Economic Geography: Sectors, Development, and Globalization

The economic sectors

Economic activity is classically divided into:

1. Primary — extracting natural resources: agriculture, fishing, mining, forestry, oil/gas
2. Secondary — manufacturing and construction — transforming raw materials into finished goods
3. Tertiary — services: retail, transportation, education, health, tourism
4. Quaternary — knowledge economy: information, research, finance, high-level management

The sectoral shift is a development story

As countries develop, their sectoral composition typically shifts:

• Low-income — heavy primary share (subsistence agriculture)
• Middle-income — growing secondary (industrialization)
• High-income — dominant tertiary + quaternary (services, information)

Manufacturing centers historically moved from Britain (18th-19th century) to Northern US and Continental Europe (late 19th-mid 20th) to Japan and South Korea (mid-late 20th) to China (1980s onward) and now increasingly Southeast Asia (Vietnam, Bangladesh, Indonesia) and parts of Africa. This is the geography of the ongoing "great convergence".

Agricultural systems

• Subsistence — feeding the farm household, limited market surplus. Much of Sub-Saharan Africa and rural South Asia.
• Commercial — market-oriented, mechanized, specialized. US Midwest, Argentine Pampas, Canadian Prairies.
• Plantation — large-scale tropical monoculture (rubber, coffee, sugar, palm oil) — historically colonial, still economically important
• Nomadic pastoralism — seasonal livestock movement across rangelands. Mongolia, Sahel (Fulani), East Africa (Maasai)
• Wet rice — flooded paddies, terraced hillsides. Monsoon Asia.
• Mediterranean — olives, grapes, wheat, small livestock. Around Mediterranean Sea + California + central Chile + Cape SA + southern Australia

Development metrics

• GDP per capita — economic output per person. Standard single-variable measure but limited (doesn't capture distribution, health, education)
• PPP (purchasing power parity) — adjusts GDP for local price differences. Better for comparing living standards.
• HDI (Human Development Index) — combines income, life expectancy, and education (mean and expected years of schooling). Published by UNDP.
• Gini coefficient — measures income inequality (0 = perfect equality, 1 = maximum). South Africa, Namibia, Brazil are at the high-inequality end; Northern European countries at the low.

Globalization since ~1950

Several forces drove the surge in cross-border trade, investment, and communication:

• Containerization (1950s onward) — standardized shipping containers dropped intermodal cargo costs by orders of magnitude
• Trade liberalization — GATT rounds, WTO founding (1995), regional trade agreements
• Digital revolution (1990s onward) — internet, mobile phones, cheap communication
• Air travel — cheaper for goods (perishables) and business travel

Multinational corporations and supply chains

Modern products often have global supply chains — components sourced from multiple countries, assembled in another, sold worldwide. A smartphone might have chips from Taiwan, screen from Korea, camera from Japan, assembly in Vietnam or China, and consumer in the US or Europe. Managing these chains is a form of economic geography in itself. The concept: global value chains.

Trade blocs

• EU — single market + customs union + partial monetary union (Eurozone). Deepest integration.
• USMCA — US-Mexico-Canada Agreement (2020, successor to NAFTA)
• ASEAN — Southeast Asian nations
• MERCOSUR — South American common market
• African Continental Free Trade Area (AfCFTA) — launched 2021, aims to integrate African markets

Maritime chokepoints — where global trade concentrates

• Strait of Hormuz — Persian Gulf oil exit
• Strait of Malacca — Indian Ocean → East Asia route
• Suez Canal — Mediterranean ↔ Red Sea (Europe-Asia route)
• Panama Canal — Atlantic ↔ Pacific (US and Europe ↔ Asia)
• Bab-el-Mandeb — Red Sea exit near Yemen
• Bosphorus + Dardanelles — Black Sea exit through Turkey