3.4 The global shift has created winners and losers for people ad the physical
environment
The Global Shift
- The global shift refers to the relocation of different types of industry, in particular
manufacturing, towards Asia from western Europe and north America
- The global shift is a result of a combination of off-shoring, outsourcing and new
business start-ups in emerging economies
Benefits of the global shift for Asia
Poverty reduction
- Globally over 1 billion people have escaped poverty - with 680 million being from
China - since 1980
- New global middle class has emerged
Waged work
- Growing middle class wage
- People earn between $10-100 per day working in manufacturing and service sectors
- As education increases wages increase
- As education levels rise the supply of rural labour decrease, wages rise and there is
a shift to more capital intensive production of higher technology products eg cars and
computes which have wage rates of $10 a day (lewis model)
Infrastructure investment
- Economic growth leads to investment in infrastructure
- Development of motorways, high speed railways and airports, usually around SEZs
- This encourages additional FDI
Education and training
- Economic growth generated by the global shift in manufacturing is used to finance
investment in education and training
- China awarded 30,000 PHDs in 2012
- Asian countries play a vital role in the quaternary sector
- TNCs invest in training and skills development to improve workforce productivity and
some skills are transferable
Costs of the global shift to Asia
Unplanned settlements
- Raid urbanisation leads to an increase in unplanned settlements
- Loss of recreational space to built environments
- Eg Dharavi slum in Mumbai is home to 1 million people
Environment and resource pressure
- Loss of forested land due to urbanisation, logging and farming
- Eg since 1990 togo has lost 60% of its forest - created environmental pressures
elsewhere
- Land has been exploited and overused which leads to soil erosion and soil infertility
- China is now looking to countries in Africa to supply mineral resources a demand for
all resources is so high
- Water pollution eg 80% of china's groundwater is polluted
- Manufacturing creates demand for commodities such as raw materials
, - Commodity extraction creates environmental pressure elsewhere eg deforestation for
timber in Togo has meant it has lost 60% of forested area since 1990
Loss of productive land
- Construction of factories, infrastructure and housing occupies land previously used to
generate agricultural output
- Air and water pollution from industrial activity can render more agricultural land
unusable
Outsourcing services to India
Outsourcing services to india has become popular due to many Indian citizens speaking
fluent English and the indian government have invested in infrastructure, such as broadband
capacity, and investment in institutes if technology produced a large pool of IT workers so
has attracted high tech companies eg bangalore is a technology hub
Pros:
- Workers receive a middle class wage
- Other businesses in india have seen more customers and more spending eg in
shopping centres and nightclubs, due to the positive multiplier effect
- Companies using outsourcing in India have seen increased profits
- Indian technologies companies are very profitable eg infosys had revenues of $9
billion in 2015
Cons:
- Exploitation (long hours and paid less than workers in developed countries)
- Employees are demotivated due to repetitiveness of work
- Growing inequality (uneducated people cannot access outsourcing jobs) eg India has
more billionaires per capita than the UK and more people in extreme poverty than the
whole of Africa
Outsourcing manufacturing to China
Since the 1990s, cities like Shenzhen offered investors incentives and a large pool of cheap
labour for manufacturing, since then manufacturing to China has increased. BUT China has
now become less popular due to cheaper labour elsewhere eg Bangladesh, whereas new
technological outsourcing opportunities have moved into China offering higher wages
Pros:
- Production methods + techniques brought in bt TNCs have been adopted by local
companies = economic development
- Increased wages means economic growth is driven by domestic consumption
- Infrastructure expansion eg three gorges HEP dam
- Education is now free and compulsory - literacy rates have risen by 20% since 1980
- Waged work has lifted 680 million chinese people out of extreme poverty since 1980
Cons:
- Exploitation + dangerous working conditions (eg workers poisoned by chemical used
to treat iphone touch screens)
- Foxcon produces iphones outsourced by apple, and operated 70 hour weeks in
Shenzen factory - leading to 14 suicides in 2010
- Environmental degradation
- Wage rates are rising eg honda car factory earn $10 a day BUT this has meant that
