Economic Transition Flashcards
results of the Manaus free trade zone
The Manaus Free Trade Zone employs 125,000 people in nearly 500 industries (2006). Investment from Samsung to Coca Cola.
Honda has one of its biggest factories outside Japan in Manaus and produces more than one million motorbikes a year both for the Brazilian market and for export.
Unemployment at the time was at 5% compared to a national average of 10%.
explain how increased petrol prices contributed to the deindustrialization of Detroit
The gasoline crises of 1973 and 1979 (which saw a global rise in petrol prices)
lead buyers chose smaller, more fuel-efficient cars made by foreign makers politics].
Efforts to revive the city were unfruitful as the motor companies were reluctant to adapt to the changing market as their sales and market share declined.
Automakers laid off thousands of employees and closed plants in the city, further eroding the tax base.
The lack of economic diversification in the area offered the residents no alternative employment opportunities, leaving to a massive reduction in the population of the area and a vicious cycle.
how did the politics of the 1980s contribute to the deindustrialization of Detroit
President Ronald Reagan supported free trade and globalisation.
This meant US motor industry was opened up to foreign importers, eg Japan, who’s vehicles were cheaper and more efficient than the one ‘General Motors’ had been designing.
People stopped buying US produced cars and opted for more appealing Asian models from companies such as Toyota and Honda.
strategy for reducing regional disparities such as
Bolsa Familia
It provides financial aid to poor Brazilian families; if they have children, families must ensure that the children attend school and are vaccinated (long term poverty). Cash transfers (short term poverty)
If they exceed the total of permitted school absences, they are dropped from the program and their funds are suspended.
Bolsa Familia is estimated to cost only 0.5% of Brazilian GDP.
Assessed every 2 years - CADASTRO UNICO (registry of vulnerable populations)
NE 80% on scheme
why is there a difference in international infant mortality rate?
differences in material resources
(with same knowledge)
difference in the efficiency of social institutions and health systems also enable countries with similar resource levels to register differently
aligns well with other indicators of development
centre west brazil regional difference
commercial agriculture ; large industrial park in Annapolis (fertilisers and pharmaceutical)
low population density 9km/2
land can be used for grazing
climate is semi humid aiding agriculture
criticisms of amazon regional management
nearly impossible to implement
enforcement is nonexistent
what is the new international division of labour
a term that reflects the spatial shift of manufacturing industries from advanced capitalist countries to developing countries
reflects a change in the geographical pattern of specialisation with the fragmentation of many production processes across national boundaries
describe the secondary sector of an economy
manufacturing sector
of raw materials from the primary sector to refine and add value
produces a finished usable product
in this stage of production, natural resources are processed or refined for further use
require factories machinery large amounts of energy and lots of waste materials
divided into light industry and heavy industry
eg metal working and smelting automobile production textile production
why might capital, resources and labour move from the core to the periphery because of URBAN-RURAL MIGRATION
on retirement especially of the more affluent who may innovate or when family or community ties attract a young migrant to return home with their skills and savings
eg establishing a new buisness
role of government influencing the growth of tncs
providing sites for infrastructure
eg export processing zones
fiscal advantage
training and education of workforce
different attitudes to labour conditions and pay rates
less stringent or enforced environmental standards or laws
explain the growth of china as an NIC for political reasons
contrast to south korea
non democratic and authoritarian, centralised decision making
SK: democratic with an active opposition
strong leadership, squashing rebellions and making trade unionism impossible
SK: criminal act “obstruction of buisness” opposes and sues trade union officers that engage in strikes
privatisation, economic resurrecting
50% buisness is owner privately
SK: entrepreneurship vs chinese confucianism
One child policy
reduces child rearing increasing worker pool
five year plans (13) increased reaserch and development
Xhongguan in NW Beijing with prestigious universities and 4,000 businesses (motorola, nokia, IBM)
what is the economic core
the most highly developed region in a country with advanced systems of infrastructure and high levels of investment resulting in high average income
what is outsourcing
the subcontracting of manufacturing and other services to low cost locations
this means the TNC can make higher profit margins by minimising costs
e.g. many TNCs outsource the design of software to designers in Mumbai and Bangalore - the Indian version of Silican Valley
criticisms of bolsa familia
The Catholic Church oppose the concept of money transfers to the poor; suggesting they would spend the money on drink or drugs. However, the money is actually spent on (food, school supplies, clothing, shoes)
A common public complaint is that the scheme discourage the search for employment, encouraging laziness. However, the World Bank finds the opposite: work is not impacted; in some cases adults will even work harder because having this safety net encourages them to assume greater risk
Money transfer is subject to corruption
strategy for reducing regional disparities such as
Manaus Free Trade Zone
before - only 1 warehouse in the port of manuas (1951)
The policy intended to populate the area and to promote regional growth by giving incentives to the manufacturing sector to substitute imports.
