u4. economic activities and geographical spaces
TRANSCRIPT
Unit 4
ECONOMIC ACTIVITIES & GEOGRAPHICAL
SPACES
IES Camilo José Cela
Teacher: Rocío Bautista
1) Economic activity. Components & sectors
ECONOMIC ACTIVITY = combinationof the tasks undertaken by people toobtain the goods required to meet theirneeds.
MATERIAL GOODS IMMATERIAL GOODS (SERVICES)
1st PRODUCTION: the resultant goods of the economic activity.
2nd DISTRIBUTION: the transfer of the goods to the consumers & their sale.
3rd CONSUMPTION:the use of the goods.
COMPONENTS OF ECONOMIC ACTIVITY
SECTORS OF ECONOMIC ACTIVITY: ranges of activitieswith several shared features
ECONOMIC SECTORS
SECONDARY: transformation of natural resources
Industry, construction, mining, energy
production
TERTIARY: activities that
provides services.
Trade, transport, tourism, healthcare,
education…
PRIMARY: extraction of
natural resources.
Agriculture, livestockfarming, forestry,
fishing.
SECTORS OF ECONOMIC ACTIVITY:
To analyse the importance of each sector, we need to look at 2 indicators:
a) EMPLOYMENT
b) GDP (Gross Domestic Product) PIB (Producto Interior Bruto):
• It is defined as the total value of all goods & services produced in a country in a given time period (normally, a year).
• It’s used in economics to measure the size of a territory's economy. It enables us to know how healthy a country is, from an economic point of view.
The importance of each sector in the economy of a country varies a lot depending on it’s degree of development.
GDP
VS
GDP PER CAPITA
SECTORS OF ECONOMIC ACTIVITY
Primary sector: <10%
Secondary sector: 25 – 35%
Tertiary sector: >60%
DEVELOPED
COUNTRIES
Primary sector: >50%
Secondary sector: very low (in underdeveloped countries). In emergingcountries it’s more and more important.
Tertiary sector: low
DEVELOPING
COUNTRIES
SECTORS OF ECONOMIC ACTIVITY
In developed countries the Secondary Sector is losing importance, while it’s gaining importance in emerging countries… Why is this happening?
ACTIVITY 1
a) P.82 ex. 1
b) Devise 2 outlines: one about the components of economic activity & another one about the economic sectors.
c) What is “GDP”? And “GDP per capita”? Which of these two economic indicators do you think is better to analyse the wealth of a country and the standard of living of its inhabitants?
d) P.82 exercise 2. Using the information on that chart fill in worksheet 1 (pie charts with the economic structure of developed, developing & underdeveloped countries)
ACTIVITY 2
DO A COMMENTARY OF THE PIE CHARTS YOU’VE JUST DONE
1) Introduction paragraph… What type of charts are they? What do the charts show us? Source?
2) Define GDP and then describe the contribution of each sector to the GDP of developed, developing & underdeveloped countries.
3) Describe the contribution of each sector to the employment in developed, developing & underdeveloped countries.
4) Draw your conclusions.
2) Economic agents & their relationships
Which “agents” (who?) are involved in economic
activities?
ACTIVITY 2
a) Read the text on p.84-85
b) Fill in the following chart
c) P.85 ex. 3
d) What is the difference between…• A small, a medium & a large company?• A public and a private company?
BUSINESSES FAMILIES STATE
FUNCTION
AIM/S
INCOME SOURCE
ECONOMIC AGENTS:B
US
INE
SS
ES • Basic unit of
production.
• FUNCTION: produce, distribute& sell goods.
• AIM: obtain aneconomic profit.
• INCOME SOURCE: sale of goods.
FAM
ILIE
S • Basic unit of consumption.
• FUNCTION: buygoods.
• AIM: satisfy theirneeds.
• INCOME SOURCE: sale of their labour.
ST
AT
E /
GO
VE
RN
ME
NT • Unit of production &
consumption.
• FUNCTION: providepublic services neededby society & consume goods/services fromprivate companies.
• AIM: provide welfare.
• INCOME SOURCE: taxes.
Economic circuit
ECONOMIC AGENTS
BUSINESSES
STATE / GOVERNMENTFAMILIES
Taxes
Types of businesses:
Types of businesses
According to size
Small (<50 employees)
Medium (50-250 employees)
Large (>250 employees)
According to capital ownership
Public companies
Private companies
According to social organisation
Public licensed companies / Sociedad Anónima (S.A.)
Limited companies (Ltd.) / Sociedad Limitada (S.L.)
Cooperatives
Business = usually refers to small/medium companiesCompany/Enterprise = bigger businesses
S.A. S.L.
Capital dividido en ACCIONES (al portador) librementetransmisibles a terceros.
VENTAJA: facilita la captación de capital.DESVENTAJA: dificulta el control de la empresa por parte de los socios.
Capital dividido en PARTICIPACIONES(nominativas), que son más difíciles de transmitir a terceros (necesidad de acuerdo de los socios).
