Lesson 4- Global Shifts (Production, Distribution and Consumption)

Question 1

What does the term ‘global shift’ mean?

Answer 1

• Shift of power from the US, Europse to Asia
• Reffers to more investment towards periphery countries which have industrialised
• Countries in Asia do this through Exportvalorisation

Question 2

Global Economic Shifts: The Rise of NEEs

Answer 2

• Simple division is now not so simple – in the last 40 years this has become much more complex. Some NEEs have become HICs.
• These have developed their own industrial commercial bases and their own TNCs – which have then grown and had a global influence.
• This started with the ‘Four Asian Tiger’ economies of Hong Kong, Singapore, South Korea and Taiwan.
• Followed by BRIC economies – Brazil, Russia, India, China (China, the most rapidly growing and prominent)
• More recently MINT economies – Mexico, Indonesia, Nigeria, Turkey.
• Development has come to regions surrounding these new ‘cores’, particularly to South East Asia (and also Latin America).

Question 3

How does Hyundai demonstrate recent global shifts?

Answer 3

• Hyundai in South Korea, is an example of a TNC set up in an NEE.
• South Korea previously manufactured products for TNCs based in other countries.
• Hyundai received investment from the South Korean government because they saw it was a great model for development
  – getting TNCs to invest in their country was good but creating their own was even better.
• South Korea consequently invested in factories, tax breaks, infrastructure (such as roads) for Hyundai, to make their operation profitable.
• In 2021, Hyundai reported sales revenues of $99 billion!

Question 4

Patterns of production 1
- LIT

Answer 4

• Over the past 40 years, manufacturing has become decentralised, moving away from the highly developed economies (HICs) of Western Europe, North America and Japan.
• Lower land and labour costs
• Incentives offered by governments, in the form of tax breaks or special economic zones, have encouraged TNCs to invest and relocate the production side of their business abroad.
• The transfer of technology by TNCs has enabled countries in the developing world to increase their productivity, without raising their wages to the same levels as HICs.

Question 5

Patterns of production 2
-AOAA

Answer 5

• availability of a skilled and educated workforce

- opportunity to build new plants with the latest and most productive technology

• access to large markets without tariff barriers (enabled through trade agreements)
• availability of infrastructure including power supply, roads, ports etc. (though many TNCs are willing to invest in these assets if other conditions are favourable).

Question 6

How can ‘shifts in production’ topic link to the CUE topic of deindustrialisation

Answer 6

• One of the main consequences of this global shift has been deindustrialisation in richer HICs and a subsequent decline and loss of jobs in the manufacturing sector.

Govs have combatted this by:
-encouraging foreign TNCs to invest in deindustrialised regions by offering incentives, such as tax breaks

• Encouraging investment in skills and technology to upgrade manufacturing industry

- adopting more protectionist policies, such as import tariffs, to protect domestic production (this can prove counterproductive).

Question 7

How have people reacted to shifts in production in HIC’s?

Answer 7

• The Brexit vote and the election of Donald Trump symbolize dissatisfaction with globalization and concerns over weakened national sovereignty versus global economic forces.
• Many voters felt that international trade agreements and multinational corporations were undermining local industries and job markets.
• These sentiments drove a desire to reclaim control over economic policies and protect national interests.
• The result was a push for protectionist policies and a shift away from global economic interdependence.
• Both events underscore the complex relationship between global economic integration and the autonomy of sovereign governments.

Question 8

Patterns of consumption/distribution

Answer 8

• Over the past 40 years, global consumption patterns have shifted dramatically, with the rise of the middle class in developing countries driving significant increases in consumer spending
• The United States remains the largest consumer market, with household final consumption expenditure (HFCE) reaching $21 trillion in 2023. Asia, particularly China and India, has emerged as a major consumer market, with projections indicating it will become the world’s largest consumer market by 20301.
• This shift has been fueled by expanding economies and increasing wealth, leading to higher spending on goods and services.
• Businesses are increasingly focusing on these markets, offering customised products and adjusting their supply chains to meet the growing demand1.