3.4 - The Global Shift

Question 1

What is the global shift

Answer 1

the relocation of different types of industry, especially manufacturing to Asia from Europe and North America, particularly, the shift of manufacturing jobs to China and the shift of service and administration jobs to India.

Question 2

What caused the shift

Answer 2

• Lowering of trade barriers
• Off shoring and outsourcing
• Opening up to FDI

Question 3

What is the history of the shift

Answer 3

• 1990: china gained its reputation as the workshop of the world due to its fewer environmental regulations
• 2000 – 2010: conditions improved for workers, disposable income tripled
• 2010: workers walked off production line leading to wage increases of between 30%-65%
• Onwards: planning by the government helped companies receive better quality products maturing the economy rapidly

Question 4

What are the benefits of the shift

Answer 4

• waged work: factory work provides provides a reliable regular wage compared to agricultural work which can be as low as $2 - $3 a day. Overtime as education levels rise and supply of rural labour decreases, wages rise and there is a shift to production of higher technology products with wages of $10 a day.
• poverty reduction: since 1990 1 billion people have been lifted out of extreme poverty (less than $1.25 a day) mainly due to the shift. Incomes are rising due to waged work in factories. 600 million Chinese people were lifted out of poverty between 1992 and 2015.
• education and training: TNC’S invest in training and skills development to improve workforce productivity and some skills are transferable. This can allow workers to continue to get higher paying jobs. Households use higher income to pay more tax improving infrastructure such as healthcare and education.

Question 5

What are the costs of the shift

Answer 5

• unplanned settlements: new job opportunities promotes rural to urban migration, this leads to rapid urban population growth which outpaces formal housing construction leading to unplanned settlements.
• environmental pressure: Industrial activity can produce serious air and water pollution. Puts pressure on natural resources, especially water supply, as new factories and offices demand resources causing environmental degradation as well as increasing health risks.
• cultural erosion: rapid loss of tradition such as local food and dress as the pace of urban and industrial change is so rapid
• detrimental for mental health: Workers may be required to live in dormitories with restrictions on their free time. They would be separated from their families, with their children staying with grandparents in the village.

Question 6

Flint town case study

Answer 6

• At the beginning of the 1900’s flint became the key hub of the GM industry, whilst the factories in Flint produced a wide range of car parts as well as vehicles themselves, causing Flints economy to boom providing many jobs to the local community in turn improving their quality of life.
• After WW2 there was a gradual decline in Flints significance in the automotive industry due to a rise in competition from foreign companies.
• This caused immense deindustrialisation in Flint as the community were hit with a large number of layoffs increasing unemployment and catalysing the rise in flints poverty epidemic.
• The main cause of the deindustrialisation in Flint is due to the global shift made by TNCs. This is where large corporations move their production factories abroad where cheaper labour is available due to lax legislation on labour e.g. No minimum wage or child labour laws. This includes outsourcing and offshoring.
• This meant that the 80,000 people the GM industry employed in its peak during the 1950’s were soon made unemployed. As of 2024, GM employs approximately 5,000 to 6,000 people in Flint

Question 7

Impacts of the shift in flint

Answer 7

• The decline of the GM industry and outsourcing of jobs lead to the loss of a major economic base, an epidemic. As a result, the public services experienced a lack of funding which increased crime and in turn reduced quality of life. By the 2000s, Flint had one of the highest unemployment rates in America, this contributed to a decrease in household income and worsening poverty levels.
• Due to the lack of job opportunities many residents left Flint in order to find employment. Between 1960 and 2010, Flint’s population shrank by over 50%, from around 200,000 to under 100,000. This population decline lead to an increase in empty homes and abandoned buildings. There was also a large number of empty factories which created challenges for local governments having to maintain them.
• Deindustrialisation caused a significant increase in poverty in Flint. By the 2000s, nearly 40% of the population lived below the poverty line. High unemployment led to social instability. Also, Flint experienced a rise in crime. The lack of jobs and the stress on public services contributed to this increase. Furthermore the decrease in funding for the police meant that it was difficult to try and keep this under control.
• High levels of lead in the water, combined with stress, poor nutrition, and limited access to healthcare, led to increased rates of health problems such as lead poisoning. The long-term decline and hardship took a psychological toll on residents. Economic instability, crime, and environmental issues contributed to a decline in overall quality of life and mental health problems in Flint.

Question 8

China case study

Answer 8

• China opened up to globalisation in 1978 with Deng Xiaoping’s Open Door Policy. Joined WTO in 2001.
• Low wages attract initial FDI in the 1990s for cheap toys and textiles. Since 2000s also higher tech like computers and cars.
• Waged work lifted 680 million Chinese people out of extreme poverty since 1980.
• Extreme poverty rate in China has fallen from 84% in 1980 to 10% in 2016 (though 20% still earn less than $2 per day, which the World Bank classes as poverty.
• Wage rates rising - workers in Honda car factory (Japanese TNC) earn $10 per day. Low wage manufacturing shifting to Vietnam and Bangladesh.
• Education free and compulsory for 5-15 year olds. Literacy rate risen from 20% in the 1950s to 84% in 2015.
• 7 million university graduates in 2014, 15x higher than in 2000.
• Car ownership increased from 1% in households in 2000 to 20% in 2015.
• Technology transfer as local companies adopt TNC techniques. New Chinese TNCs, like Huawei smart phones.

Question 9

Environmental impacts of the shift

Answer 9

TNCs look for low-cost locations for their factories and a lack of environmental and health and safety regulations is an attractive feature. In china this has has many impacts:

• Since 1980 China has undergone an industrial revolution similar to the one the UK underwent from 1770 to 1900.
• Severe air pollution in cities like Beijing, where air pollution is regularly above the World Health Organisation safe limits.
• Beijing’s six million cars and coal-burning power stations are the source of this pollution, close to 50% of the world’s coal is burnt in China.
• Around 50% of China’s rivers and lakes and 40% of its groundwater is polluted - so much that it is unsafe to drink untreated.
• Over 20% of China is subject to desertification and severe soil erosion, which can create major dust storms.

Question 10

What is deindustrialisation and its impacts

Answer 10

This is the decline of important manufacturing industries in a region, this has many impacts:
- Dereliction resulting from the closure and abandonment of factories, shutting down of services and neglected housing
- Depopulation as large numbers of people migrate from the deteriorating urban areas
- Rising crime in deprived urban areas
- High unemployment as a result of factories closing, losing manufacturing jobs