Globalisation

Globalisation

1. Changing employment patterns

   • Clark Fisher Model
   • Pre-industrial stage
     • Most people employed in primary industries
   • Industrial stage
     • New factories and industries develop which provide jobs
     • Chemical and vehicle industries develop
     • Secondary industries dominate the economy
     • Tertiary sector begins to grow
   • Post-industrial stage
     • Tertiary sector grows to provide services for increasing population
     • Tertiary sector employment becomes more important than the secondary sector
   • After post-industrial stage
     • Employment in quaternary sector begins to grow
     • Quaternary sector - based on research, IT and communications

2. Employment sectors

   • LICs (Ethiopia)
     • Primary sector 75% - mostly subsistence farmers, long hours and hard work
     • Secondary sector - very small
     • Tertiary sector 15%
   • MICs (China)
     • Primary sector - largest but less dominant than in LICs
     • Secondary sector - medium, but dominates economy
     • Tertiary sector - large, with long working hours but good conditions and wages
   • HICs (UK)
     • Primary sector - very small, mechanisation means fewer workers
     • Secondary sector - small due to automation and relocation
     • Tertiary sector - dominates due to a large variety of employment
     • Quaternary sector - growing
     • Good working conditions and wages in all sectors

3. Impacts of globalisation

   • Developed world e.g. Leeds
     • Positives
       • Wages have improved
       • Everyone benefits from global goods/services
       • Good working conditions
       • More flexibility/choice in working times/location
       • Higher prices can be charged for goods and services
     • Negatives
       • Some jobs are lost as companies outsource
   • Developing world e.g. Vietnam
     • Positives
       • Produce/services can be provided to more people
       • Those who own land/resources benefit
     • Negatives
       • Informal sector continues
       • The cost of products/services from the developed world is high
       • Lower prices for their products than the developed world
       • Low wages/exploitation of workers
   • Worldwide
     • Increase in women working
     • Better working conditions
     • Goods available everywhere
     • More skills
   • Institutions
     • World Trade Organisation (WTO) - aims to encourage global trade and reduce import duties
     • International Monetary Fund (IMF) - aims to provide the financial stability required for trade

4. International trade and capital flows

   • What has happened?
     • International trade has grown massively
       • 2010 - 48 times larger than in 1970
     • Growth of TNCs, companies which expand into and invest in countries all over the world
     • Banking, insurance and finance companies have also become globalised, meaning they can offer services all over the world
   • Why has this happened?
     • Transport
       • Container ships & air transport make trade faster and cheaper
     • Communication
       • IT has made it easier for countries to communicate
     • International Monetary Fund (IMF)
       • Made it easier for state-led investment in many countries
     • TNCs
       • Increased trade between countries
     • Trade agreements
       • Agreements between countries (e.g. EU) make trade between these countries easier
   • Foreign Direct Investment (FDI)
     • The investment which flows from one country to another (often by TNCs)
     • Can involve buying a business/factory in the country or by expanding an existing business
     • Mostly done to take advantage of cheaper labour or resources

5. TNCs: Secondary sector (e.g. Nike)

   • Headquarters usually in a HIC
   • Why TNCs operate globally
     • Reduce labour/land costs
     • To sell inside trade barriers
     • To be close to markets
     • Large workforce
   • TNCs in developing countries
     • Advantages
       • Local people able to earn higher/regular wages
       • Can bring new skills
       • Bring investment, e.g. in new factories or call centres
       • TNCs pay taxes which boost the local economy
     • Disadvantages
       • Low pay for workers
       • Training only in low-level skills
       • Long shifts and poor working conditions/abuse
       • Factories can cause pollution

6. TNCs: Tertiary sector (e.g. BT)

   • BT Case study
     • Outsourcing
       • English speaking foreign nationals take over services like call centres
       • Software development skills in India enable BT to develop
       • Locations with administrative skills manage services like company accounting
     • Why Bangalore attracted investment
       • English speaking Universities provide science and technology graduates
       • It has attracted software development companies, creating India's own 'Silicon valley'
       • It offers reduced taxes
       • Companies don't have to pay as much as they would in the UK
   • How tertiary TNCs differ from secondary TNCs
     • Often administration companies, with call centres relocated to cheaper locations
     • Often chain retail outlets located across the world
     • Working conditions often better than those in the secondary sector
   • The new economy
     • Based on the sale of services
     • Most HICs have moved to it
     • They are 'footloose' - they can locate anywhere

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