1. GLOBALISATION Keywords:
PRIMARY: the first job in a process (e.g. Growing potatoes > farming)
SECONDARY: the second job (e.g. Making chips in factory)
TERTIARY: the third job (e.g. Selling chips or serving to customers)
QUATERNARY: the fourth job (e.g. Marketing and designing the chips)
GOODS: items bought and sold
SERVICES: Ideas or help (e.g. Call centres, schools...)
EXPORTS: things sold OUT of a country
IMPORT: things bought INTO a country
TRADE: total money of imports and exports
GLOBAL INSTITUTIONS: organisations which many countries belong to
TNCs: big companies which make money by being in several countries
OUTSOURCING: when TNCs send jobs to other countries
NEW ECONOMY: world trade based more on knowledge than goods- skills are worth more than goods
LEEDS-
Has a strong industrial history contained textile companies like Burton and Hepworth. Men: mining, railways and engineering. Women: clothing factories, health and administration. Apprenticeships: 15+
1980s- Couldn’t compete with cheaper prices overseas for clothes and resources.
2011- more tertiary jobs for the skilled people there. Decline in manufacturing jobs. Fewer apprenticeships, only low paid jobs. Older men and women had unwanted skills.
Until the 1980s- flow of trade was either between the world’s developed and developing countries, or between developed countries themselves
Now there is a third type of trade- between the growing developing economies of countries like India and China. China buys raw materials from Africa, and Chinese goods are exported to India and the developing economies of South America.
Foreign Direct Investment-
1990s- American and European TNCs invested in new factories and transport infrastructure for Chinese cities. Investment is known as FDI. Chinese wages were 90% lower than USA and Europe, TNCs get goods made cheaply. Huge growth in Chinese exports.
2007- China was the world’s second largest trader.
LOWER TRANSPORT COSTS!
Shipping- 90% of our goods. Only needs one crew and fuel efficiency has also reduced fuel use.
Containerization- most arrive from Asia in containers, easier to load on and off. Has barcodes, so machines can be used instead of people.
Aircraft- more expensive than ship, so only 0.2% of goods. Airfreight is 70 times more valuable than goods by sea (electronics, medical, fruit and veg). Fuel efficient operate with fewer people.
INTERNATIONAL TRADE- has exploded in volume as TNCs invest in developing countries to manufacture goods. Then shipped to markets in North America and Europe > 2010 = Population x 1.8 but value of exports x 48.
Greater economic inter-dependence between countries- national boarders have become less important
Increasing volume and variety of trade in goods and services
Easier for money to flow
Increasing spread of technology
Culture- global media companies spread news, TV shows, film and music.
CLARK FISHER MODEL
Primary industry- the extraction of raw materials from the land or sea (farming, fishing, quarrying, mining)
Secondary industry- manufacturing, where raw materials are converted into a finished product (house building, car making, steel processing, food processing)
Tertiary industries- or services. Wide range of service industries associated with both manufacturing and people
Quaternary industries- provide information and expert help. Often associated with creative or knowledge-based industries.
The balance of these is known as the country’s employment structure
In the UK, there has been a major change in the types of jobs that people have been doing over the past 40 years. A drop in primary and secondary and rise in tertiary quaternary (80%).
LOW-INCOME COUNTRIES- pre-industrial
MIDDLE-INCOME COUNTRIES- industrial
HIGH-INCOME COUNTRIES- post-industrial
GLOBALISATION
BT (TNC in tertiary sector)
Largest telecommunications companies in world (170 countries). British-owned (telephone rentals, broadband, mobile phones, communications for factories, retailing and TV. Merged with companies from USA, Italy, Germany, South America and South Africa. 1990s- outsourcing: English-speaking foreigners, software development skills and locations with administrative skills. Bangalore has experienced an IT boom. High tech buildings attract young professionals. Bangalore has English-peaking university, attracted software development companies like Infosys, and reduces taxes. Can locate anywhere. High-quality communication links, fibre-optic cable. Relies on being able to employ skilled, creative well-qualified people. Located close to university cities. Location based on skills and wages cost. New economy is based upon the development of knowledge, ideas and services. Usually based upon people over the world discussing issues. High quality recruitment is vital in order to supple talented specialists. It is usually English speaking and men and women are equal numbers in employment. Creative thinking is done at headquarters (London) and outsource low wage jobs.
