3.b Processes of economic change

Define globalisation?

• The growing integration and interdependence of people’s lives in a complex process with economic, social, political and environment change

Which players are mainly responsible for globalisation?

• TNCs

• Nation states

Define global shift?

• The relocation of manufacturing production on a global scale (a result of globalisation)

• ACs to EDCs - 1970’s onwards

What did the New International Division of Labour do from the 1980’s onwards?

• Reorganised the production at a global scale as a result of deindustrialisation in ACs and the growth of MNCs (multinational companies)

What happened to the the pattern of employment/jobs after the NIDL was established?

• Higher-paid managerial jobs in ACs

• Lower-paid labouring jobs in LIDC’s

Define economic restructuring?

• The changing in proportions of people working in various economic sectors e.g, secondary to tertiary, transformation to post-industrial societies

Which industries are badly affected by deindustrialisation?

• Economic restructuring - deindustrialisation

• Mine and factory closures - traditional economic activities (mining, steel-making etc.,)

What were (generally) the economic impacts of deindustrialisation?

• Unemployment, ill-health - concentrated in inner city neighborhoods

• Skills acquired in traditional heavy industries - non transferable to the growing service sector

What were (generally) the environmental impacts of deindustrialisation?

• Poor, abandoned and derelict buildings

• Polluted land and waterways

What are the positive impacts of structural economic change from globalisation in ACs?

• Cheaper imports of labour-intensive products - cost of living reduced, successful retailing sector

• Promotion of labour market flexibility - worker mobility to areas scarce of labour

• Industrial efficiency - development of technology, entrepreneurship, foreign investment

What are the negative impacts of structural economic change from globalisation in ACs?

• Divide between skilled/unskilled workers - extreme redeployment issues

• Job losses - concentrated in certain areas, de-industrialisation, structural unemployment

• Branch plants - vulnerable - economic recession, first to close - job losses

What are the positive impacts of structural economic change from globalisation in EDCs/LIDCs?

• Higher export-generated income - export-led growth, investment (productive capacity), multiplier effect

• Exposure with new technology, improving labour productivity

• Employment growth in labour-intensive manufacturing - wealth, reduces global injustice

What are the negative impacts of structural economic change from globalisation in EDCs/LIDCs?

• Unlikely to reduce inequality - jobs concentrated in core regions, urban areas, in-migration

• Disruptive social impacts - TNCs can be exploitative, sweatshops - instability

• Destabilised food supplies (lack of agriculture), environmental issues (over-industrialisation)

Define multiplier effect?

• Expanding economic activity in an area - generates additional employment

• As wealth increases, it stimulates economic activity

Define comparative advantage?

• Countries or regions benefit from specialising in an economic activity in which they are skilled at

How did globalisation influence comparative advantage?

• Greater international opportunities

• Specialist high-tech industries and highly qualified workers - promoting investment

Define cyclical economic change?

• Frequent cycles of booms (increases) and recession (decreases) in economies

Which economist theorised that the capitalist economic system operates in a series of interconnected cycles?

• Russian economist Nikolai Kondratiev

How often does Kondratieff’s theory occur?

• 50-year cycles of growth and decline (has characterised the world since the 1750’s)

• Boom is followed by recession

What was Kondratieff’s theory?

• Cycle of growth and stagnation - technological innovation, new industries providing the basis for a boom

• Once this technology is no longer new - fewer opportunities for growth exist

How does cyclical economic change create varied impacts on social opportunities?

• Within centres of innovation or core regions - stronger multiplier effect

• Greater economic opportunities - higher standards of living

How does cyclical economic change create varied impacts on inequality?

• Macroeconomic indicators - GDP, investment spending, household income, profits fall

• Bankruptcies and unemployment rise

Which methods does the government use to overcome social and economic inequalities?

• Taxation

• Subsidies

• Planning

• Law and education

How does taxation reduce social inequality? (government)

• Income tax - distributes wealth among the population

• Progressive tax systems - wealthy pay a larger proportion of their incomes

• Benefits poorer groups spending a larger % of their income on food

How do subsidies reduce social inequality? (government)

• Poorer groups - free school meals, clothing, university

• Pensioners - free fuel and transport

• Etc,. single parents, unemployed workers, people with disabilities

How does planning reduce social inequality? (government)

• Governments, charities, housing agencies - priority to upgrading housings/services in the poorest areas

• Organised geographically, targeted at deprived areas

How does law reduce social inequality? (government)

• Legislation reduces discrimination on racial, ethnic, gender and age criteria - equal opportunities

• Poorest workers are protected by minimum-wage legislation

How does education reduce social inequality? (government)

• Funding for training skills - raising skill levels and qualifications, improving employment prospects, boosting economic growth

• Programmes to improve personal health - targeted at poorest groups

How do pensions create social inequality? (government)

• Disproportionate people within inner city areas - higher levels of multiple deprivation

• People receiving occupational pensions and state pensions - this increases their wealth and reinforces social inequality

How do pensions try and reduce social inequality?

• Poorest groups - must rely on state pensions

• State pensions ensure financial stability and reduce the pressure on younger family members

How does healthcare create social inequality?

• Inner cities and remote rural areas - short of GPs, issue for lower-income families and elderly (personal mobility)

• Language/cultural barriers - preventing migrants from accessing healthcare

How does healthcare try to reduce social inequality? (government)

• Accessibility - literature in ethnic minority languages, informing parents of the benefits of immunisation

• Groups fearing immunisation - lack of resistance to childhood diseases

How do rural services create social inequality?

• Improvements in social mobility - people no longer exclusively rely on their local key settlements

• Home delivery is also available

• Unemployment within local areas

How do rural services try and reduce social inequality?

• Rural planning supports rural areas - key settlement

• Hubs for people living in surrounding smaller settlements

• Visiting the outskirts of urban places has also been more accessible - extended opening hours

Define key settlement?

• Rural settlement where services are concentrated to meet thresholds that will ensure economic viability