3.4A costs and benefits of global shift

• Global shift = the relocating of the global manufacturing to Asia from Europe and North America. This has involved:

  -> The shift of manufacturing jobs from Europe, Japan and North America to China.

  -> The shift of service and administration jobs to India, especially Bangalore. 
• Global shift benefits:

  • created more waged work
  • poverty reduction
  • increased education and training
  • Investment in infrastructure
• Global shift costs:

  • Loss of productive land
  • unplanned settlements
  • environmental and resource pressure
• Manufactoring in China:

  • China opened up to globalisation in 1978 with Deng Xiaoping's Open Door Policy. Joined WTO in 2001. 
  • Special Economic Zones set up including Shenzen in Pearl River Delta, Guadong Province, and in Shanghai. 
  • Waged work lifted 680 million Chinese people out of extreme poverty since 1980
  • Waged rates rising
  • more free education
• Services in India:

  • Early investment in Indian Institutes of Technology produced a large pool of IT literate workers. 
  • Computer software design outsourced by TNCs such as Texas Instruments. 
  • Technology workers earn $10 per day.
• why has there been a global shift to Asia:

  • Asian nations allow FDI (Open-door policy)
  • labour intensive industries have moved there
  • Asian nations have a comparative advantage
  • Asia is becoming an emerging market
  • cumulative causation
• cumulative causation: TNC investment and trade cause large markets to become more prosperous through technology transfers, FDI and the multiplier effect, attracting more FDI