Globalisation and Structural Economic Change

Question 1

Cycle of decline stages

Answer 1

• [Inner city area]
• Old factories close
• Land becomes derelict
• Jobs lost
• People leave the inner city
• Fewer services needed; shops and schools close
• More jobs lost
• More people leave
• People who stay are mainly elderly or low income groups
• Little money is put into the area so it becomes more run down
• More crime and vandalism
• Quality of life gets worse

Question 2

Positive impacts of economic change on people and places in ACs

Answer 2

• Cheaper imports of all relatively labour-intensive products can keep cost of living down and lead to a buoyant retaining sector
• Greater efficiency apparent in surviving outlets. This can release labour for higher productivity sectors (this assumes low unemployment)
• Growth in LIDCs may lead to a demand for exports from ACs
• Promotion of labour market flexibility and efficiency, greater worker mobility to area with relative scarcities to labour should be good for the country
• Greater industrial efficiency should lead to development of new technologies, promotion of entrepreneurship and should attract foreign investment
• Loss of mining and manufacturing industries can lead to improved environmental quality

Question 3

Negative impacts of economic change on people and places in ACs

Answer 3

• Rising job exports lead to inevitable job losses. Competition-driven changes in technology add to this
• Job losses are often of unskilled workers]
• Big gaps develop between skilled and unskilled workers who may experience extreme redeployment differences
• Employment gains from new efficiencies will only occur if industrialised countries can keep their wage demands down
• Job losses are invariably concentrated in certain areas and certain industries. This can lead to deindustrialisation and structural unemployment in certain regions
• Branch plants are particularly vulnerable as in times of economic recession they are the first to close, often with large numbers of job losses

Question 4

Positive impacts of economic change on people and places in EDCs and LIDCs

Answer 4

• Higher export-generated income promotes export-led growth - thus promotes investment in productive capacity. Potentially lead to a multiplier effect on the national economy
• Can trickle down to local areas with many new highly paid jobs
• Can reduce negative trade balances
• Can lead to exposure to new technology, improvement of skills and labour productivity
• Employment growth in relatively labour-intensive manufacturing spreads wealth, and does redress global injustice (development gap)

Question 5

Negative impacts of economic change on people and places in EDCs and LIDCs

Answer 5

• Unlikely to decrease inequality- as jobs tend to be concentrated in core region of urban areas. May promote in-migration
• Disruptive social impacts, e.g. role of TNCs potentially exploitative and may lead to sweatshops. Also branch plants may move on in LIDCs too, leading to instability (e.g. in the Philippines)
• Can lead to overdependence on a narrow economic base
• Can destabilise supplies, as people give up agriculture
• Environmental issue associated with over-rapid industrialisation
• Health and safety issues because of tax legislation

Question 6

The multiplier effect example

Answer 6

• A new factory is set up
• This creates jobs
• This creates more local wealth which is spent at local shops
• This creates more tax for the council/government
• This is reinvested back into local infrastructure
• The area is now more appealing to even more investment
• [The cycle continues]