Economic Activity and Development
What this domain tests
This domain examines how economic activities are classified and located, and how development is measured and unevenly distributed. Expect sector-shift questions, indicator comparisons and evaluations of development projects.
Core rules and concepts
- Economic sectors: primary (extraction), secondary (manufacturing), tertiary (services), quaternary (knowledge and research).
- The Clark-Fisher model shows employment shifting from primary to secondary to tertiary as economies develop, though resource-rich or tourism-dependent economies can differ.
- Location factors include raw materials, energy, labor cost and skill, transport, market access, capital, government incentives and agglomeration.
- Development indicators include GDP/GNI per capita, life expectancy, literacy, HDI and access to clean water. HDI combines income, education and health.
- A single indicator can mislead: GDP per capita ignores inequality and unpaid work; literacy ignores quality of schooling.
- Globalization increases flows of trade, capital, people and information. TNCs can create jobs and technology transfer but may repatriate profits and worsen uneven development.
- Sustainable development meets present needs without compromising future generations, balancing economic, social and environmental goals.
Worked example
Country A has GDP per capita of US$3,000, life expectancy 58 and adult literacy 62%; Country B has US$9,000, life expectancy 74 and literacy 95%. Reasoning: B is more developed on all three measures, so its HDI will be higher. Do not conclude B has no poverty: the national average can hide inequality. State the comparison explicitly, then add the limitation.
Traps that cost marks
- Treating GDP per capita as a complete welfare measure.
- Confusing GNI with government spending.
- Listing location factors without linking them to the specific industry.
- Calling any development 'sustainable' without naming the environmental and social costs.