3.1 How does the economy of the globalised world function in different
places?
a. The balance between employment sectors (primary, secondary, tertiary and
quaternary) varies spatially and is changing.
Use the Clark Fisher model to investigate changing employment structure in
countries at different stages of development.
Pre- industrial
Industrial countries
Post- industrial countries
Tanzania
India
UK
South Sudan
Brazil
USA
Ivory Coast
China
Primary= Taking something out of the ground e.g. farming, mining or fishing.
Secondary= Making something from raw products e.g. processing oil into fuel,
making a carrot into soup or manufacturing cars.
Tertiary= Services, e.g. shop workers, teachers, doctors, lawyers, hair dressers,
accountants and many more.
Quaternary= The research industry e.g. researching illnesses or medicine (such
as cancer research) or researching new technologies (e.g. Bentley researching
hydrogen fuel)
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Contrast the importance of different employment sectors and working
conditions in countries at different stages of development.
Pre industrial- Primary industry dominates (usually farming, fishing and mining).
There is some secondary industry, but this is usually low- tech, and often for
TNC’s so profits are not going to the country itself. There are small amounts of
employment in the service (tertiary) industry. Working conditions usually poor
and incomes are low. People are usually just grateful to be bringing any money in.
Industrial- Primary employment declines, as machinery and imports usually
means there are fewer jobs in this sector. Secondary industry increases and
factories are built; this is industrialisation. As people earn more money the
service (tertiary) sector increases. Working conditions can still be poor, and
only around 50% of people work in the secondary (manufacturing) sector. Wages
increase slightly.
Post Industrial- Services take over and the primary and secondary sectors
decline. Wages are generally higher and people work in much better conditions
as there are a bigger range of jobs available. There is spare money to spend,
which results in the development of the quaternary (research) sector.
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Countries are usually divided into developed (HICs) and developing (LICs). We
generally refer to countries in the middle as NICs (Newly Industrialised
Countries); these countries have a middle to high income and are therefore
MICs (Middle Income Countries) or HICs. Developed and developing does not
always take into account the industry in the country.
LICs (low income countries) = Low income, usually at pre- industrial stage. An
example of this is Ethiopia.
MICs (middle income counties) = Middle income, usually at the industrial stage.
An example of this is India.
HICs (high income countries) = High income, usually at the post-industrial
stage. An example of this type of country is the USA.
Ethiopia is a developing country, classified as a LIC. 75% of people work in
agriculture (farming). 15% work in manufacturing and 10% work in tertiary
(services). Many people in Ethiopia work in the informal sector, this means their
jobs are illegal and they do not pay tax (and they therefore aren’t contributing
to the economy).
Working conditions in Ethiopia are very poor, as are wages, as people are
desperate for work and to support themselves with any income they can bring in.
Ethiopia suffers from drought, and doesn’t have many valuable resources; this
adds to unemployment there.
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China is a Newly Industrialised Country; it is one of the “BRICs” (Brazil,
Russia, India and China) who are making rapid economic progress. China’s
secondary (manufacturing sector) is making huge amounts of products sold
around the world; a large labour force with ambition and a good work ethic have
made Chinese manufacturing very successful.
Work in the Primary sector is less popular and many of the workers in this area
are older. China’s Primary sector includes coal mining and farming, coal mining in
particular can be very dangerous, and both are physically demanding to work in.
Many younger people have moved to cities to work in factories; work in factories
involves long hours in poor conditions. A successful secondary sector has caused
the growth of the tertiary (service) sector, with many jobs in offices now
available. These jobs have good pay and much cleaner working environments.
The UK is a developed country the secondary industries in the UK have
declined, automation (workers replaced by machinery) such as at Jaguar Land
rover where robots build many parts of the cars has contributed to this, as has
a global shift in manufacturing to the BRICs (Brazil, Russia, India and China),
where labour is cheaper. The UK has a very small primary sector; mining has
virtually stopped, the fishing industry can’t expand due to fish quotas. Farming
machinery has meant little labour is needed.
The tertiary (service sector) dominates; people have disposable income to spend
on luxury services, shopping and tourism activities. Global banking, insurance and
financial industries are based in London.
