A2 Human Geography Economic transition. Cambridge A level Human Geography

1. ECONOMIC
TRANSITION
A2 ADVANCED HUMAN GEOGRAPHY

2. VOCABULARY
Primary sector
Secondary sector
Tertiary sector
Quaternary sector

3. CHAIN OF PRODUCTION

4. TASK 1
Choose any product. Research the manufacturing of this product and describe its chain of production

5. COMPARING EMPLOYMENT STRUCTURES IN HIC
AND LIC’S

7. TASK 2
Choose an HIC and an LIC, using various graphs, compare the employment structure in each country

8. HOW EMPLOYMENT STRUCTURES HAVE CHANGED
IN HIC COUNTRIES
• Many HICs are called POST-INDUSTRIAL SOCIEITIES – due to a decline in their secondary industry- a shift
from manufacturing to services and technological development
• OUTSOURCING is the main reasons for the decline in the secondary industries in HIC
• Increased mechanization has led to fewer workers being employed e.g. spray painting of cars can be
done more efficiently using robots
• Primary sector in HICs e.g. agriculture is highly mechanization so employment decreases
• The quaternary sector is rapidly increasing in importance – 10-15% of all workers in the UK are employed
in the quaternary sector
TASK 3
- Using an example, explain the concept of outsourcing

9. WHAT IS A POST INDUSTRIAL SOCIETY?????

10. IS OUTSOURCING GOOD OR BAD????

11. REASONS OF OUTSOURCING
• HIC companies search for the cheapest location for the manufacturing and the assembling of component
• Cheap labor
• Lower taxes
• Lower locational costs
• Access to resources in the outsourced location
• Lower manufacturing and development costs

12. NEWLY INDUSTRIES COUNTRIES - NIC

14. 1970 – 1980 – 4 Asian tigers
Hong Kong, South Korea, Singapore, and Taiwan
Late 2000s – BRICs
Brazil, Russia , India, China, South Africa
MINTs
Mexico, Indonesia, Nigeria, Turkey
• NICs attract FDIs from TNCs that wish to take advantage of:
• -lower land cost
• -lower wage rate
• -better business environment

15. THE 4 ASIAN TIGERS

16. BRICS

17. EMPLOYMENT STRUCTURE IN LICS
• Dependent on primary activities e.g. Malawi 80% of the working population is dependent on agriculture ,
30% on the manufacturing of agricultural products 20% of the labor force works in the tertiary sector
• In both NICs and LICs employment in the informal sector is very important e.g. in South Africa 10% of the
workforce is employed in the informal sector of the economy
• Many LICs are reliant on resources that are the product of the primary sector. E.g. Malawi - 50% of the
exports are tobacco, 64% of Zambia’s exports are made up of copper and Cobalt
• Reliance on a single commodity makes many LICs susceptible to fluctuations in market prices.

18. HOW EMPLOYMENT STRUCTURE CHANGES –
CLARK-FISHER MODEL
PRE-INDUSTRIAL INDUSTRIAL POST INDUSTRIAL

21. The way people work has also changed in the last 50 years
• Shorter work week
• Longer annual holidays
• Development of the internet has radically changed the way people work
Some companies also exist solely on the internet

22. WHAT IS DEVELOPMENT?????

24. ACCORDING TO THE CAMBRIDGE ENGLISH
DICTIONARY – DEVELOPMENT

25. FACTORS LIMITING DEVELOPMENT IN LIC
- Climate related diseases
- Lack of natural resources
- Resource curse theory
- Landlock countries
- Climatic hazards

26. WHY ARE SOME COUNTRIES RICH AND SOME
COUNTRIES POOR????

27. GLOBAL WEALTH INEQUALITY

28. HOW IS DEVELOPMENT MEASURED???
1981 – West German Chancellor Willy
Brandt
Produced the Brandt report
The report identified the development
gap

29. Development is measured mainly through development indicators: -
Development indicators can be broken up into economic indicators and social indicators
ECONOMIC INDICATORS
- GDP – total value of all goods and services produced in a country over a period of one year
This is the ranking of
countries according to
nominal GDP

