4.6 The global Shift: winners and losers Flashcards
In 2022, what was the GDP of:
China
the US
the UK?
China: $19.9 trillion
US: 25.3 trillion
UK: $3.4 trillion
What is the global shift?
The international relocation of different types of industrial activity, especially manufacturing. Many have moved from Europe and North America to Asia and South America
How has trade between Europe and America compared between that of America and Asia
By 2013, the value of two way trade between the Americas and Asia was nearly double that of the Americas and Europe
Why has there been a global shift?
-Asian nations allowed foreign TNCs in (open door policy)
-been relocated to Asia by TNCs, due to cheaper labour, land and natural resources
-TNCs can exploit tax regulations
-High populations have made Asia an attractive emerging market for TNCs to invest in
-With TNC investment and trade these large markets have also started to become more prosperous through technology transfer, FDI and the multiplier effect
When did FDI increase significantly in China and India?
What about Eastern Europe?
Although restrictions on FDI were relaxed in 1978 and 1991 respectively, these flows did not increase significantly for another 10-20 years.
In Eastern Europe, it wasn’t until a decade after the collapse of communism that FDI took off, after many former communist countries joined the EU in 2004
Why is China known as the workshop of the world?
The world’s largest recipient of FDI since 2000
Its share of global trade by value rose from 3% in 2001 to 10% by 2013.
Rapid industrialization has been accompanied by urbanization.
By 2015, China had 150 cities with populations of over 1 million- up from 30 in 2000
What are the four benefits of the global shift in China?
Investment in infrastructure
Reduction in poverty
Better education and training
Increases in urban incomes
Discuss the benefit of investment in infrastructure in China
By 2016:
-China has the world’s longest highway network
-its rail system has reached 100,000km in length
-Shanghai’s manglev had become the world’s fastest commercial train service - the 30km journey between Shanghai’s airport and the CBD takes just 8 minutes and reaches 431 km/h
-82 airports have been built since 2000, so they now have 250, with eight of the world’s top 12 airports by freight tonnage
Discuss the benefit of reduction in poverty in China
By 2022, an estimated 45% of the Chinese population will be classed as urban middle class- this is higher than the entire population of USA. Sales of consumer items have now rocketed e.g. the Chinese bought more TVs and laptops in 2013 than Americans
Between 1981 and 2010, China reduced the number of people living in poverty by 680 million. It has also reduced its extreme poverty rate from 84% in 1980 to just 10% in 2016. Although 20% still live on less than $2 a day, many cope thanks to remittance payments from families
Discuss the benefit of increases in urban income in China
As a result of China’s one-child policy, employers have had to pay higher wages to recruit staff. Urban incomes have risen by 10% a year since 2005. By 2014, they averaged US$9000 a year. While there are still large variations within this, they are still paid much higher than what they would of earnt in the countryside- plus their terms and conditions include a 40 hour week, with higher overtime rate and holiday pay.
Discuss the benefit of better education and training in China
Education is free and compulsory between the ages of 6 and 15. 94% of Chinese over the age of 15 are now literate compared to just 20% in 1950
In 2015,15 times the number of students graduated from university than that of 2000.
Created a skilled workforce for Chinese’s expanding knowledge economy
However, there is a big rural-urban divide with per capita spending education varying widely from £2200 in Beijing to £300 in Guizhou
What are the six costs of the global shift within China?
-The loss of productive farmland
-An increase in unplanned settlements
-Pollution and health problems
-Land degradation
-Over exploitation of resources and resource pressure
-Loss of biodiversity
Discuss the cost of the loss of productive farmland in China
Over 3 million hectares of arable farmland (the size of Belgium) has been polluted with heavy metal
12 million tonnes of grain were polluted in 2014
The increased use of fertilisers and pesticides has led to farmland near rivers being taken out of production
Discuss the cost of an increase in unplanned settlements in China
Need for rapid increase in urban housing has resulted in the increase of building informal homes. Land prices have rocketed and made decent housing unaffordable. Two types of illegal housing have emerged
-Expanded housing in villages located on the edge of cities. Villagers add stories to their house and then rent out the extra space to migrant workers
-Farmland (owned collectively under communism) is privately developed for housing without permission
Discuss the cost of pollution and health problems in China
-China’s air pollution is so bad that the capital, Beijing, has frequent pollution alerts
-70% of China’s rivers and lakes are now polluted. The water in 207 of the Yangtze’s tributaries is not even fit for irrigating farmland
-100 cities suffer from extreme weather shortages and 360 million Chinese don’t have access to safe drinking water. Tap water in Chongqing contains 80 out of 101 forbidden toxins under Chinese law
-Chinese air pollution kills an average of 4400 a day
Discuss the cost of land degradation in China
Despite having 22% of the world’s population, China only has 7.2% of its farmland. Over 40% of its farmland is now suffering from degradation. The rich black soils in the north are eroding, while in the south the soils are suffering from acidification caused by industrial emissions. Land clearance has also led to deforestation and over-grazing
Discuss the cost of over-exploitation of resources and resource pressure in China
Its resources cannot keep up with its demand, so the Chinese government has sought additional resources in Africa and Latin America. Amazonian rainforest has been cleared in Ecuador, the Cerrado savannah has been converted to soy fields in Brazil, and oil fields are in development in Venezuela’s Orinoco belt- all for China’s consumption
Discuss the cost of loss of biodiversity in China
In 2015, the WWF found that China’s terrestrial vertebrates had declined by 50% since 1970. The main cause was habitat loss and the degradation of the natural environment by economic development
Why have US and UK businesses outsourced so much work to India, and the city of Bangalore in particular?
Many Indian citizens are fluent English speakers. This is a legacy of British rule, which ended in 1947
Broadband capacity is unusually high in Bangalore. This city is a long established technology hub, thanks to early investment in the 1980s by domestic companies such as Infosys and foreign TNCs such as Texas instruments
What are 3 examples of companies who have set up call centres in Bangalore
Dell
Intel
Yahoo
What are the benefits of outsourcing call centres to India?
-India’s call centre workers earn good middle-class wages by Indian standards. Nightclubs and 24 hour shopping malls in Bangalore testify to the relatively high purchasing power of the new ‘techno-elite’ typically earning 3500 rupees (£40) a week
-Indian outsourcing companies have become extremely profitable. Founded in 1981, Infosys had revenues of US$9billion in 2015.
What are the costs of outsourcing call centres to India?
-some call centre workers complain they are exploited
-Their work can be highly repetitive. Business is often conducted at night- due to time zone differences between India and customers in the UK and US- sometimes in ten hour shifts, six days a week
-The gap between the rich and poor has widened sharply. India has more billionaires than the UK, yet it also has more people living in absolute poverty than all of Africa. In 2015, half a billion Indians lived in homes that lacked a toilet
What are the four factors which have been critical in Bangalore’s growth?
-historic role of the university in providing well-qualified graduates
-the growth in outsourcing from western economies: British airways led an early movement to India by moving its accounting jobs to India in 1996, where are the time, wages were 10% of those in London
-The establishment of Bangalore as a special economic zone
-the caste system
What have been the affects of making Bangalore a SEZ
In theory, these zones should create a mass of high-earning, high-spending people. The benefits should therefore be increased tax income for the development of infrastructure. However, in reality, the income for Bangalore’s authorities has been outpaced by its rapid growth; attracted by low taxes, company growth has been greater than the speed at which new roads, water or energy networks can be provided
