The World Economy
There are many definitions of Economy, but this one is sufficient for the purpose of our lesson: the large set of inter-related
production, consumption, and exchange activities that aid in determining how scarce resources are allocated. The production,
consumption, and distribution of goods and services are used to fulfil the needs of those living and operating within the economy.
What is the most common tool Geography uses to describe economy of a particular country? - GDP and it´s variants
GDP – monetary value (AKA price) of all finished goods and services produced in a country during a year;
GDP per capita - a monetary value of all finished goods and services produced in a country during a year per each
person;
GDP per capita at PPP – the same as GDP per capita + it takes into account inflation, cost of living and value of
currency;
Be able to explain:
• Which measure should I use to prove that China annually produces more products and services
than Britain and why? – just GDP because we aren´t interested in production per each person, or
life standard;
• To compare productivity of two nations? – GDP per capita, because we want to know how much
value is being produced per average member of the country.
• To compare standard of life of two countries? – GDP per capita at PPP – because we also want to
consider the cost of living in that country;
Can we know everything about the economy of some country just from GDP?
As in all other fields, we can never interpret data from one measure without context.
Shortcomings of GDP
• doesn´t consider quality of products and services
• it doesn´t count goods and services which aren´t sold – free services provided by state, foods grown home, charity etc. –
those lower GDP but actually make life standard better;
• doesn´t count monetary value of items which were produced in the past but sold now –selling old house/ appartment;
• and many others...
VS
Economic sectors
• Primary sector - extraction of natural resources + agriculture: e.g. mining, fishing, forestry, growing crops =
basicaly everytime you sell unprocessed material it´s a part of primary sector;
• Secondary sector – production of physical goods : e.g. food processing, car manufacturing, construction
industries ... – selling wheat = primary sector BUT selling bread = secondary sector
• Tertiary sector – services : transportation of people and products, shop assistants, hair dressers, babysitter,
nurse etc.
• Quaternary sector – information based services: bankers., accountants, people who provide consulting
services, researchers, doctors, teachers
In the past there was only categorisation into 3 sectors – all services were in one category, quaternary sector was created
because people wanted to stress the difference between jobs like bus driving and science; However, many times it´s tricky to
find exact boundary which separates them – e.g. one could argue that an average nurse also works with a lot of information;
What can sectors tell us about the economic situation of a particular country?
Poverty – manual for watching video
Watch this video: https://www.youtube.com/watch?v=efnHiz0USQE&t=469s
And answer these questions using information mentioned in video + your own point of view:
• What is the exact definition of extreme poverty?
• Imagine the life of someone who is extremely poor by definition, do you think there is a reasonable chance
that they´ll get better on their own? Why?
• How has the rate of extreme poverty changed since 1990?
• Which countries made the biggest impact on the rate of extreme poverty?
• Where are the regions which are most affected by extreme poverty today? Why is it so?
•
• Does the situation seem to be getting better so far?
• Why is climate change affecting people from such countries much more than it affects us?
• How does situation in the poorest countries affect the rest of the world? What will happen when
the only available work force will be from those countries?
• What can be done about it? (this question is mostly about your opinion)
•
If we go further back time, the numbers would be even more shocking. At the beginning of the 19th century
85% of the global population lived in extreme poverty. The first spark for this huge change was the Industrial
revolution.
Developed vs. developing countries
Generaly speaking developing countries should be those with less developed industrial base, lower
GDP and worse life standard than developed ones. However there is no universaly accepted
definition, therefore you may find various categorisations. For this reason I´m not really keen on you
learning any categorisation of countries by heart.
