EQ3 7.9 CHALLENGES TO SUPERPOWERS Flashcards
what does deindustrialisation cause
In the developed world, deindustrialisation has caused social and environmental problems as manufacturing industries have declined.
deindustrialisation
In the US and the UK, economic restructuring has taken place as deindustrialization has reduced the importance of the secondary sector and there has been huge growth in the tertiary and quaternary sector.
This is because of the global shift which has meant that manufacturing has moved abroad to benefit from cheaper labour costs, for example, in China
what is economic restructuring
Economic restructuring refers to the changing importance of different economic sectors.
structural unemployment
Unemployment was a key problem for the UK during the 1980s where 240,000 people worked in the UK’s coal mines. By the 1990s however, the closure of many mines (as a result of cheaper imports) meant that only 13,000 people worked in mining.
These people are unable to easily get jobs in other sectors because of their lack of skill.
We say that these people are ‘structurally unemployed’
what happened in Detroit, USA
Detroit was the 4th largest city in the USA during its peak as a car producing city, with Ford and General Motors operating there.
With globalisation, car production moved to Japan where costs were cheaper.
As a result, the spiral of decline set in and in 2013, the city was declared bankrupt.
In 2017, Detroit was still losing 0.5% of its population each year.
what did detroit produce
Detroit’s rise was driven by the Ford and General Motors factories in the city. When they outsourced production to other nations, the main employment sector of the city shrank. Outsourcing and the automation of the production line destroyed jobs in Detroit.
debt as an economic problem for superpowers
Large government and household debt is a major problem facing existing superpowers.
what caused private or household debt
The global financial crash of 2007-2008 was the result of actions by US and European bank lending to homeowners.
People were given loans by the banks that they couldn’t really afford and would struggle to repay.
This led to the banks having debt that they couldn’t repay and that became worthless when the property bubble burst.
Because of globalization and the interdependence between different companies and countries, the collapse of the global banking system affected every global bank.
Generally, large recessions and financial crises are preceded by a growth in debt.
what caused government debt
In the UK, some banks (e.g. Lloyds) had to be bailed out by the government. In other words, the government had to give them money to stay in business. The Royal Bank of Scotland was nationalized so it was taken into government control.
The global economic crash also meant that many countries have debt that makes up a significant part of their total GDP and will do so for a long time.
recorded government debt
As well as bailing out the banks, governments had to spend more money on unemployment benefits during the recession.
It is estimated that in 2017, the UK Government recorded a government debt of 85.30% of GDP.
However, many other European countries have much higher debt levels. Italy has an estimated 132.6% of GDP debt.
the social effects of debt
In recessions and economic downturns, there are fewer jobs available.
Suicide, depression and crime are all correlated with hard economic times. This means that they tend to rise when times are hard.
For example, many towns in Northern England saw significant rises in mental health issues linked to the closure of the mines which employed the majority of the population.
Economic Problems for Superpowers - Military Cost
Maintaining a blue water navy and staying a global military power is expensive.
costs of military
With countries facing high levels of debt and austerity to try and bring down this debt level in 2018, some super powers are starting to question whether they need to spend so much on defence.
In 2016-2017, the UK’s had the world’s fifth largest defence budget (US$56 billion) but this only accounted for 10% of the US military budget.
This money is used for naval, nuclear, air power and intelligence services.
costs of intelligence
Arguably, intelligence services are becoming more important as government budgets are increasingly directed towards anti-terrorism work.
But, this is labour-intensive and expensive.
costs of being a nuclear power
Spending on nuclear power is one of the most debated. The UK currently pays to keep nuclear weapons that may never be used.
Some people question whether it is worth it. Others argue that it is necessary as a deterrent for future conflict.
In 2016, the UK Parliament voted to replace the UK’s Trident nuclear deterrent at an estimated cost of over $20 billion.
