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Geography- Global shift in manufacturing industry
Transcript of Geography- Global shift in manufacturing industry
-Wages are lower and workers are given
fewer benefits in the LDCs than in the MDCs
-Land rent and operating costs, e.g. electricity
and water charges, in the LDCs are lower too. Attracting factors of LDCs 3) Rising markets in the LDCs
-With improved living standards,
some LDCs have become new
markets for many goods. For
example, China has become a
a major automobile market in the
world. Setting up factories in
these new markets makes it easier
to make goods that are suited to
local tastes, and to respond to
market changes more quickly. This
increases the location pull of LDCs
to the industries in the MDCs. Facilitating factors 1) Advancements in transport
-Development of large vessels and oil tankers
lowers transport time and cost of goods.
-A steel plant can locate far away from an iron
ore or a coalfield, or a car assembly plant can
locate far away from the market.
By Janice Lim 3D(32) Global shift in manufacturing industry Do you know what are the factors causing
global shift in manufacturing activity? There are
two kinds of factor causing global shift in manufacturing activity. One is the attracting factors of LDCs and the other one is facilitating factors. There are three attracting factors and two facilitating factors. Let me tell you these factors! 2) Attractive government policies in LDCs
-Incentives such as low tax rates and land
prices, duty-free of imported raw materials
are provided in the special economic zones
in China and maquiladoras in Mexico.
These caused manufacturing activities
are pulled from the MDCs to LCDs. 2) Advancements in information and
communications technology (ICT)
-The widespread use of the Internet and quick
flow of information allows a firm to manage
its labour, money flow, etc. in the overseas
branches more easily. The first factor gives
more freedom to industries to choose their
location. The second factor lowers the
difficulty to choose their companies
across borders. The role of transnational corporation Characteristic of transnational corporation:
1) Target world market and have large-scale production.
2) Have wide choice of suppliers of raw materials and parts around the world.
3) Bring great economic benefit to countries, thus are welcome.
4) Have a widespread network covering the world. They are sensitive to market change. Advantage:
1) Lower unit costs by buying raw materials and parts in bulk. They enjoy economies of scale.
2) Able to access the cheapest suppliers.
3) Have strong bargaining power on where to locate their factories.
4) Can easily relocate any production process to any part of the world to get the highest profit. Secondly, I would like to talk about the benefits and problems of the global shift in manufacturing industry. Benefits to host country: 1) More job opportunities.
-Require relatively low skill, but the salaries are often high
2) Improvement in infrastructure and public services.
-Example of infrastructure: transport net work
and power supplies.
-Example of public services: education, health care
3) Increase in national income.
-Transnational corporation bring huge inflows of capital.
-Transnational corporation bring cash into local resources, products and services.
-Governments can collect more tax revenue.
4) A wider economic base.
-No longer rely heavily on primary industry.
-More opportunities are created for the growth of tertiary activities such as banking.
5) Multiplier effect.
-Improvements in employment, national income and infrastructure all raise the living standard of the local people.
-The multiplier effect of economic development is triggered.
6) Transfers of technologies and skills.
-Transnational corporation set up regional centers in other countries. Benefits to the Home country: 1) Social and economic benefit:
-Focus on high-value product or services. This increases productivity and raises living standards. -Products become more competitive in world market. -People can buy cheaper imported goods. 2) Environmental benefit:
-There is less pollution caused by factories. Problems to host country: 1) Workers Aspect
-Poor environments and safety conditions of factories.
-Work long hours for very low wages.
-Some factories even hire child labor.
2) Local firms Aspect
-They are responsible for low manual processing and earn very little.
3) Economic Aspect
-A lot of money is put in improving infrastructure and offering financial benefits.
4) Environment Aspect
-Loss of natural areas and farmland. Problems to Home country:
1) Workers Aspect
-Workers who cannot change to high- value production or services will become unemployed.
-Unemployment leads to social unrest and problems, such as drug and family problems.
2) Economic Aspect
-The local government gets less tax.
-Urban decay and economic decline occur. How can the challenges created by global shifts of manufacturing industries be managed? Let me suggests the solution of these problems! LDCs
1) Pollution controls
-The government in LDCs should set up policies to reduce pollution levels. For example, they can charge factories pollution fees based on the polluter-pays.
2) Labor protection
-Governments should take measures to ensure labor welfare, such as legislation against child labor, and minimum wage laws.
3) Careful selection of foreign investment projects
-Governments in host countries should consider ways of protecting their domestic industries.
1) Development of other economic sectors and specialised industries
-New job opporunities can be created in other economic sectors.
2) Retraining program
-Retraining programs can be provided to unemployed factory workers that will help them find jobs in service industries.
3) Improved social security system
-Governments in MDCs should set up strong social security systems for the unemployed to help them maintain a minimum standard of living. ~The End~