Working conditions in all sectors are good due to health and safety laws, and
the minimum wage means that pay is fair.
Some people “telework” or work from home using the internet, e.g. customer
service phone operatives and travel agents.
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b. Globalisation is changing employment sectors in both the developed and the
developing world.
Outline the role of global institutions including the World Trade
Organization (WTO), the International Monetary Fund (IMF) and
transnational corporations (TNCs), in creating a more globalised economy.
Role of the World Trade Organisation (WTO) in creating a more globalised
economy- The WTO oversees the global rules of trade between countries, it
tries to keep trade as free as possible, smooth and predictable.
Role of the International Monetary Fund (IMF) in creating a more globalised
economy- 188 countries are members of the IMF. They give loans to poor
countries to encourage development and try to aid cooperation between
countries to reduce poverty. The IMF have helped Tanzania to grow by securing
development loans for infrastructure.
Role of Transnational Corporations (TNC’s) in creating a more globalised
economy- Transnational Corporations are companies based in more than one
country. They are creating a more globalised economy as they transfer capital
across countries, e.g. to pay a wages bill, to buy land of governments and to pay
tax bills.
Networks, Flows and Players
Networks, flows and players link the four employment sectors, and the global
economy.
Networks- these “spider webs” link countries; transport networks, telephones,
internet and trade blocs.
Flows- these move through the networks and include raw materials,
manufactured money, migrant workers, information and aid.
Players- organisations who influence the global economy, including TNC’s and
global organisations, such as the WTO.
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Evaluate the impact of globalisation on different groups of people, including women as a
group and men as a group, in the developed and developing world.
Impact of globalisation on women in the developing world:
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Women in the developing world have increased access to education.
Many women in countries like Bangladesh work in ‘sweatshops’ for TNCs,
stitching clothes for minimal pay, in tough conditions with limited or no
breaks.
Women and men in the developing world have access to urban secondary
and tertiary jobs.
There are more jobs available in developing countries, especially in
manufacturing and increasingly in tertiary too
Impact of globalisation on men in the developing world:
Many men in developing nations feel work is better paid and more
consistent in factories compared to farming which can be affected by the
weather.
 Many men in developing countries have to leave their rural homes and
children with elderly relatives in countries like China, to work in factories.
 There are more jobs available in developing countries, especially in
manufacturing and increasingly in tertiary too.
 Women and men in the developing world have access to urban secondary
and tertiary jobs.
Impact of globalisation on women in the developed world:

Women are more equal in the jobs market.
Women in the UK have increased job opportunities in flexible, part time
employment especially in retail sector.
 As male dominated employment of the past (mainly secondary) has
declined, this has led to increased pressure on women in the developed
world to have jobs
Impact of globalisation on men in the developed world:
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Men in the East end of London have reduced access to secondary jobs in
car manufacturing that their fathers did.
In the UK, fewer full time jobs in secondary industries, and more part
time tertiary jobs than 50 years ago.
Whole areas, such as the Welsh Valleys have unemployment and a large
amount of people with mental illness due to the closure of traditional
manufacturing (steel) and mining (coal).
Diagram showing the impact of the global economy on employment
3.2 What changes have taken place in the flow of goods and capital?
a. In the past 50 years both international trade and the flow of capital across international
borders have expanded rapidly.
Examine the changes in the volume and pattern of international trade and foreign direct
investment.
International Trade
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Developing countries have many raw materials developed countries need to
manufacture products elsewhere or in their own country. Developed countries
have items such as machinery, medication and electronic technologies developed
countries have not developed and desperately need.
Global trade leads to developed countries getting richer and developing
countries still falling behind as they do not have the resources to manufacture
high end products and have little power to negotiate raw material prices with
developed countries.
Global trade has increased dramatically as developed countries import raw
materials more cheaply than they could extract them (e.g. England with coal) or
import materials they do not have (e.g. South African gold as there is not a
large amount
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Foreign Direct Investment
Foreign Direct Investment is investing directly into a foreign country, the
pattern and quantity has changed overtime due to globalisation. Reasons for FDI
are:
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
Access to foreign markets

Exploiting new sources of energy and minerals

Increasing food supplies

Taking advantage of cheap labour.
