3.1 How does the economy of the globalised world function in different places?

Transcription

1 3.1 How does the economy of the globalised world function in different places? a. The balance between employment sectors (primary, secondary, tertiary and quaternary) varies spatially and is changing. Use the Clark Fisher model to investigate changing employment structure in countries at different stages of development. Pre- industrial Industrial countries Post- industrial countries Tanzania South Sudan Ivory Coast 1 India Brazil China UK USA Primary= Taking something out of the ground e.g. farming, mining or fishing. Secondary= Making something from raw products e.g. processing oil into fuel, making a carrot into soup or manufacturing cars. Tertiary= Services, e.g. shop workers, teachers, doctors, lawyers, hair dressers, accountants and many more. Quaternary= The research industry e.g. researching illnesses or medicine (such as cancer research) or researching new technologies (e.g. Bentley researching hydrogen fuel)

2 Contrast the importance of different employment sectors and working conditions in countries at different stages of development. Pre industrial- Primary industry dominates (usually farming, fishing and mining). There is some secondary industry, but this is usually low- tech, and often for TNC s so profits are not going to the country itself. There are small amounts of employment in the service (tertiary) industry. Working conditions usually poor and incomes are low. People are usually just grateful to be bringing any money in. Industrial- Primary employment declines, as machinery and imports usually means there are fewer jobs in this sector. Secondary industry increases and factories are built; this is industrialisation. As people earn more money the service (tertiary) sector increases. Working conditions can still be poor, and only around 50% of people work in the secondary (manufacturing) sector. Wages increase slightly. Post Industrial- Services take over and the primary and secondary sectors decline. Wages are generally higher and people work in much better conditions as there are a bigger range of jobs available. There is spare money to spend, which results in the development of the quaternary (research) sector. 2

3 Countries are usually divided into developed (HICs) and developing (LICs). We generally refer to countries in the middle as NICs (Newly Industrialised Countries); these countries have a middle to high income and are therefore MICs (Middle Income Countries) or HICs. Developed and developing does not always take into account the industry in the country. LICs (low income countries) = Low income, usually at pre- industrial stage. An example of this is Ethiopia. MICs (middle income counties) = Middle income, usually at the industrial stage. An example of this is India. HICs (high income countries) = High income, usually at the post-industrial stage. An example of this type of country is the USA. Ethiopia is a developing country, classified as a LIC. 75% of people work in agriculture (farming). 15% work in manufacturing and 10% work in tertiary (services). Many people in Ethiopia work in the informal sector, this means their jobs are illegal and they do not pay tax (and they therefore aren t contributing to the economy). Working conditions in Ethiopia are very poor, as are wages, as people are desperate for work and to support themselves with any income they can bring in. Ethiopia suffers from drought, and doesn t have many valuable resources; this adds to unemployment there. 3

4 China is a Newly Industrialised Country; it is one of the BRICs (Brazil, Russia, India and China) who are making rapid economic progress. China s secondary (manufacturing sector) is making huge amounts of products sold around the world; a large labour force with ambition and a good work ethic have made Chinese manufacturing very successful. Work in the Primary sector is less popular and many of the workers in this area are older. China s Primary sector includes coal mining and farming, coal mining in particular can be very dangerous, and both are physically demanding to work in. Many younger people have moved to cities to work in factories; work in factories involves long hours in poor conditions. A successful secondary sector has caused the growth of the tertiary (service) sector, with many jobs in offices now available. These jobs have good pay and much cleaner working environments. The UK is a developed country the secondary industries in the UK have declined, automation (workers replaced by machinery) such as at Jaguar Land rover where robots build many parts of the cars has contributed to this, as has a global shift in manufacturing to the BRICs (Brazil, Russia, India and China), where labour is cheaper. The UK has a very small primary sector; mining has virtually stopped, the fishing industry can t expand due to fish quotas. Farming machinery has meant little labour is needed. The tertiary (service sector) dominates; people have disposable income to spend on luxury services, shopping and tourism activities. Global banking, insurance and financial industries are based in London. Working conditions in all sectors are good due to health and safety laws, and the minimum wage means that pay is fair. Some people telework or work from home using the internet, e.g. customer service phone operatives and travel agents. 4

