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2013

H2 Geography 9730
PART II - Human Geography

STUDY NOTES
LOH ZHENG YI 12S74

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CONTENTS
Uneven Development in the Global Economy +
Transnational Corporations + Role of the State &
Supranational Bodies

Loh Zheng Yi 12S74


H2 Geography

A. THE GLOBALIZATION
OF ECONOMIC ACTIVITY

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A. The Globalization of Economic Activity

LEARNING OBJECTIVES
A1. Uneven Development in the Global Economy

1. Discuss the characteristics and processes of globalisation

2. Discuss the impact of globalisation on the world economy

3. Discuss what is meant by ‘the globalisation of economic activity’

4. Discuss the global, regional and national variations in economic wealth

5. Discuss the development gap

6. Evaluate the usefulness of various indicators used to measure the level of development

7. Discuss the causes and impact of the emergence of the new international division of
labour on global economic activities

8. Analyse the impact of the new technologies on work

9. Discuss the impact of global economic change on the service sector

10. Discuss the growth and locational shifts in various economic activities

A2. Transnational Corporations

11. Discuss the characteristics of TNCs

12. Discuss the spatial organisation and structure of TNCs

13. Discuss the command and control relationship between TNCs and the host economy

14. Analyse the social and economic impact of TNCs on the economies in which they operate

15. Discuss the role of governments in attracting investments

16. Discuss the spatial organisation, linkages with and the social and economic impact of TNCs
on a specific host economy

A3. Role of the State and Supranational Bodies

17. Examine the role of the state in economic development

18. Evaluate the effectiveness of the state in economic development

19. Discuss the role of supranational bodies and evaluate their impact on national and regional
economies

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A. The Globalization of Economic Activity

A1. UNEVEN DEVELOPMENT IN THE GLOBAL ECONOMY


1.1 GLOBALIZATION

 Globalization – Growing economic interdependence of countries worldwide through increasing volume and
variety of cross-border transactions in goods and services, free international capital flows and more rapid
and widespread diffusion of technology [IMF]
 Involves the extension of economic activity across national boundaries and the functional integration of
internationally dispersed activities
 Core Concepts [Emphasis on Economic Activity]
 Global Industrial Shifts/New International Division of Labour (NIDL)
 Tertiary Industry & Outsourcing
 Transnational Companies
 Newly Industrializing Economies
 Global & Regional Economic Inequality
 Supporting/Related Concepts [Not in syllabus]
 Industrialization + Footloose Industries
 Related Geography Concepts
 Urbanization: World City, Socio-Economic Polarization, Urban Decay
 Population: Migration

1.1.1 CHARACTERISTICS OF GLOBALIZATION

 Economic Characteristics
 Increase in international trade and flows of international capital including foreign direct investment
 Development of global financial systems
 Development of global telecommunications infrastructure and greater trans-border data flow
 Socio-Cultural Characteristics
 International culture exchange
 International travel and tourism
 Increased immigration

1.1.2 PROCESSES DRIVING GLOBALIZATION

1. Changing Structure of Firms: Increasing number of firms are becoming more globalized and
internationalized through the distribution of functions worldwide. This results in the formation of many
Transnational Corporations (TNCs)
 Firms now tend to outsource, globalize and form joint ventures/strategic alliances with other countries
 Reasons for globalizing and outsourcing
 Labour is cheaper in developing countries as compared to developed countries; Labour force is
large and hardworking; Labour force is more specialized in certain countries.
 Market has a good purchasing power and is of a suitable size
 Overcoming trade barriers such as tariffs and quotas (capital)
 Exchange rate advantages (capital)
 Allows MNCs to enjoy economies of scale (unit cost of product goes down)  Makes it competitive
 Reduces risk of investing too heavily in a single region
 Examples
 Mitsubishi Motors Corp

