The use of a resource depends on a nation’s culture, values, access to technology, and governmental priorities as they change over time Social and economic priorities that influence a culture’s perspective on resources Economic development priorities (China values economic development over saving the environment) Environmental conservation priorities Priorities of indigenous minorities Indicators of Economic Development ratio – developed countries have more people living in cities Labor force characteristics – in developing countries more people work in primary and secondary activity GDP per capita – developed countries have a high GDP Educational achievement Indicators of Standards of Living Population growth rate – developing countries have a higher growth rate Population age distribution – developing countries have younger populations Literacy rate (who can read and write) Life expectancy Infant mortality Percentage of population Non-proximity of economic activity and natural resources – limited natural resources; major manufacturing region United Arab Emirates – oil; lack of industry Technologies that have created a demand for particular resources Steam engine – demand for coal Internal combustion engine – petroleum Computer – demand for skilled labor Differences between developed and developing nations Access to natural resources Access to capital resources Numbers and skills of human resources Levels of economic development Standards of living and quality of life Relationship between economic development and quality of life Comparative Advantage Comparative advantage: countries will export goods and services that they can produce at lower relative costs than other countries Specialization of goods and services that a country can market for a profit Some Countries’ Use of Resources Japan – Highly industrialized nation despite limited natural resources Russia – Numerous resources many of which are not economically profitable to develop United States – Diversified economy, abundant natural resources, specialized industries Cote D’Ivoire – Limited natural resources, cash crops in exchange for manufactured goods Switzerland – Limited natural resources
Changes Over Time Industrial systems (factories replaced cottage industries) Migration from to urban areas Industrialized countries export labor intensive work to developing nations Growth of trade alliances Growth of service industry Growth of financial services networks and international banks Internationalization of product assembly Technology that allows instant communication among people in different countries Modern transportation networks that allow rapid and efficient exchange of goods and materials Widespread marketing of products (Nike, Coke) Examples of Economic Unions EU – European Union NAFTA – North American Free Trade Agreement ASEAN – Association of Southeast Asian Nations OPEC – Organization of Petroleum Exporting Countries Advantages of Economic Unions More efficient industries Access to larger markets Access to natural, human, and capital resources without restrictions Greater influence on the world market Disadvantages of Economic Unions Closing of some industries Concentration of some industries in certain countries Agribusiness replacing family Difficulty in agreeing on common economic policies