5 b. Globalisation is changing employment sectors in both the developed and the developing world. Outline the role of global institutions including the World Trade Organization (WTO), the International Monetary Fund (IMF) and transnational corporations (TNCs), in creating a more globalised economy. Role of the World Trade Organisation (WTO) in creating a more globalised economy- The WTO oversees the global rules of trade between countries, it tries to keep trade as free as possible, smooth and predictable. Role of the International Monetary Fund (IMF) in creating a more globalised economy- 188 countries are members of the IMF. They give loans to poor countries to encourage development and try to aid cooperation between countries to reduce poverty. The IMF have helped Tanzania to grow by securing development loans for infrastructure. Role of Transnational Corporations (TNC s) in creating a more globalised economy- Transnational Corporations are companies based in more than one country. They are creating a more globalised economy as they transfer capital across countries, e.g. to pay a wages bill, to buy land of governments and to pay tax bills. Networks, Flows and Players Networks, flows and players link the four employment sectors, and the global economy. Networks- these spider webs link countries; transport networks, telephones, internet and trade blocs. Flows- these move through the networks and include raw materials, manufactured money, migrant workers, information and aid. Players- organisations who influence the global economy, including TNC s and global organisations, such as the WTO. 5

6 Evaluate the impact of globalisation on different groups of people, including women as a group and men as a group, in the developed and developing world. Impact of globalisation on women in the developing world: Women in the developing world have increased access to education. Many women in countries like Bangladesh work in sweatshops for TNCs, stitching clothes for minimal pay, in tough conditions with limited or no breaks. Women and men in the developing world have access to urban secondary and tertiary jobs. There are more jobs available in developing countries, especially in manufacturing and increasingly in tertiary too Impact of globalisation on men in the developing world: Many men in developing nations feel work is better paid and more consistent in factories compared to farming which can be affected by the weather. Many men in developing countries have to leave their rural homes and children with elderly relatives in countries like China, to work in factories. There are more jobs available in developing countries, especially in manufacturing and increasingly in tertiary too. Women and men in the developing world have access to urban secondary and tertiary jobs. Impact of globalisation on women in the developed world: Women are more equal in the jobs market. Women in the UK have increased job opportunities in flexible, part time employment especially in retail sector. As male dominated employment of the past (mainly secondary) has declined, this has led to increased pressure on women in the developed world to have jobs Impact of globalisation on men in the developed world: Men in the East end of London have reduced access to secondary jobs in car manufacturing that their fathers did. In the UK, fewer full time jobs in secondary industries, and more part time tertiary jobs than 50 years ago. Whole areas, such as the Welsh Valleys have unemployment and a large amount of people with mental illness due to the closure of traditional manufacturing (steel) and mining (coal). 6

7 Diagram showing the impact of the global economy on employment 3.2 What changes have taken place in the flow of goods and capital? a. In the past 50 years both international trade and the flow of capital across international borders have expanded rapidly. Examine the changes in the volume and pattern of international trade and foreign direct investment. International Trade 7

8 Developing countries have many raw materials developed countries need to manufacture products elsewhere or in their own country. Developed countries have items such as machinery, medication and electronic technologies developed countries have not developed and desperately need. Global trade leads to developed countries getting richer and developing countries still falling behind as they do not have the resources to manufacture high end products and have little power to negotiate raw material prices with developed countries. Global trade has increased dramatically as developed countries import raw materials more cheaply than they could extract them (e.g. England with coal) or import materials they do not have (e.g. South African gold as there is not a large amount 8

9 Foreign Direct Investment Foreign Direct Investment is investing directly into a foreign country, the pattern and quantity has changed overtime due to globalisation. Reasons for FDI are: Access to foreign markets Exploiting new sources of energy and minerals Increasing food supplies Taking advantage of cheap labour. 9

