1.2 Development & Economy

What is the North–South divide?

A broad global division in which the Global North is generally more industrialised and economically developed while the Global South is generally less developed.

What is the Brandt Line?

A simplified representation of the North–South divide.

Why is the North–South divide an oversimplification?

There are major variations within both regions; for example, some Southern countries are wealthy and some Northern countries are relatively poorer.

What GDP contrast is given within the Global North?

Romania and Croatia are given as below US 600, contrasted with the USA above US 36,000 in the notes.

What wealthy Global South examples are given?

Saudi Arabia and the Asian Tigers.

What are key reasons for Asia's rapid development?

Competitive wages, infrastructure, large domestic markets, diversified exports and export-oriented policies.

What Asian export examples are given?

Vietnam textiles and Singapore/Malaysia electronics.

What export-processing-zone examples are given in Southeast Asia?

Batam, Thailand, Indonesia, Malaysia, Myanmar and Vietnam.

Why has South America experienced economic stagnation according to the notes?

Exports are less technology-driven, intraregional ties and FTAs are weak, and infrastructure/transport routes are limited.

What are examples of development differences within countries?

China's east–west divide and India's north–south divide.

Why is Singapore relatively developed within Southeast Asia?

Its strategic position on shipping routes supports busy ports; low corruption builds trust and attracts FDI; its economy is concentrated in higher-value secondary and tertiary activities.

Why is Laos relatively disadvantaged geographically?

It is landlocked, reducing direct access to maritime trade.

How can political systems affect development in Southeast Asia?

Singapore's low corruption can support FDI, while Myanmar's autocratic rule can constrain development.

What sectors dominate Singapore compared with Cambodia, Thailand and Laos?

Singapore has high-end manufacturing and services such as semiconductors, R&D and banking; Cambodia, Thailand and Laos have larger primary-sector/agricultural roles.

What was the Iron Curtain?

The political division of Europe after WWII between capitalist Western Europe and communist Eastern Europe.

How did the Marshall Plan affect Western Europe?

US aid helped Western Europe rebuild quickly and develop prosperous market economies.

Why did Eastern Europe develop more slowly after WWII?

Soviet control produced centralised economies, limited Western trade and less foreign investment.

How can political decisions restrict development within a country?

Governments may protect land for cultural preservation or designate zones such as green belts, limiting some forms of development.

What Green Belt example is given?

New York City's Central Park.

What are China's Special Economic Zones (SEZs)?

Designated areas offering policies and conditions intended to promote particular industries and attract investment.

How did the number of Chinese SEZs change?

From 5 in 1980 to 18 in the notes.

What are China's open coastal cities?

36 coastal cities opened to encourage overseas trade and attract FDI.

What spatial development pattern resulted in China?

The eastern/coastal region became richer while the western/inland region remained poorer.

Why are coastal areas often more developed?

Trade, migration and port access can concentrate economic activity along coasts.

What characterises LDC employment structures?

High dependence on the primary sector, relatively few secondary/tertiary/quaternary jobs, and dependence on a small number of primary commodities for export earnings.

What happens to employment structure in NIEs?

Employment shifts towards secondary and tertiary sectors, with manufacturing employment increasing and primary-sector employment declining.

What characterises DC employment structures?

Most workers are in tertiary activities, with an increasing share in quaternary activities.

Why have manufacturing industries moved towards NIEs and LDCs?

Lower costs of production, especially labour and sometimes transport costs, and technological changes that can replace labour.

What unusual development pathway is shown by the Maldives?

Tourism, a tertiary-sector activity, is its largest industry and contributes about 28% of GDP despite the Maldives being an LDC.

Why does development not always follow a simple primary→secondary→tertiary pathway?

Some countries may remain dependent on primary/secondary activities, while control and ownership of dynamic Global South sectors can remain in the Global North.

How do TNCs influence development pathways?

They often retain control over technology and ownership of major productive sectors.

How can mechanisation change employment structure?

Mechanisation in agriculture, mining, forestry and fishing reduces labour demand and can push workers towards urban areas and secondary/tertiary jobs.

What factors attract FDI and manufacturing?

Low labour and land costs, political stability and good transport infrastructure.

What manufacturing transition is Vietnam experiencing?

A shift from agriculture, including rice, wood and coffee exports, towards garments, footwear and furniture manufacturing.

Why does secondary-to-tertiary transition occur with higher development?

Rising incomes increase demand for consumer goods and public services, while deindustrialisation shifts labour-intensive processes elsewhere.

What is the New International Division of Labour (NIDL)?

The relocation of low-cost production jobs from DCs to LDCs/NIEs while highly skilled R&D and decision-making remain concentrated in DCs.

When did the NIDL become prominent?

After the 1950s.

What encouraged the NIDL?

Trade liberalisation, international trade agreements and multilateral institutions, advances in technology and transport, and changing production costs.

How is global trade spatially uneven?

Trade is concentrated among wealthier countries, while many LDCs remain dependent on commodity exports.

Why do DCs generally gain a larger share of export income?

They specialise more in high-value manufactured goods and services whose prices are higher than primary commodities.

Which countries are examples of rapid trade growth despite the uneven pattern?

China and India.

How can trade liberalisation negatively affect farmers?

Poor farmers may be unable to compete with subsidised imports.

What EU Common Agricultural Policy example is given?

Agricultural dumping can lower prices and harm producers in poorer countries.

What is FDI?

Foreign direct investment: cross-border investment that provides access to capital, technology and organisational expertise.

What benefits can FDI bring?

