The global economy is divided into 4 sectors, each involving different types of employment:
- Primary sector- This involves working with natural resources: fishing, farming, forrestry and mining.
- Secondry sector- Manuufacturing or construction.
- Tertiary sector- Providing service for the population: commercial, professional, social, entertainment and personal.
- Quaternary- Only developed countries, it involves research, information and communication, e.g. financial advice.
The Clark Fisher model
As a country develops the stages people work in changes with the Clark Fisher model.
There are 3 stages of development:
- Pre-industrial stage- The majority of people are employed in primary industries with a small proportion in secondary and tertiary.
- Industrial stage- Lots of jobs are created in factories and industries. Secondary industries such as manufacturing increase in importance. Industrial revolution.
- De-industrial stage- Brings about the post-industrial society, dominaed by service (tertiary). The quaternary service begins to make appearance.
LICs, MICs and HICs
LICs- Low income countries, least developed.
MICS- Middle income countries, more developed.
HICs- High income countries, higher developed.
LIC case study- Ethiopia
- Primary sector is the largest employment sector, 75% work in this sector. Mainly in agriculture and subsistance farming who needs the food to support their families. They work long hours in harsh physical conditions.
- Secondary sector is very small with mainly men working in factories recieving little pay. Foreign investment has created jobs in textile and leather factories.
- Tertiary sector accounts for around 15% of the population, men and women working in services including tourism.
Due to Ethiopias level of poverty and the lack of work that isn't farming, many people are working in the informal sector. People including children who work in this sector work on the streets of towns or cities by selling goods or providing services for passers (e.g. shoe polishing).
MIC case study- China
- Primary sector is the largest employment sector however unlike Ethiopia it involves mining as well as agriculture. Mining accidents are common showing the consequences of weak safety regulations.
- Secondary sector is not as large but generates the most money; driving Chinas economy. Both men and women work in this sector manufacturing goods that are sold around the world. The hours are long and working conditions are quite unsafe but the pay is better than farming.
- Tertiary sector is also large. Hours are long but conditions are better than in the secondary sector.
HIC case study- UK
- Primary sector accounts for roughly 2% of UKs employment structure.
- Secondary sector accounts for only 18% of the UKs employment structure. Due to the deindustrialisation of the UK and the relocation of traditional industries. There are some factories left but they are high tech so require few workers.
- Tertiary sector dominates.
- High working conditions and minimum wage.
Networks, flows and players
There are 3 critical parts needed for the global economy to work and for globalisation to occur. They also provide links between the employment sectors and different parts of the world. These 3 parts are:
- Networks: Things that link countries together e.g. transport networks, phones, internet and trade blocks (known as spiders webs).
- Flows: Things that move through the networks e.g. raw materials, manufacturing goods, money, migrant workers, information and aid.
- Players: The organisations which influence the workings of the global economy, including transnational coorperations (TNCs), the huge business empires as well as many other global organisations.
Some institutions are very influential in the spread of globalisation and the growth of global economy:
- World trade organisation (WTO) established 1995: encourages trade between countries while ensuring it flows as smoothly, predictably and freely as possible.
- International monetary fund (IMF) established 1945: 188 countries working together to provide financial aid between countries and promoting trade and high employment to reduce world poverty.
- World bank: aims to reduce poverty around the world by providing financial and technical assistance to developing countries.
Impact of globalisation
- More gender equality for women, however they still don't recieve the same level of pay as men. Wome still remain disadvantages in many areas including education, employment, health and rights.
- According to the US agency for international development and world bank, 57% of 72million primary aged children who do not attend school are female.
- Working conditions have improved i.e. health and safety, working hours, pay.
- More skilled people thanks to new employment areas.
- More goods and services available to everyone.
- Improved wages.
- Good working conditions.
- Products and services can be charged at high prices.
- More flexibility in working location and when people work i.e. working from home.
- Some job losses as companies relocate to the developing world e.g. call centres and factories.
Impact of globalisation
- Their products are now available to a wider range of people in a greater number of places.
- Pay high prices for the developed worlds products and services.
- Overall, wages are low and there is continueing exploitation of workers and child labour.
- The few who own land have benefitted greatly.
- Few people can afford the goods and services provided by the global economy.
- The informal sector remains.