30. PROS AND CONS OF USING THE GDP/GNI/GNP AS
A MEASUREMENT OF DEVELOPMENT
• PROS
• It takes the economy of the whole country into
consideration.
• It is a good measure to compare the economies of
different countries in the world
• It is a good way to determine whether the economy
of a country is expanding or contracting.
• It indicates the overall living standards of a
population because as the GDP increases, the living
standards of a population also increases.
• CONS – DISADVANTAGES
• It does not show how equitable a countries income is
distributed
• It does not take into consideration life expectancy,
quality of life, pollution, environmental degradation,
health care, education
• It only includes market transactions, it does not
describe income distribution
• It does not describe what is being produced
• It ignore externalities - e.g. the exploitation of
resources in the production process

31. GNI – Gross national income – income received by a country
Like GDP but also includes income from overseas investments –
As such it is a better measure than GDP
Like GDP it is given as a per capita value. [per person]
It is shown in US$ using a conversion method known as the
ATLAS method (Using exchange rates averaged
out over 3 years – to smooth fluctuations) – method used by the world b
To work out the size of the economy of a country

32. WHAT IS WRONG WITH THESE MEASURES
• Non of them take into consideration PERCHASING POWER PARITY (PPP) i.e. what is this
income actually worth in terms of cost of living

33. PURCHASING POWER PARITY - PPP

34. PPP as a development indicator has some weaknesses
• Some countries have huge disparities with regards to income and equality e.g. in the UAE the expat
population have low purchasing power but the Emiratis have huge purchasing power. They live in luxury
housing paid for by the state and they drive high end vehicles.
• Governments also vary in how they spend the money they earn e.g. some governments spend the money
on funding wars and buying weapons rather than on health and education e.g. DRC
Economist also use other indicators to determine the differences in the cost of living
e.g. iPad Mini index
Big Mac index

35. HUMAN DEVELOPMENT INDEX [HDI]
Research the following
• What is the Human Development index?
• How is it used to measure development?
• What are the advantages and disadvantages of using this as a measure of development?

36. HUMAN POVERTY INDEX [HPI]
- Developed by the united nations to complement the HDI
- It is an indication of the standard of living within a country
- The HPI focuses on – health care, safe water, plentiful food and quality of life.
- A higher value in HPI is an indication of greater poverty

37. HUMAN POVERTY INDEX

38. ROSTOW’S DEVELOPMENT PATHWAY

40. THE GLOBALIZATION OF ECONOMIC ACTIVITIES
DEFINITION – integration of economies, industries, markets, cultures, and policy-making around the world
Initially globalization was focused on trade,FDI,and international capital
flow
Recently globalization has been expanded to include culture,media,
technology,socio-cultural, politicaland even biological
factors.

41. • Globalization and Trade
Global trade has grown since the second world war. This can be attributed to a number of factors
- Liberalization of world trade – world trade organization
- Outsourcing – moving manufacturing to newly emerging economies
- Containerization – China dominates container traffic – 26% of container traffic
originates in China. 97% of all containers are made in China
Read page 351 in your textbook and
highlight the important factors about
containerization

42. • Globalization and communication
- Communication costs have declined – allowing easy daily access via the telephone and internet
- Outsourcing of IT to other countries like India has resulted in greater global work teams
• Globalization and immigration
- The international organization for migration estimates that there are 200 million migrants
- Migrants move from LIC to MIC and HIC
- Entertainers, sports players and the rich move freely from one country to another influencing globalization
• Globalization and transport
- Transportation of people and goods has increased substantially
- Massive growth in the aviation industry
- Emergence of budget airlines e.g. Air Asia
- The growth of air port hubs e.g. Dubai
- In 2013 there were 36 million flights world wide, carrying around 3 billion passengers

