3.b. Processes of economic change can create opportunities for some while creating and exacerbating social inequality for others.

--The influence of global connections and globalisation in driving structural economic change in places, such as de-industrialisation and the rise of the service industry. --How structural economic change impacts patterns of social opportunities and inequality for people and places. --How cyclical economic change (booms and recessions) has varied impacts on social opportunities and inequality. --The role of government in reducing, reinforcing and creating patterns of social inequality in places through spending or cuts in key services such as availability and accessibility of education, healthcare, infrastructure and community services.

What has globalisation led to in manufacturing?

• Globalisation has led to a global shift in manufacturing

• Global shift = the relocation of manufacturing production on a global scale

Explain how globalisation has led to a global shift in manufacturing

• 50 years ago, most manufacturing was concentrated in Western Europe and North America

• Raw materials were exported from countries such as Zambia and Brazil and manufactured elsewhere

• From the 1980s the New International Division of Labour gathered pace, leading to labour-intensive factories being created in newly industrialised countries in East Asia and Latin America

• Containerisation and bulk handling brought down relative costs dramatically, and so contributed to locational changes

Positive effects of global shift in manufacturing for ACs

• The tertiary and quaternary sectors will grow

• Imported goods are cheaper to buy as they come from LIDCs, resulting in a lower cost of living

• Improved environmental quality due to loss of mining industries

Negative effects of global shift in manufacturing for ACs

• Deindustrialisation means that jobs will be lost, leading to unemployment and economic decline in previous industrial regions (e.g. North of England)

• There will be greater inequality between high-skilled and low-skilled workers and between different regions of ACs

• Jobs are exported to LIDCs, leading to job losses

Positive effects of global shift in manufacturing for EDCs and LIDCs

• Employment will increase in urban areas
• Wages are higher in manufacturing industry than agriculture
• High export-generated income promotes export-led growth
• Reduces trade deficit
• Causes exposure to new technology

Negative effects of global shift in manufacturing for EDCs and LIDCs

• Jobs concentrated in urban areas, meaning that rural citizens will be 'left behind' and will experience unemployment, resulting in lower incomes and a poorer quality of life
• As jobs are concentrated in urban areas, there will be increased rates of rural-urban migration, which will cause overcrowding and the development of squatter settlements in inner city regions
• Negative impact on the environment through air and water pollution in factories
• Poor working conditions, low wages, and exploitation
• Fewer people working in agriculture, possibly leading to food insecurity

Positive effects of economic change on a place

• Expansion of local job opportunities and population
• Establishment of large manufacturing plant/business
• Improvement of physical and cultural infrastructure
• Higher tax base increases local government spending power
• Substantial rise in incomes
• Inflow of business and capital to satisfy local demand

Boom

• Period of rapid economic expansion resulting in higher GDP, lower unemployment, and rising asset prices

Recession

• Significant decline in economic activity spread across the economy, conventionally lasting more than two consecutive quarters and affecting GDP, income, employment, industrial production, and retail sales

Depression

• If a recession lasts a long time or involves a big reduction, it can lead to a depression

The Great Depression

• The Great Depression ended just before WW2. It was partly a result of consumer borrowing to buy products such as fridges and washing machines. Many people could not repay their loans, contributing to banking losses and defaults.
• The US fixed its currency to gold, and the Great Depression spread across the globe, affecting countries such as Germany and France. Some cite the economic crisis as a factor contributing to Hitler's rise to power.
• WW2 helped end the Great Depression because manufacturing was necessary for the war effort.

What are the impacts of a recession?

• Fall in GDP, investment spending, household incomes, jobs in the service industry
• Rise in unemployment and bankruptcy

2008 Great Recession

• People were given subprime mortgages even if banks knew they might not be able to pay them back, contributing to the housing market boom in the early 2000s.
• In 2007 the housing bubble burst, meaning people could no longer easily invest in real estate, sell their homes, or pay back their loans.
• Resulted in approximately 8 million job losses in the US.

COVID impact on UK economy

• In 2020 the UK's GDP dropped by around 20% during the first lockdown period.
• This was a greater quarterly drop than in 2008.

Why is technological innovation not evenly distributed?

• During a boom, innovation is not evenly distributed.
• LIDCs and EDCs, and generally less developed places even within ACs, may provide raw materials but lack the infrastructure for technological breakthroughs.
• Capital is concentrated in a few small pockets (e.g. Silicon Valley), meaning start-ups in other locations struggle to secure funding.
• Brain drain happens in LIDCs, meaning global inequality in innovation is balanced more in favour of ACs, where skilled workers from LIDCs migrate.
• Colonial legacies mean some countries are dependent on primary-sector exports rather than high-tech industries.
• In LIDCs there may be weak intellectual property (IP) protection.
• Unreliable infrastructure in LIDCs and low levels of government spending.

Example of an area with technological innovation

• Silicon Valley, US, is located in the San Francisco Bay Area, California.
• It is home to many tech corporations and start-ups hoping to be the next Facebook.
• There is a large availability of venture capital, which funds the development of risky innovations.

How can cyclical economic change (booms and busts) have varied social impacts?

