Transcript Comparing economic structures by country and time

Comparing economic structures
by country and time
Let’s see what you found from the homework
• This has all the countries filled in – could you see a
pattern between the LICs and the graph? The HICs and
2
the graph?
Let’s see what you found from the homework
Any
patterns?
3
Lets look at these 3
Afganisatan
13%
Malaysia
Australia
4%
10%
10%
21%
51%
36%
80%
75%
Primary
Secondary
Tertiary
• The primary sector: what kind of activities are in
•
•
this group? What pattern do you notice?
The secondary sector: what kind of activities
are in this group? What pattern do you notice?
The tertiary sector: what kind of activities are
in this group? What pattern do you notice?
4
Lets look at these 3
Afganisatan
13%
Malaysia
Australia
4%
10%
10%
21%
51%
36%
80%
75%
Primary
Secondary
Tertiary
• 1. The primary sector – farming, forestry, fishing and
•
•
•
mining - decreases as a country gets a higher GDP
2. The tertiary sector – shops, government sector,
transport, entertainment – increases with the GDP
3. Something a bit odd happens with secondary sector - it starts off low and then increases but then starts to
get smaller again in the HICs.
Our task in this section is to look at why this should
happen.
5
Why are so many people employed in
primary industries in LICs?
• LICs have a low income per person. This is mainly to do
•
•
•
•
with the things that they sell have low value.
These are mostly primary products – raw materials –
which have not been processed.
The richer countries and the traders have always paid as
little as they can for raw materials.
This means that these countries cannot afford the
machines to do the work but depend on poorly paid labour
to do most of it instead.
This also explains why such a large % of the population is
involved in growing/collecting and harvesting these raw
materials.
6
Why do MICs have fewer people
working in primary industries?
• However, once a country begins to develop, it will not sell
•
•
•
raw materials for low values, but will begin to process
them themselves and so become richer.
As they become more industrialised, they will have more
money to invest in machinery, which means that few
people are involved in the production of raw materials.
It becomes increasingly pressing that more people are
released from primary production as more and more
people are needed in the secondary manufacturing
industries.
So as industrialisation increases, then the number of
people employed in primary production decreases. This
does not mean that the amount of primary production
decreases, just the number people needed to carry it
out.
7
Why does the number of people in tertiary
industry increase with development?
• As a country becomes richer, an educated work force
•
•
•
becomes more important, so there is more invested in
education (tertiary).
As fewer people are producing their own food, then
services to provide food to the industrial workers also
increases (secondary – food processing and tertiary –
distribution network shops and transport).
Industries are most economical in urban areas so you
need roads, water, police (all tertiary). So the general
trend is that as a country becomes more industrialised,
the greater the tertiary activity is.
When a country becomes richer still, then services likes
banks, insurance, widespread healthcare and many others
employ more and more people.
8
What about the odd pattern of
secondary employment?
• But what about that trough-peak- trough pattern of
•
•
•
•
•
secondary economic activity?
As we saw there is little large-scale secondary activity in
LICs because they do not have the money to invest nor
the skilled worked force to operate and maintain the
machinery.
But as they begin to develop, then more processing of
primary products takes place there.
Once an industrial base exists, with lower costs that in
HICs, the TransNational Corporations (TNCs) see this as
a new market but also a good place to put new factories.
The governments of these countries are all in favour of
bringing in more industry and so do their best to make
the environment positive for any TNCs wishing to come.
So manufacturing employment decreases as a country
more expensive than the growing MICs.
9
For example, Malaysia – take a look at
their exports (case study 1)
What do
you
notice
• Primary
 1970: 43 + 5+ 25 = 73+% (other will be some primary as well)
 2000: 7 + 3 =10% + other
• Secondary
 1970: 15% + some
 2000: 61 + 4 + 3 = 68% + some
10
Why did they make that change
• Besides the usual ones
•
•
of seeing it as the only
way to develop, they
had another reason.
There was one ethnic
group, the native
Malays, were very poor
and this was causing
civil unrest.
They could see that in
order to make more
money for everyone,
industrialisation was the
way forward.
11
What did they do?
• In 1970 it introduced its New Economic Policy (NEP).
They decided to:
 provided financial incentives for foreign trans-national companies
(TNCs) to invest in Malaysia.
 train their workforce in the necessary skills.
 use money from traditional exports to help fund this
development.
• They attracted inward investment with the inducement
•
•
•
•
•
of low taxes and cheap land
They invested heavily in getting an educated workforce.
The government has also built an infrastructure of roads,
railways, airports and ports, which benefit the population
but also encourage the TNCs to invest
They kept the wages low
The strict labour laws minimised disruptions and union
membership was not encouraged
The working day was long.
12
How did they get the population to
accept these conditions?
• The government achieved good social welfare results
• The reductions in child and maternal mortality have been
•
•
•
exceptional and rates are now similar to those of many
developed countries.
These improvements are attributable to a well developed
primary health care system, including substantial
investments in the reproductive health service, and to
access to quality water, sanitation and nutrition.
The Malaysian government subsidies for petrol, food and
other essential goods allows the people to have
sufficient, even if their income is low.
Over time, they built up their own design facility – Proton
Cars and microelectronics component industries.
13
But what about the secondary employment
blip? (HIC over time case-study)
• Let’s look at the UK over time
• What happened to the primary industry?
