Geography - Development EQ3 Flashcards
What are reasons for the global industrial shift?
1) Decisions of TNCs to gain advantage
2) Improvements in space-shrinking technology
3) Competitive government policies
What are the methods for TNCs to gain advantage?
1) Transnationalising operations
2) Outsourcing
3) Access to workers
4) Access to customers
How does transnationalising operations allow TNCs to gain advantage?
Transnationalizing operations allowed firms to take advantage of what different countries have to offer to increase their profits.
How does outsourcing allow TNCs to gain advantage?
They can outsource products from other firms e.g. from supplier firms which specialise in these processes. TNCs purchase bulk orders from more cheaply.
How does access to workers allow TNCs to gain advantage?
a) cheap, abundant, flexible labour for labour-intensive jobs; not highly skilled labour; large number of low-salary workers; lowers cost of production; produce large number of products quickly
b) skilled labour; capital-intensive that require specialised knowledge; e.g. advanced manufacturing
How does access to customers allow TNCs to gain advantage?
a) nature of products; some products e.g. fresh fruits cannot be shipped over large distances; or bulky items; TNC should be located near to the customer
b) customer preferences; some companies locate near their customers to capture the market; or better study their taste and needs
c) avoid import tax; some countries place expensive taxes on imported goods
How does improvements in space-shrinking technologies benefit TNCs?
Transportation technologies, communication technology
How do transportation technologies benefit TNCs?
a) development of commercial jet aircraft; enables large numbers of people to travel over long distances quickly and affordably; staff from different countries can have face-to-face meetings regularly with overseas operations
b) containerisation; simplifies the transport of goods over long distances at reduced cost
How does communication technology benefit TNCs?
a) almost instantaneous and cheap communication of information across large distances
b) invention of mobile phones allow more people globally to access the internet
allow people, goods and information to travel further quickly and affordably; TNCs can spread to other countries and control and coordinate them
How do government policies affect TNCs?
- can encourage or restrict the location of industries
- lowering taxes for foreign companies
- providing purpose-built facilities
- industry-related education programmes for skilled workers
- development of infrastructure (e.g. roads)
- tariffs to protect local industries
- health and environmental regulations (makes it costly)
What is the multiplier effect?
The multiplier effect refers to how an increase in spending ultimately leads to a far bigger change in GDP than the amount spent.
What is the cumulative causation effect?
Cumulative causation occurs when changes within a system are persistent, self-reinforcing and strengthen over time.
What is the trickle-down effect?
The trickle-down theory is the theory that benefits given to people at the top of a system will eventually be passed on to people lower down the system.