• Household income varies in periods of boom and recession, leading to differences in access to health and education services and leisure activities.
• Social impacts of booms and recessions have disproportionate effects on disadvantaged groups. Low-income households are less able to withstand periods of unemployment compared to more affluent counterparts.
• Social impacts of economic growth, like new job opportunities and increased household income, can help raise standards of living and lift people out of poverty.
• There is a strong link between unemployment and bad health during periods of recession.

What is the government's role in reducing, reinforcing, and creating patterns of social inequality?

• Governments use decision-making and resource allocation to aim to reduce poverty and inequality.
• They can also reinforce and create inequality by cutting spending in key services.

Role of government in reducing inequality - education

• In 2014, the free school meals programme began, giving free meals to pupils in Reception to Year 2.
  • This helps reduce inequality by ensuring all children have access to a balanced diet.
  • This helps improve health, reduce costs for low-income families, and encourage better performance in school.
• In 2025, the government announced £3 billion to be spent on special educational needs and disabilities (SEND) expansion in mainstream schools.
  • This means young people do not need to travel as far from home to have their needs met, as 50,000 specialist places are planned in schools, for example sensory rooms.
  • Providing facilities locally reduces reliance on long-distance transport, stress and costs while increasing social inclusion.

Role of government in reducing inequality - healthcare

• The NHS provides free healthcare at the point of use, paid for mainly through taxation.
• Initiatives like Core20PLUS5 target the 20% most deprived people and other underserved groups, reducing healthcare inequality.

Role of government in reducing inequality - infrastructure

• Jobs are created when new infrastructure is needed, in construction and planning industries.

Role of government in reducing inequality - community services

• The government is using the £5 billion Pride in Place programme by 2035, providing nearly 250 areas with up to £20 million each to improve local community services and infrastructure.

Role of government in reinforcing inequality - education

• The 20% most deprived secondary schools saw a 14% fall in spending per pupil between 2009 and 2019.
• There is already a North-South divide in the UK, and this is evident in education too. The disadvantage gap for pupils in London is 10.2 months, whereas in the East Midlands it is 21.7 months.

Role of government in reinforcing inequality - healthcare

• Unequal healthcare funding and provision can reinforce inequality.
• Rural areas are short of GPs compared to urban areas.

Role of government in reinforcing inequality - infrastructure

• HS2 was announced in 2009 and has cost the government billions of pounds.
  • It mainly connects major cities, potentially reinforcing rural-urban inequality.
• The NHS is undergoing a significant shift to digital services, with the NHS app becoming a way to access healthcare.
  • This can leave behind elderly residents who may be less comfortable using technology.

Role of government in reinforcing inequality - community services

• Cuts to local authority spending have affected children's centres, youth centres and libraries.
• In October 2020, the pension age rose to 66.
  • This increased the number of people who needed to work for longer before receiving their state pension, particularly affecting those on lower incomes.

What is the multiplier effect?

• The idea that an injection of investment creates further wealth and jobs. However, in deindustrialising ACs, this works in reverse as a negative multiplier effect.

How does deindustrialisation trigger the negative multiplier effect?

• When a major manufacturing plant or mine closes, thousands of direct jobs are lost.
• Local workers lose their disposable income, meaning they spend less in local shops, pubs, and services.
• This leads to a secondary wave of service-sector job losses in the local economy.
• Local government tax revenues shrink because unemployment rises and people relocate, forcing cuts to local public services and infrastructure.

Emigration during deindustrialisation

• Ambitious, skilled, and educated young people migrate away from post-industrial regions (e.g. the North of England) towards core urban hubs like London, where quaternary and service jobs are concentrated.
• Those left behind are disproportionately older, less mobile, and experience higher rates of long-term illness and deprivation, entrenching regional inequality.

What is the rise of the service industry?

• A major structural economic shift driven by globalisation, where developed economies transition away from primary and secondary (manufacturing) sectors towards tertiary (consumer/public) and quaternary (information, technology, R&D, finance) sectors.

What has caused the increase in the service sector?

• Cities like London became command centres of the global economy, demanding advanced producer services (law, finance, accountancy).

Consequences of the growing service sector

• High-value quaternary sectors concentrate in affluent metropolitan cores, whereas low-value consumer services spread across deindustrialised suburbs and towns.

How has the global shift given opportunities to EDCs and LIDCs (positive)?

• More women enter the labour force. Global-shift factories (e.g. garment manufacturing and assembly lines in Southeast Asia or Latin America) often recruit young women because they are perceived as more compliant and cheaper to employ.
• Earning a formal wage grants young women financial independence, potentially delaying marriage and childbearing and improving their social status within traditional patriarchal households.
• Increased household income generated by factory work often allows families to invest more in the education of younger siblings, improving long-term generational opportunities.

Case study: deindustrialisation in England

• North-East England, Tyneside and Consett.
• In the 19th and 20th centuries, the North-East of England was a global powerhouse for shipbuilding, coal mining, and iron and steel manufacturing.
• Driven by global shifts, the New International Division of Labour, and overseas competition (e.g. East Asia), the region suffered severe structural economic decline.

North-East England: impacts of deindustrialisation

• Shipbuilders in Tyneside lost jobs.
• Consett Steelworks shut down in 1980, wiping out jobs and causing male unemployment to reach up to 35%.
• This resulted in a negative multiplier effect and brain drain.
• It caused intergenerational deprivation and health inequalities