SWEAT SHOP- a factory where workers are expected to work very long hours, with low pay and poor working conditions (such as Apple and Nike in Asian Tigers- most of the Asian countries that are industrialising
NIKE (TNC in secondary sector)
Nike was founded in Oregon, USA in January 1964 as Blue Ribbon Sports and was later renamed Nike in Its HQ is still in Beaverton, Oregon, USA
They produce and sell a vast range of sports clothing and equipment
They have offices in 45 countries and 700 stores worldwide
The majority of their products are outsourced and manufactured in Asia, but they also own some factories where their goods are manufactured.
The components for their goods are sourced from various different countries around the world.
Their annual turnover continues to rise
Nike maintains its market and reputation by sponsoring and promoting sports events and sports stars.
1964- began importing running shoes to the USA from Japan. Needed to compete with Adidas and Puma. Decision-making is done in USA and most Asian are outsourcing countries. They have bad working conditions, $2. Neglect of health and safety, physical and sexual abuse, and persecution of workers who have tried to organise trade unions.
1960s- Japan, 1970s- South Korea and Taiwan, 1980s- China, Thailand and Indonesia, 2000s- Vietnam. Head office- USA.
Campaigns tried to improve conditions by consumers ‘boycott Nike’. There are few worker’s rights and are not in democratic country.
Nike now publishes data about supplier inspections on its website.
CONSOLIDATION- merging companies making similar products (Sony and Ericsson).
CONGLOMERATION- buying companies with no link (Moet & Chandon, Louis Vitton, Bulgari and Pink- owned by LVMH and all luxury brands).
STATE-LED INVESTMENT
China’s economic growth has come from SLD. Government keeps a tight grip over its banks. Use money from household savings and overseas trade to fund state-owned companies.
TNC grew because:
GROWTH- in sales of popular products (e.g. Apple products).
MERGER- with other companies, by consolidation or creating a conglomerate.
MALAWI- half of farmer’s have 1 hectare of land and provides the family with food. They are subsistence farmers- producing enough to sell (tobacco and groundnuts). 85% of Malawi’s population live in rural areas. Farmers used hand tools and relies on family labour. More produce means more to sell, more money for tools and fertilisers, more money. But this hardly happens.
INDIA
Malawi
GDP
3400
900
Source of GDP
Agriculture: 22
Industry: 40.3
Services: 37.7
Agriculture: 30.3
Industry: 16.7
Services: 53
People by occupation %
Agriculture: 48
Industry: 22.4
Services: 29.6
Agriculture: 90
Industry and Services: 10
Exports ($)
95.32 billion
0.91 billion
Export goods
Clothing, shoes, electronics, wooden products, rice
Tobacco, tea, sugar, cotton, coffee, peanuts, wood
WTO- world trade organisation- encourages trade between countries while ensuring it flows as smoothly, predictably and freely as possible. Whoever is the cheapest wins. Cutting tariffs does not benefit all
THE BANANA TRADE-
West Indies produce bananas on small farms. More expensive to produce than those from large US-owned plantations, so the EU protects them by charging an import tariff of 140€ per tonne on Latin American bananas. This makes the price the same everywhere. WTO is insisting to cut tariff. Latin American bananas will be cheaper, so large plantations will gain and the small farmers will suffer.
INDIA - Population is increasing rapidly. It is a typical Asian country, with growing cities full of people who have left traditional rural lives. Manufacturing jobs are increasing, so people are moving into urban areas where the work is. There is a shortage of young people in rural areas, older family members left to farm. Becoming increasingly globalised- large companies pay foreign workers cheaper prices (out-source their work). Many have to work long hours, in sweatshops for very low wages. The goods they produce increases their GDP
IMF- international monetary fund- is a US-based organisation that raises funds from the world’s wealthier countries to help countries which have become economically unstable. Aims to stop existing crisis, to spot potential future crisis, to check investment and to reduce global poverty.
FRANCE- The French economy is changing. Has a healthy quaternary employment in cities, but kept manufacturing industry (Peugeot, Citroen and Renault)- rely on technology not people. Farming is also healthy, a lot of work is now automated. French farmers rent their farms to larger farms with machinery or ‘gites’ for tourists. Rural primary employment has declined, while the tertiary economy is growing. GDP- $35,600