low wage manufacturing is shifting to vietnam and Bangladesh
-
environment
The Global Shift
- The global shift refers to the relocation of different types of industry, in particular
manufacturing, towards Asia from western Europe and north America
- The global shift is a result of a combination of off-shoring, outsourcing and new
business start-ups in emerging economies
Benefits of the global shift for Asia
Poverty reduction
- Globally over 1 billion people have escaped poverty - with 680 million being from
China - since 1980
- New global middle class has emerged
Waged work
- Growing middle class wage
- People earn between $10-100 per day working in manufacturing and service sectors
- As education increases wages increase
- As education levels rise the supply of rural labour decrease, wages rise and there is
a shift to more capital intensive production of higher technology products eg cars and
computes which have wage rates of $10 a day (lewis model)
Infrastructure investment
- Economic growth leads to investment in infrastructure
- Development of motorways, high speed railways and airports, usually around SEZs
- This encourages additional FDI
Education and training
- Economic growth generated by the global shift in manufacturing is used to finance
investment in education and training
- China awarded 30,000 PHDs in 2012
- Asian countries play a vital role in the quaternary sector
- TNCs invest in training and skills development to improve workforce productivity and
some skills are transferable
Costs of the global shift to Asia
Unplanned settlements
- Raid urbanisation leads to an increase in unplanned settlements
- Loss of recreational space to built environments
- Eg Dharavi slum in Mumbai is home to 1 million people
Environment and resource pressure
- Loss of forested land due to urbanisation, logging and farming
- Eg since 1990 togo has lost 60% of its forest - created environmental pressures
elsewhere
- Land has been exploited and overused which leads to soil erosion and soil infertility
- China is now looking to countries in Africa to supply mineral resources a demand for
all resources is so high
- Water pollution eg 80% of china's groundwater is polluted
- Manufacturing creates demand for commodities such as raw materials
, - Commodity extraction creates environmental pressure elsewhere eg deforestation for
timber in Togo has meant it has lost 60% of forested area since 1990
Loss of productive land
- Construction of factories, infrastructure and housing occupies land previously used to
generate agricultural output
- Air and water pollution from industrial activity can render more agricultural land
unusable
Outsourcing services to India
Outsourcing services to india has become popular due to many Indian citizens speaking
fluent English and the indian government have invested in infrastructure, such as broadband
capacity, and investment in institutes if technology produced a large pool of IT workers so
has attracted high tech companies eg bangalore is a technology hub
Pros:
- Workers receive a middle class wage
- Other businesses in india have seen more customers and more spending eg in
shopping centres and nightclubs, due to the positive multiplier effect
- Companies using outsourcing in India have seen increased profits
- Indian technologies companies are very profitable eg infosys had revenues of $9
billion in 2015
Cons:
- Exploitation (long hours and paid less than workers in developed countries)
- Employees are demotivated due to repetitiveness of work
- Growing inequality (uneducated people cannot access outsourcing jobs) eg India has
more billionaires per capita than the UK and more people in extreme poverty than the
whole of Africa
Outsourcing manufacturing to China
Since the 1990s, cities like Shenzhen offered investors incentives and a large pool of cheap
labour for manufacturing, since then manufacturing to China has increased. BUT China has
now become less popular due to cheaper labour elsewhere eg Bangladesh, whereas new
technological outsourcing opportunities have moved into China offering higher wages
Pros:
- Production methods + techniques brought in bt TNCs have been adopted by local
companies = economic development
- Increased wages means economic growth is driven by domestic consumption
- Infrastructure expansion eg three gorges HEP dam
- Education is now free and compulsory - literacy rates have risen by 20% since 1980
- Waged work has lifted 680 million chinese people out of extreme poverty since 1980
Cons:
- Exploitation + dangerous working conditions (eg workers poisoned by chemical used
to treat iphone touch screens)
- Foxcon produces iphones outsourced by apple, and operated 70 hour weeks in
Shenzen factory - leading to 14 suicides in 2010
- Environmental degradation
- Wage rates are rising eg honda car factory earn $10 a day BUT this has meant that
low wage manufacturing is shifting to vietnam and Bangladesh
-