Modernised infrastructure, greater industrial capability, and improved quality and depth of tertiary services.

Why is FDI unevenly distributed?

It concentrates where infrastructure, technology, transport, market potential, political stability and supportive state policies are favourable.

What China market-size example is given?

China's large consumer market attracts investment.

How can labour flows contribute to globalisation?

People migrate to cities or across borders, while firms offshore or outsource operations to lower-cost countries.

What is wage segmentation?

The division of labour markets into higher- and lower-wage groups, often across countries and skill levels.

What Haiti brain-drain example is given?

About 80% of university-educated Haitians live abroad.

What are the three major flows of global interconnectedness?

Trade, capital and labour.

How does trade create interdependence?

Countries and regions depend on flows of goods and services from one another.

How does capital create interdependence?

Cross-border FDI links economies through investment and ownership.

How does labour create interdependence?

Workers move across borders to fill jobs and earn income.

What is a TNC?

A firm/business involved in international production of goods and services in more than one country.

Why are TNCs powerful?

They can act as hegemonic economic forces, control FDI, internationalise operations and organise production spatially.

What pushes firms towards globalisation through labour costs?

High labour costs in home countries encourage firms to seek lower-cost production locations.

How does market access encourage globalisation?

Saturated home markets push firms outward while growing host markets pull them in.

How do states attract FDI?

Through incentives, infrastructure, SEZs, tax policies and other supportive policies.

How has technology enabled globalisation?

Transport and communication technologies make it easier to coordinate production and trade across long distances.

What transport technology example is given?

Standardised containers improved cargo shipping and handling.

What communication technology example is given?

Satellite technology enables global communication.

What political change helped globalisation?

Trade liberalisation after WWII reduced barriers to international trade.

What is a Global Production Network (GPN)?

A network coordinated and controlled by a globally significant TNC involving overseas allies, strategic partners, customers and non-firm institutions.

What stages are included in a GPN?

Inputs, transformation, distribution and consumption.

What is an intra-firm network?

Production and organisational links within the same TNC, including headquarters, R&D facilities and operating units.

Where are R&D facilities usually concentrated in a TNC?

Higher-level R&D is generally located at major/global headquarters, while lower-level regional R&D may be elsewhere.

Where are labour-intensive operating units often located?

In LDCs or lower-cost locations.

What is an inter-firm network?

Links between separate firms through subcontracting, outsourcing, strategic alliances, joint ventures or franchising.

What outsourcing example is given?

Nike operates through suppliers in about 40 different countries.

What strategic-alliance example is given?

Star Alliance is a network of airlines.

What franchising examples are given?

7-Eleven and KFC.

What are the advantages of outsourcing?

It reduces the need for heavy capital investment because factories need not be owned, and firms can switch to cheaper suppliers/locations.

What does footloose mean in this context?

A firm can relocate operations relatively easily to lower-cost locations.

What are disadvantages of outsourcing?

Loss of control over operations and risks involving loss of trade information, piracy and counterfeit goods.

What Nike example illustrates outsourcing risks?

Nike faced backlash over exploitation of workers in its supplier network.

Where are counterfeit goods examples given?

Indonesia, Vietnam and China.

What monetary policies can states use to influence TNC activity?

Interest-rate, exchange-rate and other macroeconomic policies that affect investment conditions.

What fiscal policy example is given for Singapore?

Singapore offered tax holidays to TNCs such as Seagate in the 1970s.

What is deregulation?

Reducing government controls or regulations to make economic activity easier.

What privatisation example is given?

Veolia from France took over waste collection in Singapore from the Ministry of Environment.

How can infrastructure attract TNCs?

SEZs, industrial estates, transport and skilled labour can create favourable operating conditions.

What Shenzhen example is given?

Shenzhen's economic/industrial zone attracted investment through special policies.

What Taiwan example is given?

Taiwan had about 50,000 college-educated engineers, providing skilled labour.

What are the main positive economic impacts of TNCs?

Direct job creation, industrial linkages, multiplier effects and structural shifts from agriculture towards industrialisation.

What are the main negative economic impacts of TNCs?

Footloose activity, limited skill transfer, uneven global development, stifled local competition, economic hegemony, profit repatriation/leakage and inequality along production chains.

Why can TNCs be footloose?

They can relocate production to lower-cost locations.

How can TNCs fail to transfer skills?

High-value management, R&D and specialised skills may remain in headquarters or higher-income locations.

How can TNCs create uneven development?

Investment can concentrate in selected regions and sectors, leaving lower-order regions behind.

How can TNCs stifle local competition?

Large TNCs may have financial, technological and market advantages over domestic firms.

What is economic hegemony in relation to TNCs?

TNCs can gain disproportionate influence over economies and markets.

What is profit repatriation?

Sending profits earned in a host country back to the firm's home country.

Why can TNCs create inequality along the production chain?

Workers doing the most labour-intensive work may receive the lowest wages.

What are positive social impacts of TNCs?

Feminisation of the workforce and greater affordability/convenience of goods and services.

What are negative social impacts of TNCs?

Poor working conditions, consumerism and cultural homogenisation.

What environmental benefit of TNCs is given?

Reforestation efforts, such as Daikin in West Java.

How can consumer demand encourage environmental sustainability?

Consumers increasingly demanding sustainable products can push firms towards greener practices.

How do states regulate trade involving TNCs?

Through tariffs and free-trade agreements.

How do states regulate capital flows?

Through tax incentives, deregulation and infrastructure/industrial clusters.

What Singapore cluster examples are given?

Tuas Biomedical Park for R&D and the heavy-industry area in Tuas.