43. FOREIGN DIRECT INVESTMENT - FDI

44. • Foreign direct investment – investment from one country into another – usually involves TNC’s and
MNC’s
There are 5 types of FDI’s
1. Horizontal FDI – a company carries out the same activities at home and in the other country e.g. Toyota
2. Vertical FDI – different stages of activities are added abroad e.g. when a manufacturing company
acquires an interest in a foreign company that supplies parts or raw materials for the the company e.g. Apple
(America) Foxconn (China)
3.Forward vertical FDI – an MNC establishing a company in a foreign country near the market e.g.
Hyundai acquiring a car distributorship in the UK
4.Backward vertical FDI – where an MNC acquires a company that produces the raw materials for its
products e.g. McDonalds acquiring a cattle farm that produces the beef for its burgers
5.Conglomerate FDI – FDI that is unrelated to its existing business in the home country e.g. British
petroleum acquiring a cell phone company. Since the two businesses are unrelated this often takes the form of a
Joint venture

45. FDI’s can also take the form of: -
GREENFIELDS ENTRY – MNC establishing a company from scratch on the outskirts of an urban area
(country side)
e.g. Honda established a manufacturing plant on the edge (periphery) of Swindon in the UK
TAKE OVER – MNC/TNC can take over/buy out an existing foreign company e.g. Tata (MNC from India) took
over Jaguar Land Rover from Ford (American MNC)

46. GREENFLIEDS ENTRY

47. REASONS FOR MNC/TNC CHOOSING A
PARTICULAR LOCATION FOR AN FDI
• Low labor cost
• Availability of resources
• Relaxed laws
• Tax breaks
• Political stability
• Size of the domestic market
• Availability of land
• Availability of skilled labor
• Good infrastructure
• Government incentives and investments
CAN YOU THINK OF MORE REASONS?????

48. NEW INTERNATIONAL DIVISION OF LABOR

49. Definition – global division of labor associated with the growth of TNC’s and the de-industrialization of advanced
economies
• More
economically
developed
countries
• HIC’S
Research and
development
• Less
economically
developed
countries
• LIC’s
Production-
manufacturing

50. Core
areas
Increase in
profit
Greater
invention and
innovation
Greater
efficiency
Large scale
production can
take place at a
cheaper cost

51. TNC’S
Large company with subsidiaries
or manufacturing in more than 1
country
Grown by merges and
acquisitions – FDI’s
Most of the manufacturing is
outsourced to 3rd parties in MIC’s
and LIC’s
Over 60 000 TNC’S and they
control 25% of the worlds
market and they employ 1%
of the worlds labour force
e.g. Cadbury and Oreo are
owned by Mondelez (American
TNC)
TNC’s links groups of
countries through
production of goods - build
connections between
people
Control production
and sales to keep
costs low and make
a profit
Many TNC’s
outsource the
design of software
to Indian based
companies in
Mumbai and
Bangalore

52. ADVANTAGES DISADVANTAGES
- Job creation
- Fosters relationships between countries and people
- Brings about cultural exchange
- Develops infrastructure
- They bring FDI to foreign nations
- Allows workers to contribute tax revenue to the
government
- Stimulates growth of local services
- Exploiting host countries
- Paying workers low wages
- Avoid paying corporation tax
- Conducting industrial processes that might be illegal
their home country
- Many TNC’s don’t care about pollution or workers
rights e.g. an American company Union Carbide was
responsible for a chemical leak in Bhopal India that
killed 3000 people in 1984

53. CASE STUDY – TOYOTA – TNC’S
BACK GROUND
- established in Japan in 1937
- 1959 first overseas plant in Brazil
- 2004 – 3rd largest manufacturer of automobiles in the world
- 12 plants and 11 subsidiary companies in Japan
- 51 manufacturing plants in 26 countries
- Employs a quarter of a million people world wide
- 90% of the companies business is automobiles and the other 10% is telecommunications, prefabricated housing,
leisure boats

