Eoh4 Chapter 04
- 1. You Will Learn Earth: Our Home 4 (Full Geography) • To explain the trend of transference of manufacturing activities from developed countries to less developed countries Chapter 3: Plate Tectonics How Has the Global Manufacturing How Has the Global Manufacturing Industry Changed? Industry Changed? • Development of large-scale manufacturing • Industrialisation due to large-scale manufacturing – Characterised by the industrial revolution that began in the United – Some countries has become highly industrialised due to large- Kingdom (UK) and spread throughout the world during the 18th scale manufacturing. and 19th century. – This led to the improvement of their economies, and • Machines driven by steam power were developed. consequently, their living conditions and infrastructures. These • Steam-powered machines were first used in the manufacturing of countries are called developed countries (DCs). textile goods. – Other countries continued to rely more on primary industries • These machines were then gradually introduced to other industries, rather than secondary industries. As their economies did not leading to large-scale manufacturing. improve as much as in DCs, they are called less developed countries (LDCs).
- 2. Trend of Transference Trend of Transference • A global shift in location of large-scale manufacturing activities and a change in the 1960s 1970s 1980s 1990s Mid 1990s types of industries from 1960s to mid-1990s are known as the trend of transference. Large-scale Capital-intensive There was an Outsourcing trends manufacturing industries began increase in began to develop. activities started to replace high-technology moving out of DCs labour-intensive Industries. to LDCs. Industries. Push Factors: Higher This is due to rapid growth With rapid industrialisation, Companies began to labour costs as workers of international trade some LDCs became contract out parts of in DCs demanded higher and investment, as well wealthier and their the production process wages. as technological population more educated. to other companies, advancements. which could be foreign Pull Factors: Incentives For example, subsidiaries or external from governments of electronics, suppliers. LDCs and large markets pharmaceuticals in LDCs. and biotechnology. Why Do Industries Move Their Why Do Industries Move Their Manufacturing Activities? Manufacturing Activities? • Companies may relocate their manufacturing • Lower costs activities, in order to maintain low costs in production - The standard and cost of living in LDCs are lower, compared and maximise profits. to those in DCs. This leads to lower labour costs. • By doing so, they achieve competitive advantage, - The cost of land is comparatively higher in DCs, hence industries may find it difficult to expand factory space. They which is a gain obtained from locating an industry in prefer to shift to LDCs, where the land is cheaper and more a new location. readily available. • This gain may be in the form of: - lower costs - attractive government incentives - a large market.
- 3. Why Do Industries Move Their Why Do Industries Move Their Manufacturing Activities? Manufacturing Activities? • Attractive government incentives • Large markets – Tax exemption: Projects involving heavy investments and use of – Closer proximity to immensely large populations of high technology may be completely exempted from income tax. countries, such as China and India. – Free Trade Zones (FTZs): An FTZ is an area in a country where infrastructure is built, government requirements are lowered, and – With the growth of their economies, their middle class incentives, such as tax exemption, are given to attract foreign markets are predicted to rise. companies to set up their activities. – Special Economic Zones (SEZs): SEZs include more specific zone types such as FTZs. For example, in China, Shenzhen and Zhuhai are designated as SEZs to attract manufacturers with China benefits, such as tax incentives and relaxed labour laws India Space Shrinking Technology Space Shrinking Technology • The development of advanced technology has • Transport technology helped to reduce the time taken to travel, – Cargo ships – large ships that are more cost-effective than air transport. They can transport large amounts of goods over long transport raw materials and products, and distances. communicate between countries. Such – Commercial jet aircrafts – travelling has been made much easier technology is known as space shrinking and more convenient. They help make possible the transportation of perishable goods. technology.
- 4. Containerisation Communications Technology • Use of containers • Communication is the transmission of information – With the use of standard-sized containers to hold from one individual or group to another. goods, the loading and unloading of goods has • Technology has made communication between become faster and more efficient. people in different places faster and more convenient, e.g. e-mail and video-conferencing. Impacts of the Trend of Increase in Foreign Investments Transference in LDCs • Shift in manufacturing-related • More money flows into the country’s economy. jobs from DCs to LDCs – Fewer workers are employed in • When manufacturers introduce a new industry to manufacturing activities in DCs, a country, they bring along the technology while more workers in LDCs become associated with it. engaged in manufacturing activities. – Manufacturing jobs in many LDCs used to be mainly low-skilled and labour-intensive. Since the 1990s, there were more and more high- technology manufacturing activities, e.g. electronics, life sciences and communications.
- 5. Increase in Export of Growth of Newly Industrialising Manufactured Products in LDCs Economies • Note that the trend of transference does not take • Exports of manufactured place and benefit all LDCs equally. Countries such as those in Africa have received very little products in LDCs have also investment. increased significantly as a • LDCs that have been significantly influenced by the result of the trend of trend of transference have been able to enjoy rapid transference. growth in their manufacturing industry, resulting in industrialisation. They are known as Newly Industrialising Economies (NIEs). What Have You Learnt in this Chapter? ! The trend of transference of manufacturing activities from DCs to LDCs ! The reasons for the shift of manufacturing activities from DCs to LDCs ! The impacts of the trend of transference