VENTAJA: facilita el control de la empresa por parte de los socios. DESVENTAJA: dificulta la captación de capital.
Capital mínimo: 60.000€ Capital mínimo: 3.000€
En ambos casos la responsabilidad de los socios es limitada (no responden con su patrimonio personal). Es decir, sólo pueden perder lo que han invertido en dicha empresa.
Public licensed companies(Sociedad Anónima - S.A.)
3) Production factors.
- Natural resources- Capital- Technology- Labour
What thingsdoes a business need
to develop its economic activity???
PRODUCTION FACTORS
PRODUCTION FACTORS
Technology
Labour
Capital
Natural resources
1. NATURALRESOURCES
Are natural resources unlimited?
PROBLEMS??
MANY OF THE RESOURCES WE USE ARE
NON- RENEWABLE…
PROBLEMS??
EXHAUSTION OF NATURAL RESOURCES
WARS & INTERNATIONAL
CONFLICTS
To avoid the exhaustion of natural resources it is necessary to use them according to the principle of SUSTANIABLE DEVELOPMENT
The production of oil & natural gas is
unequally distributed the countries that
produce these energies aren’t the
ones that most consume them.
The desire to control these limited natural resources leads to wars & international conflicts,
and explain many political alliances.
Isn’t it strange that… • …USA & Saudi Arabia have good relations, despite their
ideological differences?
• …during the revolts of the “Arab Spring” (revolts in Arabic countries in 2010-2012), the Western countries intervened in Lybia but not in Syria?
• … the USA was at war with Irak?
Video summarizing the conflict in Syria: https://www.youtube.com/watch?v=jdXOxaydsGMDocumentary: “Oil, smoke, mirrors” http://www.youtube.com/watch?v=xlUNQWvcqww
USA former president
(Barack Obama)
&
Saudi Arabia former king
(Abdullah bin Abdul Aziz al-Saud)
2. CAPITAL
NON-NATURAL RESOURCES NEEDED FOR PRODUCTION.
CAPITAL
Physical capital:
material elements (factories, machinery…)
Human capital:
people’s productive capacity. It depends on
their training & experience.
Financial capital:
economic resources (funds) used by a company to buy what they need to
make their products.
3. TECHNOLOGY
KNOWLEDGE, METHODS & PROCEDURESUSED IN PRODUCTION PROCESS.
Types of technology
Manual Mechanised Robotised
4. LABOUR
PHYSICAL OR INTELECTUAL EFFORT MADE BY PEOPLE IN ORDER TO PRODUCE GOODS & PROVIDE SERVICES.
ACTIVITY 3
a) Define: • Production factors• Sustainable development
b) What problems does the excessive use of non-renewable resources give rise to?
c) Devise a diagram of the production factors.
d) P. 86 – 87 exercises 1 & 2
Basic concepts:
Active population (población activa): people of working agewho are employed, or unemployed but available & willing toenter the labour market.
Inactive population (población inactiva): people of workingage that aren’t available to enter the labour market. It includesstudents, retired people & home makers.
Total population
In workingage
Active population
Employed population
Unemployed population
Inactive population
OthersChildren under 16 years old
People over 65 years old
Activity rate (tasa de actividad): proportion (ratio) of active population in a country. (it is calculated among the working-age population!)
Active population X 100
People of working age
Activity rate (%) (tasa de actividad)
Unemployed population X 100
Active population
Unemployment rate (%) (tasa de desempleo/paro)
Unemployment rate (tasa de paro/desempleo): proportion(ratio) between the unemployed population and the active population.
Labour market (mercado laboral): it is formed by:
What do you think will happen to wages if…?a) Supply > Demandb) Supply = Demandc) Supply < Demand
The labour market is determined by the market forces: supply & demand. The
price of labour (salaries/wages) depends on the amount of work that is
demanded by individuals & offered by companies.
- DEMAND for workfrom individuals
- SUPPLY of jobs frombusinesses
If the supply (available jobs) is higherthan the demand (available people to work)wages are higher.
If the demand (available people to work) is higher than the supply (available jobs) wages are lower.
In this graph you can see the evolution of salaries in European countries… why have they
decreased during the crisis?
Why do high-qualified workers earn more than less qualified workers?
CAUSES OF UNEMPLOYMENT
Automation of work
Economic underdevelopment
Lack of professional
training
Transfer of economic activities
to cheaper locations
(relocation)
UNDERDEVELOPED COUNTRIES
DEVELOPED COUNTRIES
LABOUR PROBLEMS: UNEMPLOYMENT
CONSEQUENCES OF UNEMPLOYMENT
People’s income is reduced
State’s income is reduced
Less consumption
Drop in sales &
production
More unemployment (companies fire
people)
Less taxes are collected
The expenditure on unemployment
benefits is increased
LABOUR PROBLEMS: WORKING CONDITIONS
LABOUR PROBLEMS: WORKING CONDITIONS
CHILD LABOUR
LABOUR PROBLEMS: WORKING CONDITIONS
4) Economic systems
CAPITALISM COMMUNISM / SOCIALISM
Who regulates the economic activity?
the MARKET “Market economy”.
the STATE (government) “Planned economy”
Who determines…- Production (what
goods should be produced, how many, how…)
- Prices of goods?- Salaries of employees?
the MARKET, by means of the law of supply & demand.
the STATE decides everything
Other principles…
It is based on private property and free competition between companies. People invest money in creating businesses in order to achieve maximum individual profit.