Impacts on men:
- Mumbai BT call centre
- £3000 a year, equivelent
- Earns more than doctors in India
- High status
- Good living standards
Trade and foreign investment
Over the past 50 years, international trade has increased greatly. In particular, international trade has grown massively. In 2010, international trade was 48 times larger than it had been in 1970. Large companies, TNCs, have expanded and invested all around the world. Finance, insurance and banking companies have also recently been globalised offering their services all around the world.
The increase in trade around the world is down to several different reasons:
- Transport - Improvements in transport around the world means it is now easy to transport goods around the world quickly and cheaply. These improvements include large container ships and air transport.
- Communication - The developments in technology means it is now easier than ever to communicate with people in different countries. Undersea fibre optic cables and satellites now allow the use of email, phone, text and fax for communication between countries.
- Trade agreements - Agreements between countries has made trade easier
- TNCs - The growth of TNCs has increased the amount of trade between countries
- International Monetary Fund (IMF) - The IMF has made it easier for state-led investment in different countries
Foreign direct investment
FDI is when a company (normally a TNC) in one country makes an investment in another country. This investment could be buying a business or factory in another country, or expanding their own business in that country. They will make the investment to take advantage of cheaper labour or resources and increase their profit.
There has been an increase in FDI excluding 2007 (recession). Probably because of technology.
Chinas investment in Africa
- China currently has a huge demand for oil and natural resources and is now in search of these resources in Africa.
- They are investing a lot of money into the search of these raw materials, and part of this project involves building new infrastructure in Africa to transport these materials out of Africa.
- This includes building new roads, railways and ports.
- Despite this, critics say that all China wants is Africa's resources and is doing little to help Africa's development as most of the investment goes to Africa's governments, TNCs and Chinese companies, not to local companies.
- Also, the majority of the workers, close to one million, are Chinese and there are few local workers.
- A TNC is a large company which operates in countries all around the world
- In the past 20 years, TNCs have grown in number and importance
- They cover many different industries
- The headquarters of a TNC are usually found in 'global cities' such as London or New York
- A TNC may have wanted to go global for various reasons:
- take advantage of incentives
- to spread business risk
- to sell inside trade barriers
- to reduce costs of buildings/land
- to reduce labour costs
- to be close to markets
Secondary sector case study - Nike
- Nike was founded in Oregon, USA in January 1964 as Blue Ribbon Sports and was later renamed Nike in 1978. Its HQ is still in Beaverton, Oregon, USA
- They produce and sell a vast range of sports clothing and equipment
- They have offices in 45 countries and 700 stores worldwide
- The majority of their products are outsourced and manufactured in Asia, but they also own some factories where their goods are manufactured.
- The components for their goods are sourced from various different countries around the world.
- Their annual turnover continues to rise
- Nike maintains its market and reputation by sponsoring and promoting sports events and sports stars
Tertiary sector case study - Tesco
- Tesco is a retailer which sells various different products: food, clothing, toys, financial services, electrical goods and more
- It started life as a grocery stall in East London and has since become the UKs largest food retailer and has expanded globally with 6000+ stores worldwide becoming the 3rd largest retailer in the world.
- They employ 500,000 people worldwide
- Despite Tesco being an international company, it is one of the few to have their HQ's in the UK
- Outsources many products from all around the world
- Working conditions and pay are good for its employees
FTZ (free trade zones) or EPZ (export processing zones): Labour intensive manufacturing sites that import raw materials and export finished products.
Most FTZs are located in developing countries and used mainly by TNCs to assemble or process consumer goods, intended for markets in the developed world.
In FTZs TNCs are exempted from taxes and tariffs. Supposed to uphold labour laws but generally do not.
They increase GDP and jobs in the countries they are in.
FTZs tend to ignore labour standards to keep their wages low, mainly impacting women workers the hardest.
- Women are not paid less than men for equal work, but they are paid exclusively for the lowest paid jobs, whilt men work in the highest paid jobs and management positions.
- Many women workers with low paid jobs are the heads of households and wage earners, so many families live in poverty.
Piece work: wages based on units of production, rather than hourly wages.
Production qoutas: Extension to working week, lead to over-exertion and exhaustion, especially of weaker and older workers.
Minimization of non-productive time: Shortening or eliminating of breaks or lunchtimes, monitering toilet time, forbidding employers socialisation.