EQ2- 3.4

Question 1

Global shift definition

Answer 1

The movement of manufacturing and the outsourcing of services from the West to the East. It can be considered the movement of the global economic centre of gravity. The main driver has been labour costs.

Question 2

Effects of global shift

- benefits

Answer 2

• Infrastructure investment: money from exports enable governments of emerging economies to improve transport and communications, including upgrading seaports and airports (e.g. Shanghai, China)
• Waged work: factories and offices offer formal jobs with better pay, attracting people and providing a workforce (e.g. Bangalore, India) rather than working in agriculture.
• Poverty reduction: the number of people earning less than the UN minimum target (Sustainable Development Goal = $1.90 a day) has halved since 1990 (e.g. Ethiopia)
• Education and training: money from selling goods or services enables governments of emerging economies to invest in schools and higher education, producing a population with skills to secure the global shift (e.g. Thailand)

Question 3

Effects of global shift

- costs

Answer 3

• Loss of productive farmland: urban areas have grown rapidly outwards changing the land use of farmland due to rural-urban migration; this reduces the amount of food that can be produced (e.g. Nairobi, Kenya). It was predicted in 2014, 40% of China’s farmland was degraded because of pollution and increased building.
• Unplanned settlements (Shanty towns): much of the outward growth of cities is unplanned informal housing built by poor people who have squatted on the land and built their own shelters. There is no formal electricity, water supply or sewage system. (e.g. Dharavi in Mumbai, India). Here there is a low quality of life which causes problems for the government.
• Degradation of natural environment: controls of pollutants from industries, power stations and cities are often limited, leading to pollution and contamination. (e.g. Jakarta, Indonesia). In 2013, China experienced severe air pollution with residents of Beijing advised to stay indoors. The air pollution levels were over 20x higher than the WHO recommended. China also has serious water pollution problems. In 2015, 85% of the water in Shanghai’s major river was undrinkable. Pollution in Northern China is so bad that it cuts 3 years from the life expectancy. Loss of biodiversity.
• Pressure on resources: the concentration of people in urban areas increases demand for living space, clean water, fuel and food (e.g. Sao Paulo, Brazil). Industries and offices also increase the demand for raw materials and energy.

Question 4

Global shift of services

case study

Answer 4

Global shift of services- INDIA

• With a large educated and English-speaking population, India has seen a growth in services because many TNCs outsource their call centres and other services here.
• E.g. in 2003, BT opened two call centres in India, one in Bangalore and one in Delhi. They employed 2,200 people. BT benefit from lower labour costs because wages are cheaper in India.
• India has benefited significantly from the global shift in services.
• The outsourcing industry in India adds an estimated $150 billion to the economy.

Question 5

Global shift of manufacturing

case study

Answer 5

Global shift of manufacturing- CHINA

• It is possible that China will become the largest economy in the world because of this growth. This shift has caused urbanisation as workers move from agriculture to higher-paying jobs in cities.
• With a population of over 1.3 billion people, China has become the ‘workshop of the world’ as TNCs have moved their manufacturing here. TNCs can keep their costs low as wages are cheap in China. This has increased China’s GDP because their exports have increased significantly. Between 1978-2012 China’s economy grew at an average rate of 9.4% per year.