By providing tax breaks that encourage industrial development in the area, the government has created urban jobs for labourers who might otherwise have been out logging or starting illegal farms
89% less import duty for industry
no tax on industrial products
55-100% less VAT
what are the geophysical factors explaining the growth of China’s NICs
contrast to south korea
natural resources:
coal oil and gas
SK: iron and limestone are less available
21 if 31 regions in china have faced resource shortages
in china domestic prices rise 10% w year resulting in more imports
locational advantage:
south korea, taiwan, japan, hong king on trade routes
90% or china’s international trade passes through sea ports close to consumer markets
there are few delivery delays, there are lower domestic travel costs
describe the primary sector?
The primary sector comprises extractive industries: agriculture, forestry, fishing, and mining and quarrying.
Employment varies from 5% or less in MEDCs (stable), 20–35% in NICs (decreasing) to over 50% in LEDCs.
For example, the LIC Chad has 80% of its total employment is in agriculture;
compared to the HIC USA which now has less than 4% employment in the primary sector.
Some primary products are sold directly to the consumer; but many go to secondary industries for processing.
why may regional economic convergence never be achieved
Hirschman stressed the effect of counter balancing forces, allowing for economic equilibrium to be established. However, this is unlikely, full convergence may not be reached due to the intrinsic and inalienable disadvantages that the periphery may have (location, accessibility, resource base, environment).
Also, governments must balance the need to reduce disparities with attaining continued national economic growth (and meeting other priorities).
why is the primary sector important to LICs?
High percentage of employment
Provides a high sector percentage of national income eg cash crops or oil revenue
Major means of food production and subsistence
Provides raw materials for processing manufacturing and exporting
why does deindustrialisation happen in MEDC
manifestation of the global shift and development of global economy
emergence and growth of : TNCs and global production networks and supply chains
in the search of comparative advantage and profit maximisation, market penetration
it’s cheaper to manufacture process and assemble in NICs than MEDCS
why might capital, resources and labour move from the core to the periphery because of REMITTANCES
as part of the income of rural urban migrant is sent back to support the family
25% if Kerala’s GDP in southern India
how does employment in the primary sector affect a country
employs people - generated income taxes and export earnings
produces products and raw materials for the secondary sector to process refine pack and convert and add value to your
minerals can provide energy notably coal oil gas etc
this can be used to power development and provide energy for homes businesses and industry
attracts investors eg oil companies
feeds and sustains population
characteristics of emerging markets
traditional economy
emerging markets are often in the process of moving from a closed economy to an open market economy
young and growing population
emerging markets often have younger populations that can lead to long term growth by replacing ageing workers
underdeveloped infrastructure
emerging markets are usually in the early stages of building infrastructure
human factors producing social and economic inequality
colonialism
dependency (trade and aid)
criticisms of Minha Casa Minha Vida
only covers metropolitan areas of Brazil, all state capitals population over 50,000
lack of adequate infrastructure and transport links
where does coca cola do research and development
h Coca Cola have their main base for research and development in Atlanta, USA (similar to Nike in Oregon), this is changing.
Coca Cola is intending to expand research and development to Turkey, and in 2009 opened a $90 million development site in Shanghai, China.
o Tax incentives in Turkey
o HQ in America due to intellectual foundation, high skills
what is deindustrialisation
the process of change in an economy hat makes manufacturing decrease in importance and
which shifts an economy from being domination by manufacturing and processing, to being dominated by tertiary and quaternary sectors
heavy to light manufacturing
what is HDI ranks based on which 3 indicies is
Longevity (life expectancy at birth)
Knowledge (66.6% is adult literacy and 33.3% is mean years of schooling)
Income as adjusted to measure real per person income, including purchasing power adjusted to local cost of living
what are the statistical problems of measuring inequality
gender/cultural/intellectual inequalities within an area masques
outdated or inaccurate data
what are the reasons for spatial organisation of TNCs
profit maximisation
minimising costs
market penetration
proximity to customers
in terms of production transport R&D
what is the opposite of resource endowment
resource curse
if a country has one very valuable resource all the efforts of the country are put into the exploitation
potential development of other industries
and if the resource is in the hands of the ruling elite
the profits will not be shared
why is education a good indicator of development ?
quality of education and female literacy are central to development
UN sees it as vital for sustainable development
the world bank concluded that female literacy y is the fundamental achievement for a developing nation to attain
eg strong link between female literacy and infant and child mortality
people who are literate are able to access medical and other information helping them towards a higher quality of life
what is the opposite of locational advantage
landlocked with hostile neighbours
political element
if no access to the sea, countries may face huge payments to allow foods to be transited
or are engaged in regular conflict holding them back
how does coca cola utilise host market production
Coca Cola participates in host market production: the manufacturing of goods close to their intended markets.
Unlike Nike, which is a highly centralised TNC, Coca Cola gives the bottling companies some regional autonomy; executing plans on a local market level.
‘Strategic Business Units’ price, distribute and market Coca Cola according to the circumstances of the area.