54. TOYOTA – ENVIRONMENT FRIENDLY
- The Toyota production system – main goal is to eliminate waste
- Reduce pollution and production costs
- Toyota’s 2 factories in the USA have achieved 0 landfill status
- Sells or gives away its waste products to recycling companies.
JIT – just in time – allows production to stop in the event of a problem
JIDOKA – automation with human intelligence. Allows a problem to be detected, production stops, problem is
solved and improved upon. – Self monitoring machines

55. TOYOTA IN EUROPE
1990 – invested more than 7 billion in Europe
Employs over 90 000 people in 9 manufacturing plants in seven European countries
Toyota adapts its vehicles to meet the needs of the European consumer
When the EU was formed, in order to avoid tariffs and quotas, Toyota chose the UK
Why???
- Excellent skilled and flexible work force
- Engineering
- Favorable working practices
- Large domestic market
- Good transport links
- 230 British and European based supply partners
- English was the common language (English is the second language in Japan)

56. TOYOTA’S EXPANSION IN EUROPE
2001 – new factory built in Valenciennes on the border of France and Germany building the Yaris car
2002 - new factory in Poland building transmissions
2005 – new factory in Jelcz- Laskowice Poland making diesel engines
2007 – new factory in St. Petersburg Russia producing Camry models
New plant in Portugal producing Mini buses
New plant in Kolin Czech Republic producing Aygo model

57. NEWLY INDUSTRIALIZED COUNTRIES [NIC’S]

58. EMERGING MARKETS

59. NEW INDUSTRIALIZED COUNTRIES
- MIC’s
- Stronger, developed, export led economy
CHARACTERISTICS
- Increase economic freedom
- Increased personal freedom (liberties)
- Transition from agriculture to manufacturing
- Presence of TNC’s
- Strong FDI’s
- Rapid growth in urban areas due to rural- urban migration

60. EMERGING MARKETS
- Nations in the process of rapid economic growth and industrialization
- Export led economy
- Growing working population
World Bank identified 96 countries as being emerging markets based on:
- GNI per capita
- Economic diversity
- Sophistication of the financial markets
Morgan Stanley Capital investments (MSCI) developed the emerging market index (EMI) and they have identified
Countries as emerging markets

61. Characteristics of emerging markets
- Moving from a closed economy to an open market economy
- Young and growing population – the negative of this is that a young population can lead to more political
instability
- Under-developed infrastructure – in the early stages of infrastructure development
- Increased foreign direct investment – FDI
BRICs [2001]
BRAZIL, RUSSIA, INDIA,CHINA, SOUTH AFRICA
N-11 [2005]
BANGLADESH, EGYPT, INDONESIA, IRAN, MEXICO, NIGERIA, PAKISTAN, PHILLIPPINES, SOUTH KOREA, TURKEY,
VIETNAM
CIVERTS [2009]
COLOMBIA,INDONESIA,VIETNAM,EGYPT,TURKEY, SOUTH AFRICA
MINTs [2011]
MEXICO,INDONESIA,NIGERIA, TURKEY

62. REGIONAL DEVELOPMENT WITHIN COUNTRIES
Disparities can be found within countries in terms of
- Income distribution
- Educational opportunities
- Access to health care
- Job opportunities
- Social services
e.g. US census bureau in 2015 estimated that the top 5% of the population earned over 30% of the US income
Oxfam – wealth of 85 of the riches people in the world is equivalent to the total wealth of 3,5 billion of the poorest
people in the world

63. GINI COEFFICIENT AND THE LORENZ CURVE

65. CONCEPT OF CORE- PERIPHERY

67. UK - North – South divide – riches regions to the south and east [core areas] and the peripheral regions are
found to the North
African countries – core regions are generally found around ports and capital cities
Argentina – southern regions around the capital Buenos Aires – much more prosperous than the regions in the
north. The economy in the south is based on mining and the economy in the north is based on agriculture
HOW DID ARGENTINA TRY TO SOLVE THIS REGIONAL DISPARATY?
- Tax incentives for companies who open branches in the north
- FDI – TNC – Samsung is a major employer in the city of Rio Grande
Switched on places – core
Switched off places – periphery

68. DEPENDENCY THEORY