10 Example of FDI The Chinese government has invested heavily in Africa countries such as South Sudan because of a need for resources such as oil. China have paid for the infrastructure to extract and transport oil (roads, ports and rail), as well as homes and entertainment facilities for workers. There are now one million Chinese workers in Africa. China pays governments small amounts, however exporting crude oil does not bring the governments much money in. China processes raw materials into finished products within China, keeping most of the profits and skilled jobs within China. The African governments are not happy but need money and jobs, so will settle for the small amounts rather than nothing. Explore the reasons for these changes, including lower transport costs, TNC growth and mergers and state-led investment. Reasons for changes in the volume and pattern of international trade and foreign direct investment: Lower transport costs- Due to new technologies including container ships, faster boats and freight planes transport is faster (meaning fewer products go off) and cheaper. This has reduced the cost of transporting goods. 10

11 TNC growth and mergers-the revenue of many TNC s is close to, or higher than that of entire countries, for example Sweden s GDP 2006 was $444 billion, Exon Mobile s (oil company) revenue was $377 billion. These TNC s buy up smaller, foreign companies who cannot compete for resources such as raw materials and cannot undercut the TNC s as these companies sell in bulk. TNC s build links between the economies of countries as they buy, sell and operate in many countries across the world. An example of this is McDonald s. Diagram showing the global links a TNC creates Diagram showing reasons for TNC s to operate globally 11

12 State- led investment- Please see China in Africa e.g. for FDI (Page 8). States such as China invest in foreign countries and companies, such as China s investment in copper mining in Zimbabwe, to gain resources and make a profit. Other countries allow foreign state led investment as they need the small amounts of income it generates (the state that invested keeps most of the profit) and the infrastructure building (e.g. China build ports and railways to transport materials back to China. Both states benefit, and therefore state- led investment has created many global links. b. Transnational corporations (TNCs) control a substantial part of the global economy and have created a global shift. Study one TNC in the secondary sector to show how it operates in different parts of the world, e.g. location of headquarters, outsourcing and the global shift in manufacturing. Nike- TNC in the secondary sector Location of headquarters-nike Headquarters is in Oregon, USA. This is where Nike s skilled jobs are located, for example in admin and design. Outsourcing- Nike s products are mainly made in Asia, in countries such as Cambodia, China and Indonesia. Nike has been caught using tied labour, which is when worker s identity records are stolen and people are kept against their will. There have been reports of Nike paying workers less than $1 per day, and workers working 7 days a week, 18 hours a day. Global shift in manufacturing- Manufacturing has shifted from developed to developing countries, with companies such as Nike and Jaguar Land Rover because wages are cheaper abroad, many countries such as China offer taxfree zones and excellent infrastructure to TNC as they are glad for more jobs and containerisation (container boats) has lowered transport costs making it cheaper to move goods. 12

13 Study one TNC in the tertiary sector to show how it operates in different parts of the world, e.g. administrative work moving overseas, globalisation of products, including the growth of retailing chains. Tesco- TNC in the tertiary sector Administrative work moving overseas-tesco head offices are based in The UK, as are many of the call centres Tesco operate. Unlike other TNC s such as Admiral insurance company, Tesco have not cut costs by locating admin work overseas. Admiral have call centres in Mumbai where wages are lower and people still speak English well. Globalisation of products-tesco use Glocalisation - ensuring products in store meet local needs, for example in China the cuts of meat and types of vegetables are very different to those in The UK. Tesco s products come from across the world, for example green beans from Kenya and apples from South Africa. The people who pick grow these products work long hours for low wages and often become ill due to large amounts of pesticides and a lack of protective clothing. Growth of retailing chains- since the 1990 s Tesco started opening stores across the globe, 60% of Tesco s profits now come from Asia. Opening stores in other countries creates jobs there, which is good, but Tesco s profit tax revenue often leaves the country and therefore does not contribute to government projects e.g. building schools. 13