HIST363: Global Perspectives on Industrialization

It is easier to understand why people move from rural to urban, from periphery to core, from Mexico to the United States when one begins to understand the global economy. Economic conditions are connected to how countries gain national income, opportunities, and advantages. One way of gaining wealth is simply by taking someone else's wealth. This method has been common practice throughout human history: a group of armed individuals attacks another group and takes their possessions or resources. This is regularly practiced through warfare. Unfortunately, this pillage-and-plunder type of activity has been a standard way of gaining wealth throughout human history. The taking of resources by force or by war is frowned upon today by the global economic community, though it still occurs. The art of piracy, for example, is still practiced on the high seas in various places around the globe, particularly off the coast of Somalia.

The main methods countries use to gain national income are based on sustainable national income models and value-added principles. The traditional three areas of agriculture, extraction/mining, and manufacturing are a result of primary and secondary economic activities. Natural resources, agriculture, and manufacturing have been traditionally targeted as the means to gain national income. Postindustrial activities in the service sector would include tertiary and quaternary economic activities, which make up a large part of a nation's economy but might not hold the same value-added quotient for national income as the traditional three areas.

Agriculture is the method of growing crops or trees or raising livestock that provides food and some raw materials. The excess is usually sold for profits. This is a renewable method of gaining wealth, as long as conditions are favorable. Profits for agricultural products might be low because of global competition. Countries with minerals, oil, or other natural resources can earn income from the extraction and sale of those items. Saudi Arabia and other countries with abundant petroleum reserves can gain wealth by selling that resource to other countries. Since these resources are not renewable, once the minerals or oil run out, the country must turn to other activities to gain national income.

Places around the world have sometimes been named after the methods used to gain wealth. For example, the Gold Coast of western Africa received its label because of the abundance of gold in the region. The term breadbasket often refers to a region with abundant agricultural surpluses. Another example is the Champagne region of France, which has become synonymous with the beverage made from the grapes grown there. Banana republics earned their name because their large fruit plantations were the main income source for the large corporations that operated them. Places such as Copper Canyon and Silver City are examples of towns, cities, or regions named after the natural resources found there. The United States had its Manufacturing Belt, referring to the region from Boston to St. Louis, which was the core industrial region that generated wealth through heavy manufacturing for the greater part of nineteenth and twentieth centuries.

Manufacturing has offered the industrialized world the opportunity for the greatest value-added profits. From the beginning of the Industrial Revolution, solid profits have been made by turning raw materials into useable products that can be mass-produced and sold in high quantities. The core areas of the world have all made enormous wealth from manufacturing profits. Today, information technology and high-tech manufactured products generate substantial wealth. The Microsoft Corporation manufactures information by placing data in the form of computer programs on inexpensive disks or in digital files that are then sold at a profit to a world computer market. The geographic region of California south of San Francisco was labeled Silicon Valley after this type of information-generating activity.

For a country to gain national wealth, income must be brought in from outside the country or be generated from within. Other than the big-three methods of agriculture, extraction/mining, and manufacturing, there are additional ways a country can gain wealth, such as through tourism and services. Postindustrial economic activities (the service sector) contribute to a large percentage of employment opportunities in industrialized countries and generate a large percentage of their national economies. However, the service sector does not have the high value-added profits traditionally provided by the manufacturing sector. In the gaming industry, for example, casinos do not have a large wealth-generating potential for the country unless they can either attract gamblers from other countries or provide for other wealth-generating services. Gambling shifts wealth from one person to another and provides little national income. The activity of gambling does, however, generate service jobs for the gaming industry.

Figure 1.34 Major Methods of Gaining National Income Based on Sustainable National Income Models and Value-Added Principles