The tertiary?
• But now take a close look at the secondary
industry – what do you notice?
14
But what about the secondary employment
blip? (HIC over time case-study)
• Let’s look at the UK over time another way
• Line graphs are good if you want to look at
change over time.
15
But what about the secondary employment
blip? (HIC over time case-study)
• Let’s look at the patterns:
• in 1800 there was little in the
way of service industries or
manufacturing – back then
most manufactured goods were
made in small workshops by a
few craftsmen.
• However, most primary
production, farming in the
main, was done by hand or
simple technology.
• But as the industrial revolution
took hold, more people were
needed to work in factories
and so fewer were employed in
agriculture.
• This was facilitated by
increased mechanisation – the
steam engine being an
important element
16
But what about the secondary employment
blip? (HIC over time case-study)
• Even with mechanisation,
factories employed a lot of
people in the early days.
• However, even as more mass
production, of items like cars
and washing machines, meant
more factories, the increase
in labour began to tail off, as
•
the automation took over
from mechanisation.
• Another issue was raw
materials – many of our early
industries in the UK
depended on locally available,
bulk raw materials but as
these began to run out, the
advantage for the factory
nearby was lost
Add to this, as we have seen in
Malaysia, as more countries
becoming industrialised, then new
factories tended to concentrate
in those places where bigger
profits could be made, due to
lower wages and lower taxes. So
as old factories became out
dated in the HICs, new ones that
replaced them were built in the
developing countries, such as
Malaysia.
17
But what about the secondary employment
blip? (HIC over time case-study)
• So the number of people
•
employed in secondary
industry in HICs began to
decline for both the
above reasons.
In the meanwhile, TNCs
kept up their
administrative and
development arms in
HICs, increasing the
number of workers in
tertiary and even
quaternary occupations.
• In addition, finance and
tourism and all the other
service industries grew
apace in HICs and their
levels of healthcare,
education and government
services all grew too.
18
Change it a bit, take away the bottom
scale and put in countries and ….
Ethiopia Peru
Brazil
Japan
UK
• You can see that as countries develop they
•
change their employment structure.
What do you notice about their primary
industries, secondary industries and tertiary
industries.
19
Comparison between the 2 case-studies
Looking at them
separately first
20
Comparison between the 2 case-studies
• The number of people working in primary
•
industry the UK, that is farming, fishing, mining
and forestry, at 1.4% in 2006, is unlikely to go
any lower. However, the number in Malaysia 13%
and will probably continue to fall as
agriculture/mining etc becomes even more
mechanised.
The secondary industry peaked in the UK in
1900s before tailing off. This is due to increased
mechanisation, raw materials such as coal and
iron ore running out and competition for work, as
the TNCs choose more profitable places to
operate from, and in the meanwhile in Malaysia,
those in secondary production is still increasing
and already higher than that in the UK.
21
Comparison between the 2 case-studies
• Both countries have increasing numbers
involved in tertiary and quaternary
production (although the figures for
quaternary are not high enough to show up
on the graphs just yet), as they are both
concentrating on development and design
rather than on straightforward production
and the increasing standard of living of
their respective populations can use more
and more services
22
What is informal employment and why does
it happen?
• The official definition: The informal sector is largely
•
•
•
•
•
made up of jobs over which there is little or no official
control. It includes jobs such as child minding, domestic
cleaning and bar tending.
In HICs, this is the main area for the informal economy.
Previously, in the UK for example, this also included
something called the ‘Black economy’ or the ‘Lump’.
A lot of building workers were paid by the day in cash
and did not pay tax nor did they show up as being
employed – in fact many claimed unemployment pay and
worked illegally.
Because of its illegal nature, pay rates were much lower
than regular workers and so building contractors were
only to happy to use them.
Another group were illegal immigrants who worked in
sweat shops for long hours, poor and often unsafe
23
conditions and very low pay.
What is informal employment and why does
it happen?
• But the minimum wage and the demand that
•
•
building contractors withheld money, even from
self employed people, to off-set tax has
resolved many of these issues.
Officially, someone cleaning houses for a few
hours a week or doing a bit of baby sitting should
be registered as an employee but small
infrequent jobs of work are largely disregarded
by officialdom. However, they do form part of
the informal economy.
In MICs and LICs the informal sector is far less
controlled and involves a much greater variety of
people and jobs.
24
What is informal employment and why does
it happen?
• In LICs/MICs most street workers do not appear on any
•
statistics - these include street vendors, shoeshine
boys, car washers, litter pickers, as well as employees of
back street workshops who work long hours in dangerous
conditions.
In some countries, children are sold by their parents to
become ‘apprentices’ and so are virtual
slaves until they reach adulthood and as
it is for most part illegal to employ young
children, they do not appear in any
statistics either.
Venezuela
25
What is informal employment? Why does it happen?
• For example in India it has been estimated that the
informal economy was responsible for 60% of net
domestic product, 68% of income, 60 % of savings, 31%
of agricultural exports and even 41% of manufactured
exports! Some estimates say that as many as 80% of the
population earn most of their money through informal
means.
In another example, Nigeria, it is
thought that 40-45% of the GDP
comes from the informal economy,
even though Nigeria is a resourcerich country.
India street market
Guatemala
26