Transcript Deindustrialization-and-10

Deindustrialization and Rise of
the Service Sector
Spring 2016
F Block 4/14/16
SWBAT
• Define deindustrialization and explain its
impact on the MDCs
• Describe the new international division of
labor and its key features
• Describe the Japanese auto production
tecnique
HW: Study for Test
What is deindustrialization?
 a process by which companies move industrial
jobs to other regions with cheaper labor
 Regions w/high labor costs and old tech may
experience deind. (core countries, “rustbelt”)
 U.S. Sunbelt drew investment away from N.E. b/c
of lower rates of unionization and high labor cost
 It results in the newly deindustrialized region
switching to a service economy and a period of
high unemployment
 Growth of labor-intensive manufacturing
industries in the LDCs
Contemporary Global Patterns
 Fordism (Henry Ford), highly specialized
system for organizing industrial production
and labor; features assembly line production
for mass consumption after WWI
 Post-Fordist- flexible, modern production,
characteristic of tertiary industries
Just-in-Time (JIT) Production
Technique
 Seeks to reduce inventories for the production
process by purchasing inputs for arrival just in
time to use and producing output just in time to
sell
 Requires frequent ordering of small lots of goods
for precisely timed arrival and immediate
deployment on the factory floor
 A transition from mass-production (Fordism) to
flexible production systems
New International Division of
Labor
 A phrase that refers to the set of relationships that
define the contemporary world economy
 Periphery regions are dependent on core for
manufacturing jobs
 Core Transnational corporations are dependent on
periphery for cheap labor, fewer environmental
regulations and expanding markets
 Some major players: General Motors, Philips,
Union Carbide, Ford, ExxonMobil- each with
annual earning that exceeds the GDP of some
countries.
Foreign Direct Investment
 Capital invested by a country or corporation away
from the home base, usually in the periphery and
other core countries
 A key component of international finance
 Loans from commercial banks in the MDCs are
critical; some notable players are U.S., Japan,
Italy, Germany, France & U.K.
 Rise in the indebtedness of borrowing countries,
especially in the developing world
Regional and Global Trade
Agreements
 General Agreement on Tariffs and
Trade(GATT)- from 1948 to 1994; assisted
in creating a multilateral trading system and
reducing tariffs; worked w/WB & IMF
 World Trade Organization (WTO)promotes free trade; 3 main purposes: 1)
help trade flow freely, 2) forum for trade
negotiation, & 3) dispute settlement
Regional and Global Trade
Agreement Cont’d
 NAFTA - not an organization; no free flow
of labor
 EU- an economic union with more free flow
of labor
 Others: MERCOSUR, SAFTA, CARICOM,
ECOWAS, COMESA, etc
Specialized Economic Zones:
Two Types
1.Special manufacturing export zones: area within a
country in which tax incentives and fewer
environmental regulations attract foreign
business/investment, e.g. the Mexican
maquiladora & the special econ. Zones of China –
most notable
2. High technology corridors- core; network of
research, development & tech enterprises also
known as technopole, e.g., Routes 128/ 495
around Boston, Silicon Valley(CA), “Silicon
Forest” near Seattle, North Carolina’s Research
Triangle, “Utah’s Software Valley,”etc.
Other high tech areas

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
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Scotland’s Silicon Glen
England’s Sunrise Strip and Silicon Fen
Wireless Valley in Stockholm
China’s Zhong Guancum near Beijing &
high-tech industries zone in Xian
 Hitec City at Hyderabad, Pune, and
Bangalore in India
Tourism: a service industry giant
 Accounts for 11% of all global jobs and 11% of
global GNP (approx $4 trillion/yr)
 Fastest growing segment: cruising industry
 Has transformed downtowns, ports, hinterlands,
parks, and waterfronts in many places
 Theme parks: Disney- Orlando, Paris, Tokyo, &
L.A. draw millions of visitors
 Nature reserves- East Africa & South Asia
 Caribbean & Pacific
Time-space compression and its
impact
 Phrase coined by geographer David Harvey
 Refers to the social and psychological effects of
living in a technologically advanced world
 It is based on the concept, time-space convergence
which refers to the greatly accelerated movement
of goods, ideas, and information during the 20th
cent. made possible by tech. innovation in
transportation and communication
 International financial transactions
 The impact of the world wide web
Challenges for Less Developed
Countries
 Distance from markets
 Inadequate infrastructure
 Competition with existing manufacturers in
other countries
Comparative Advantage
 Principle whereby places and regions specialize in
activities for which they have the greatest
advantage in productivity relative to other regionsor for which they have the least disadvantage
 Example: Massachusetts has a comparative
advantage over other states in the production of
cranberries.
Outsourcing
 Location of manufacturing activities from highercost market country locations to lower-cost
foreign production sites, taking jobs and income
away from the consuming country; producing
abroad parts or products for domestic use or sale.
 Outsourcing also refers to subcontracting
production and service sector work to outside,
often nonunion, domestic companies.
Offshoring
 The relocation of business processes and
services to a lower-cost foreign location of
particularly white-collar, technical,
professional, and clerical services
 Examples: call centers, accounting, billing,
etc.
Footloose industries
 Firms that are neither raw materials nor
market oriented; can be located anywhere
 Example: the manufacturing of computers