TMJC 2025 J1H2 C1 Lecture 1 Global Economy Notes

1 What is the Global Economy? The global economy is complex, characterised by dynamic geographies and interactions between multiple actors at different scales. The global economy connects places at different scales and creates interdependence between them. We can think of the global economy as the flows of trade, capital and labour throughout the world. Trade generally refers to the buying and selling of goods and services. International trade refers to the buying and selling of goods and services between countries. Capital refers to money invested with the intent of generating more money. Labour generally refers to the people who work for gain, often in terms of wages. Labour is often regarded as a location-specific factor of production that affects where a firm may choose to locate its relevant operations. How do levels of development vary across space? Development can be thought as an improvement from the current state. Development is a MULTI-FACETED CONCEPT Economic Development: Improvement in Gross Domestic Product (GDP) or Gross National Product (GNP) of a country. Able to have economic prosperity, able to translate economic gains into social improvement. Social Development: Improvement in the society, well-being of people in the country, better healthcare, higher literacy rate, higher Standard of Living, improvement in quality of life, better food and nutrition. Environmental Development: Development in the environmental aspects – not polluting and overly exploiting the environment, but trying to improve air, water, land quality while allowing various ecosystems to thrive. When we think of differences in levels of development, we tend to usually associate it with the idea of economic development, it is important to note that it is not the only form of development, but we will focus on economic development for now. Higher 2 (9173) Cluster 1: Development, Economy and Environment TMJC Cluster 1 Lecture 1 Geography of the Global Economy – Structure of the Economy and NIDL 2025

2 In essence, countries have different levels of economic development and a group of countries can also be considered a Macro-Region. For our syllabus, we will follow the definition of Macro- Region created by the World Bank. World Bank Country and Lending Groups For the current 2024 fiscal year: Low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,135 or less in 2022; Lower middle-income economies are those with a GNI per capita between $1,136 and $4,465; Upper middle-income economies are those with a GNI per capita between $4,466 and $13,845; High-income economies are those with a GNI per capita of $13,845 or more What Is Gross National Income (GNI)? Gross National Income (GNI) is the total amount of money earned by a nation's people and businesses. It is used to measure and track a nation's wealth from year to year. The number includes the nation's gross domestic product (GDP) plus the income it receives from overseas sources. GNI per capita means the GNI divided by the population in the country. For a more detailed idea and sensing → You can refer or google: https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and- lending-groups Based on the dataset above, which are the more developed and less developed macro-regions?

3 Are there also variations in levels of development between countries within a Macro Region? Yes. There are high income and low income countries within a Macro Region, with the exception of North America where all three of the countries within (United States, Canada and Bermuda) are considered high income, there are variations (refer to the excel sheet online) or the world bank macro-region and income map provided with this lecture. Are there variations across space in levels of development between different places within a country? For countries, especially larger countries the economic disparity between within the country can be quite apparent due to the different type of economic activity or sector that part of the country is engaged in. The disparity can also occur between rural and urban areas within a country where the rural areas are generally less economically developed compared to the urban areas. For example, for USA, states like Montana have a much lower GDP that states like California. This is due to California having many technology firms and also the film industry such as Hollywood compared to Montana which mainly has agriculture, mining, fores try and energy production as its main economic drivers. For China, Shanghai has a much higher GDP than Xinjiang. This is because of Shanghai serving as the economic capital and financial hub of China compared to Xinjiang. In the subsequent part of the lecture, we aim to explore what are the reasons for these variations of development across space.

4 SECTORS OF THE GLOBAL ECONOMY The economy consists mainly of the primary, secondary and service sectors. Primary Sector [i.e. Agriculture] : harvest of raw material for conversion into commodities or products e.g. mining, fishing, agriculture, forestry Secondary Sector [i.e. Manufacturing] : Industries that take the raw materials produced by the primary sector and process them into manufactured goods and products e.g. o Heavy manufacturing o Light manufacturing o Food processing o Oil refining o Energy production Tertiary/Quaternary [i.e. Service Sector]: Services are activities that do not produce or modify goods. The service sector is labour -intensive and the quality of product (i.e. service rendered) depends on the quality of labour. The rise of the service sector is part of the process of tertiarisation. Services are extremely important in providing support to manufacturing activities and have grown in importance in the economies of many countries in recent years, especially in DCs. In general, there are 3 main types of services: (i) Tertiary Sector These are services provided to the general public which are profit driven . It is also known as consumer services. Such services include retailing, tourism related services and personal banking. (ii) Quaternary Sector These are knowledge-based services provided to firms and businesses which are profit driven. These are also known as producer services. Examples include market research, financial services, advertising, legal functions, insurance and logistics services. These are also government led consumer services and tend to be non -profit driven. Examples often include social services such as healthcare, education, elderly -care services and volunteer work.

5 How does global pattern of flow of trade, capital and labor vary across space? Particularly before World War 2 and the 1950s, the global pattern of trade, capital and labor were highly skewed and advantageous towards countries that were the colonial masters or countries such as USA. Most of the raw material and labor were going from the colonies to these colonial countries. Such as agriculture products from Singapore, India to UK. Raw materials from different African countries to various colonies such as Senegal and Ivory Coast to France. Furthermore, capital was not spread out throughout the world but concentrated in these already more economically developed countries. In this aspect trade between countries mainly happened between the developed countries or within the countries in the continent due to distance and the inadequacies of transport and communication technology at the time. There was a huge unevenness in the pattern of trade across space. -How has there been a shift in the global economy (trade, capital and labor) occur after the 1950s Since the 1950s, there has been a shift in the global economy, namely due to globalization (or economic-globalisation) that allow