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This lesson examines the global shift — the large-scale movement of manufacturing and service industries from High-Income Countries (HICs) to Newly Emerging Economies (NEEs) and Low-Income Countries (LICs). It addresses the Edexcel Enquiry Question: "What are the consequences of globalisation for countries and different groups of people?"
The global shift refers to the relocation of manufacturing and, increasingly, service industries from developed countries (HICs) to developing countries (NEEs and LICs). This has been one of the most significant economic transformations of the late 20th and early 21st centuries.
Key features:
| Indicator | 1970 | 2023 |
|---|---|---|
| China's share of global manufacturing output | ~4% | ~30% |
| USA's share of global manufacturing output | ~25% | ~16% |
| UK's manufacturing employment | 7.9 million | ~2.6 million |
| China's manufacturing employment | ~50 million | ~100+ million |
| Bangladesh garment exports | Negligible | ~$47 billion (2023) |
The global shift is driven by a combination of push factors (in HICs) and pull factors (in NEEs/LICs):
| Factor | Explanation |
|---|---|
| High labour costs | Average manufacturing wages in the UK ( |
| Strict regulations | Environmental regulations, health and safety laws, and labour protections increase production costs |
| Strong trade unions | In some HICs, trade unions negotiated high wages and benefits, increasing costs |
| High land and property costs | Factory space in HICs is expensive compared to NEEs |
| Shareholder pressure | TNCs face pressure to maximise profits, incentivising cost reduction through offshoring |
| Factor | Explanation |
|---|---|
| Low labour costs | Abundant supply of low-wage workers willing to work in manufacturing |
| Fewer regulations | Weaker environmental laws, less strict health and safety requirements, fewer labour protections |
| Government incentives | Special Economic Zones (SEZs), tax holidays, subsidies to attract FDI |
| Growing domestic markets | NEEs like China and India have rapidly growing middle classes — potential consumers |
| Improving infrastructure | Investment in ports, roads, power supply and communications |
| Trade liberalisation | WTO membership and bilateral trade agreements reduce tariff barriers |
Exam Tip: When explaining the causes of the global shift, always distinguish between push and pull factors. Then show how they are interconnected — for example, high wages in the UK (push) make low wages in Bangladesh (pull) relatively more attractive. This analytical approach earns higher marks.
The concept of the New International Division of Labour (NIDL) was developed by Frobel, Heinrichs and Kreye (1980). It describes the spatial restructuring of production on a global scale:
| Economic Activity | Typical Location | Characteristics |
|---|---|---|
| Headquarters, R&D, design | HICs (USA, UK, Japan) | High-skill, high-wage, knowledge-intensive |
| Advanced manufacturing | HICs and advanced NEEs (South Korea, Taiwan, Germany) | Capital-intensive, requiring skilled labour |
| Low-skill manufacturing | NEEs and LICs (China, Bangladesh, Vietnam, Ethiopia) | Labour-intensive, low-wage, often poor conditions |
| Raw material extraction | LICs (DRC, Zambia, Nigeria) | Resource-dependent, low value-added |
| Services (call centres, IT) | NEEs (India, Philippines) | English-speaking, educated but lower-wage workforce |
This NIDL means that different countries occupy different positions in global production networks, with HICs generally capturing the highest-value activities and LICs the lowest.
Special Economic Zones are designated areas within a country that offer different (usually more liberal) economic regulations than the rest of the country. They are used to attract FDI and promote industrialisation.
China's SEZ programme, launched in 1980 under Deng Xiaoping's reform agenda, was a key driver of the global shift:
| Country | SEZ/Zone | Key Industries |
|---|---|---|
| India | Over 270 operational SEZs (2023) | IT services, pharmaceuticals, textiles |
| Bangladesh | 8 Export Processing Zones (EPZs) | Garments, textiles |
| Ethiopia | Hawassa Industrial Park, Bole Lemi | Garments (attracting Chinese and European firms) |
| UAE | Jebel Ali Free Zone (Dubai) | Logistics, manufacturing, trade |
Deindustrialisation is the decline of manufacturing as a proportion of GDP and employment. It has profoundly affected many HIC regions:
Impacts on affected communities:
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