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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

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)

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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.

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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.

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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.

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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.

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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).

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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

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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

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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.

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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.

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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

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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 tax-

free 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.

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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.