Example of FDI
The Chinese government has
invested heavily in Africa countries
such as South Sudan because of a
need for resources such as oil. China
have paid for the infrastructure to
extract and transport oil (roads,
ports and rail), as well as homes and
entertainment facilities for workers.
There are now one million Chinese
workers in Africa. China pays
governments small amounts, however
exporting crude oil does not bring the
governments much money in. China
processes raw materials into finished
products within China, keeping most
of the profits and skilled jobs within
China. The African governments are not happy but need money and jobs, so will
settle for the small amounts rather than nothing.
Explore the reasons for these changes, including lower transport costs,
TNC growth and mergers and state-led investment.
Reasons for changes in the volume and pattern of international trade and
foreign direct investment:
Lower transport costs- Due to new technologies including container ships,
faster boats and freight
planes transport is faster
(meaning fewer products
go off) and cheaper. This
has reduced the cost of
transporting goods.
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TNC growth and mergers-The revenue of many TNC’s is close to, or higher
than that of entire countries, for example Sweden’s GDP 2006 was $444 billion,
Exon Mobile’s (oil company) revenue was $377 billion. These TNC’s buy up
smaller, foreign companies who cannot compete for resources such as raw
materials and cannot undercut the TNC’s as these companies sell in bulk. TNC’s
build links between the economies of countries as they buy, sell and operate in
many countries across the world. An example of this is McDonald’s.
Diagram showing the global links a TNC creates
Diagram showing reasons for TNC’s to operate globally
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State- led investment- Please see China in Africa e.g. for FDI (Page 8). States
such as China invest in foreign countries and companies, such as China’s
investment in copper mining in Zimbabwe, to gain resources and make a profit.
Other countries allow foreign state led investment as they need the small
amounts of income it generates (the state that invested keeps most of the
profit) and the infrastructure building (e.g. China build ports and railways to
transport materials back to China. Both states benefit, and therefore state- led
investment has created many global links.
b. Transnational corporations (TNCs) control a substantial part of the global
economy and have created a global shift.
Study one TNC in the secondary sector to show how it operates in
different parts of the world, e.g. location of headquarters, outsourcing and
the global shift in manufacturing.
Nike- TNC in the secondary sector
Location of headquarters-Nike Headquarters is in Oregon, USA. This is where
Nike’s skilled jobs are located, for example in admin and design.
Outsourcing- Nike’s products are mainly made in Asia, in countries such as
Cambodia, China and Indonesia. Nike has been caught using tied labour, which is
when worker’s identity records are stolen and people are kept against their will.
There have been reports of Nike paying workers less than $1 per day, and
workers working 7 days a week, 18 hours a day.
Global shift in manufacturing- Manufacturing has shifted from developed to
developing countries, with companies such as Nike and Jaguar Land Rover
because wages are cheaper abroad, many countries such as China offer taxfree zones and excellent infrastructure to TNC as they are glad for more jobs
and containerisation (container boats) has lowered transport costs making it
cheaper to move goods.
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Study one TNC in the tertiary sector to show how it operates in different
parts of the world, e.g. administrative work moving overseas, globalisation
of products, including the growth of retailing chains.
Tesco- TNC in the tertiary sector
Administrative work moving overseas-Tesco head offices are based in The UK,
as are many of the call centres Tesco operate. Unlike other TNC’s such as
Admiral insurance company, Tesco have not cut costs by locating admin work
overseas. Admiral have call centres in Mumbai where wages are lower and people
still speak English well.
Globalisation of products-Tesco use “Glocalisation”- ensuring products in store
meet local needs, for example in China the cuts of meat and types of vegetables
are very different to those in The UK. Tesco’s products come from across the
world, for example green beans from Kenya and apples from South Africa. The
people who pick’ grow these products work long hours for low wages and often
become ill due to large amounts of pesticides and a lack of protective clothing.
Growth of retailing chains- since the 1990’s Tesco started opening stores
across the globe, 60% of Tesco’s profits now come from Asia. Opening stores in
other countries creates jobs there, which is good, but Tesco’s profit tax
revenue often leaves the country and therefore does not contribute to
government projects e.g. building schools.
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