It is based on public property and there is no freedom for people to create businesses. Companies (means of production) are owned by the State, who’s goal is to achieve social equality.
Countries? Majority of the world.
Only survives in some countries: Cuba, China, North Korea, Vietnam, Laos. Some of them have even introduced private initiatives.
ADAM SMITH “father” of Capitalism (economic liberalism)
LAW OF SUPPLY & DEMAND
LAW OF SUPPLY & DEMAND
If the supply of a good is higher than its demand price falls.
If the demand of a good is higher than the supply price increases.
Quantity of cookies supplied
Quantity demanded
KARL MARX & FRIEDRICH ENGELS “fathers” of
Communism
CO
MM
UN
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AP
ITA
LIS
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CO
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UN
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LIS
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MIXED SYSTEMS
Who regulates the economic activity?
MARKET + STATE it combines a market economy with certain State economic intervention. “Welfare state”
Who determines…- Production (what goods
should be produced, how many, how…)
- Prices of goods?- Salaries of employees?
MARKET + STATE
Other principles…
It is based on private property and the search of maximum individual profit…
… but there are also public companies and the State introduces some measures to redistribute wealth and reduce social inequalities (e.g.:
Guarantee basic needs – education & healthcare - to all citizens).
Countries? Many countries in the world, especially in Europe.
ACTIVITY 4
a) Fill in the following chart to summarize communist, capitalist and mixed economic systems.
CAPITALISM COMMUNISM / SOCIALISM MIXED SYSTEMS
Who regulates the economic activity?
Who determines…- Production (what
goods should be produced, how many, how…)
- Prices of goods?- Salaries of
employees?
Other principles…
Countries?
5) Current economic trends:
- Spread of capitalism- Globalisation
THE SPREAD OF CAPITALISM
Since 1990’s (end of the Cold War),
the capitalist system has spread
and communism has nearly
disappeared.
However, there are varied capitalist ideologies.
CO
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UN
ISM CA
PIT
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KEYNESIANideologies
NEOLIBERALideologies
NEOLIBERAL IDEOLOGIES
• Father of this ideology: Milton Friedman
• Main ideas:
Defends total economic liberalisation/freedom: the economy should
be regulated only by market forces (law of supply & demand) and the
State intervention in economy should be minimum. The government
should only implement laws to guarantee the free market.
Minimum public expenditure (e.g.: no public education & healthcare).
Less taxes.
Privatisation of public companies.
KEYNESIAN IDEOLOGIES
• Father of this ideology: J.M. Keynes
• Main ideas:
Defends a degree of State intervention in the economy to correct the
problems of capitalism (e.g.: social inequality). E.g.:
• Establishment of a minimum wage
• Dismissal compensation (money that a company has to give to an employee if they fire him without a fair reason)
• Retirement pensions
• Unemployment benefits
• Subsidies for certain companies/products (e.g.: agriculture, renewable energies…)
• Charge special taxes for certain products (tobacco, petrol, alcohol...)
Promotes greater public expenditure to protect the poorer people (e.g.:
public education & healthcare).
More taxes.
Defend the existence of public companies
https://www.youtube.com/watch?v=s_9Kix4tFzk
https://www.youtube.com/watch?v=Jv3hMfTTCfY
CO
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UN
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LIS
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KEYNESIANideologies
NEOLIBERALideologies
GLOBALISATION
= GROWING INTEGRATION OF NATIONAL ECONOMIES INTO A GLOBAL MARKET ECONOMY, IN WHICH ALMOST
ALL AREAS ON EARTH ARE INTERCONNECTED.
Explained by Anna in class. Study it from the book:
• Causes of globalisation
• Effects of globalisation:• In production of goods• In exchange of goods• In consumption of goods
• Advantages & disadvantages of globalisation:• ADVANTAGES:• DISADVANTAGES:
6) Worldwide geoeconomicareas
Explained by Anna in class. Study it from the book:
• DEVELOPED AREAS: • EU• North America (US & Canadá)• Japan
• EMERGING ECONOMIC POWERS (DEVELOPING AREAS)• 3 groups:
Historically underdeveloped countries which have undergone a rapid growth:o Asia: China, India, South Korea, Singapore, Malaysia,
Philippines, Turkey, Indonesia,o America: Brazil, Mexico, Argentina.
Historical economic powers that have experienced a decline Russia
Countries that play an important economic role in their region Australia, South Africa, Middle Eastern countries (Saudi Arabia, Qatar, Israel…)
• Five main emerging economies BRICS
• UNDERDEVELOPED AREAS:• Sub-Saharan Africa• Some countries in Asia & Latin America