For example, advertising locally in native language.
factors causing economic globalisation
economic policy: deregulation, fundamentalist free market governments of Thatcher and Reagan
trade liberalisation under the WTO
the transport and communications revolution has made possible the management of the complicated networks of production and trade
economies opened up of the soviet union china and india
cumulative causation
the process whereby flows of labour commodities and capitals from the periphery are directed towards the advantages core area
why is nature of death a good way of measuring development
standards of living, healthcare and education infrastructures.
a country with a high death rate in cardiovascular disease = high life expectancy/ good social well-being and economic well-being in the country: governments can afford to either provide healthcare services such as the NHS, free of charge, or, aid schemes such as Obama care.
a country with a high level of malaria or typhoid evidently lacks basic medical infrastructure and vaccination services.
enlighten social issues e.g. FGM shows a weak position of women,
road accidents indicate a high level of car ownership
homicide indicate a high level of conflict or drug presence.
explain the social/cultural dimension of globalisation
western culture has diffused to all parts of the world to a considerable degree through TV cinema internet newspapers magazines
cultural transmission is not only a one way process; the popularity of Islam has increased considerably in many western countries as has Asian Latin America and African cuisine
role of government in the growth of NICS
import tariffs
import substitution
export led growth
education and training
why do GDP per person, GNI per person, GNI per person (PPP) and HDI all not account for individual inequality
inequalities between the elite and the poor are prevalent across HIC and LIC countries. However, they are perhaps most pronounced in the poorer parts of the world, where corruption and embezzlement are prominent.
For example, whilst millions of people live in Dharavi outside the city centre, Indian billionaires reside in central Mumbai, featuring the most expensive home in the world.
Additionally, half of DR Congo lives below the poverty line whilst dictator Mobutu used to reside in the Versailles of the Jungle.
explain international education inequalities
development levels
investment in education (schools teachers equipment)
spending priorities
gender
accessibility and remoteness
reasons for non attendance eg child labour or instability
criticisms of Manuas free trade zone
40 percent decrease in production; tens of thousands of jobs have been lost lost over the past few years.
Vulnerable to economic recession and fluctuations in the world market
Outside of Manaus, within the North Eastern reigon there is little more than dirt tracks and rainforest.
in terms of regional development, what is meant by initial advantages
cumulative causation (Myrdal 1957)
the advantages for a region, which once taken, promotes development growth and future benefits over others
each makes that place more attractive to early development elsewhere
eg resources (minerals or fertile soil or agriculture) locational advanTge (natural harbour)
what are the economic reasons that regional disparities can be difficult to overcome?
size of government debt poverty strength of fiscal institutions diversion of funds inflation diversion of funds towards other priorities
meaning of FDI
direct investment into production in a country by a company located in another country
this may include the investment in new plant or facilities; by buying a company in the target country; expanding operations of an existing buisness in that country
social factors that encourage FDI
language; English in Bangalore as a first or second language encourages western firms (especially in communications e.g. call centres) to invest
literacy/ educated workforce; more prevalent for tertiary or quaternary sectors. Banks, law firms etc travel to offer employment to the brightest and the best – be that Oxbridge in the UK, or Ivy League schools in the US.
labour supply (e.g. One Child Policy means women spend less time child rearing); people are prevented from demanding higher wages or better conditions as they are easily replaceable; rural-urban migration ensures an ever greater labour force
work ethic (Chinese Confucian values – the whole is greater than the individual, faith in the greater good). Bangalore Indians willing to work unsociable hours (through the night) in accordance with British standard time.
define debt relief
partial or total forgiveness of money owed by countries to other countries or supranational bodies / multinational groups.
The benefits are for countries (e.g. HIPCs) unable to pay off their debts where further growth may be damaged by indebtedness.
Some debts may be cancelled so removing this constraint on development and possibly facilitating development projects (depending on management of this and of any new lower-cost loans).
why is international division of labour ‘new’
it emerged recently associated with globalisations
what are the politicsl reasons that regional disparities can be difficult to overcome?
presence of vested interests
corruption
what are the economic, physical, political challenges of measuring inequality
economic:
cost of surveys on a national scale, globally
physical:
accessibility (terrain in mountainous, marshy areas, lack of roads),
scale (e.g. megacities, often with informal settlements)
political:
national statistics not collected (LIC countries do not have a formal census; HIC undocumented peoples),
government interference in outcomes (corruption; attempts to boost international standing or FDI)
how can development be measured by politics
human rights IR (trade links and treaties) Voter turnout free fair regular elections corruption index
benefits of economic development based on the secondary sector
adds value to raw materials
export earnings
skills training
external assistance from TNCS
describe how urban decay is an effect of the deindustrialisation of detroit
Parts of Detroit have been described as looking like farmland, urban prairie, and even complete wilderness.
As population of the area decreased, and the effects of economic downturn were felt, buildings were abandoned: as of 2014, 50,000 of the city’s 261,000 structures were abandoned, with over 9,000 structures bearing fire damage.
Vacant buildings have been magnets for the drug trade, arson and other criminal activity.
In January 2013 47 houses in Detroit were listed for $500 or less, with five properties listed for $1.
why does international spatial division of labour occur
globalisation
TNCs seek to remain competitive and maximise profits by minimising costs
there is a shift in the spatial margins of profitability