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 MMC has manufacturing plants in about 30 countries, some being developed and some being
developing. It also has joint ventures between MMC and local industries in developing
countries.
 MMC Sittipol Co. Ltd in Thailand, Eicher Motors Ltd in India
 In 1998, MMC together with Harbin Dong-An Engine Manufacturing Harbin Aircraft
Manufacturing and some other Chinese companies established Harbin Dong-An automotive
engine manufacturing Co, a joint venture in Harbin. This was approved by the Chinese
government in 30 July 1998. Local Content at the start of the production will be around 50%,
and is planned to increase to 85%.
 Mazda Motors Corp
 Mazda, together with Ford and Sanyo, established an auto audio manufacturing company
named FMS Audio Sdn. Bhd. In Malaysia.
 Sony Ericsson (Disbanded)
 Joint venture between Sony Corporation and Ericsson established in 2001. Allows Sony to tap
on Ericsson’s technological leadership in the communications sector.
2. Rise of Newly Industrialized Countries (NICs): These countries seek to attract TNCs through various policies,
thus indirectly driving globalization by facilitating global industrial shifts.
 NICs offers many financial incentives to attract industries (Government policy) E.g. Tax exemption,
Pioneer certificates
 Encouraging the processing of primary products, adding value to their exports
 Investing in the manufacturing industry, initially by developing heavy industries such as steel and
shipbuilding, and later by concentrating on high-tech products
 Example
 Singapore attracted MNCs by
 Offering tax exemptions and lower tax rates to pioneer industries
 Providing the necessary infrastructure to support high technology production
 Providing manufacturing sites such as Jurong Industrial Estate
 Ensuring and maintain a strike-Free movement
 Malaysia attracted MNCs by
 Setting up the Malaysia Industrial Development Authority to promote and co-ordinate
industrial development in Malaysia. It has 15 offices overseas, all in countries that export
capital and technology, to assist investors in the Malaysia manufacturing industry.
 Emphasizing on technological-base industries (Technology-Action-Plan)
 Formation of Trade Blocs
 Organization of Petroleum Exporting Countries
 Swing Producer  Controls international oil prices as it controls 79% of the world’s oil
resources and 1/3 of the global supply. This helps to increase profits for their oils.
 Their actions have substantial impact on global oil markets.
 Association of Southeast Asian Countries
 Asean Free Trade Agreement launched in 1992
 Strengthen ASEAN’s leverage against other trading blocs
 Aim to remove import taxes, tariffs (e.g. raw materials and integrate Asian economies into a
single production base, creating a regional market of 500 million people by 2015
 Average taxes dropped from 12.8% to 2.4% from 1993 to 2003
 FTAs with Australia and New Zealand, India, Japan, Korea: preferential access to certain
markets, greater export opportunities, elimination of tariffs
 European Union
 Establishment of a single market to facilitate the circulation of goods, capital, people and
services within the EU.

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 EU citizens can move freely between member states to live, work, study or retire in another
country, thus lowering the administrative formalities and enabling professional and needed
labour to travel to developing countries faster.
 Reasons for tapping on TNCs and globalization
 NIC wants industrialization to so as to enhance local infrastructure and standard of living.
 Industrialization generates more income than agriculture and provides employment
 Locals have a guaranteed income
 Brings in foreign investment
 Spread effects when MNCs form industrial links with local industries thus helping to diversify
economy
 Cheaper foreign products since it’s made locally
 NICs gain access to world markets
 Revenue to the state through corporate and personal income tax
3. Development of Space-Shrinking Technologies
 Esp. on Transportation (movement of people and materials between locations)
 Infrastructure that reduce cost of distance
 Roads, Railways, Bridges, Tunnels
 Increase speed and shortens time
 1950s – Containerisation allows for goods to be transferred between ships easily
 1950s – Introduction of the commercial jet aircraft
 Opening up of Artic Ocean & Suez Canal for shipping
 MNCs can now manufacture their products in one country and sell them in another. E.g. Reebok,
an American product, is made in South Korea, but sold in markets all over the world.
 Information flow is no longer slowed down by distance. Faster Communications (transmission of
information between locations)
 Facilitates distribution of global production activities
 Fibre optics, Satellites, Internet, Mass media
 Microsoft used to bring over 150 engineers from India to work in its offices in USA. But with
technological improvements, these engineers can now work in their offices in India while
coordinating their projects via electronic mails or video conferences.
  Easier to conduct economic activities in distant locations according to needs and conveniences.
Technological advancements have enabled MNCs to maintain control and coordinate their various
overseas ventures. They no longer fear losing control over their companies due to distance

1.1.3 IMPACT OF GLOBALIZATION

1. Shrinking World
 While the physical distance between parts of the world may have remained the same, the time taken
for information or real goods to travel between different parts have been drastically reduced.
2. Spatial Interdependence
 The world has been pulled closed as countries increasingly rely on others for the products that they
produce. Highly unlikely that any single country can survive independent of others
 Creation of global markets where firms can tap on foreign markets as sources of raw materials or
producer services
 Creation of a global financial system through the interlinking of stock markets and currency markets
 New Economic Division of Labour: Production of goods and services are now distributed worldwide but
integrated through HQ control
 Footloose industries

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 Industries are now rarely tied to the location of raw materials. There is now a greater efficiency in
the use of raw materials, finished products and the workforce is more efficient and relatively
cheaper; Components for many modern and especially high-tech industries are relatively small in
size and light in weight, and some firms may simply rely on assembling component parts elsewhere.
For example, R&D technology firms are all agglomerated in silicon valley, which is nowhere near
the raw materials required for their products (which are technically assembled elsewhere, in China)
3. Increased trade, mobility and flexibility
 Space-shrinking technologies have facilitated the spread of labour, information, capital and trade across
national boundaries.
 Many industries, especially the service industry, are footloose and can operate in many locations
 Globalization has also allowed firms to outsource their labour and enjoy cost savings while managing
their resources better.
4. Global Economic Structure Redistribution
 Macro-Scale
 Transition from a bipolar world to that of a tripolar structure
 In the past, the economic structure of the world revolved around a bipolar core-periphery model
where manufacturing was concentrated in the core [North America & Europe] while the periphery
focused on providing raw materials.
 Currently, trade takes between three major areas in the world – Europe, North America and East
Asia [thus tripolar]
 Micro-Scale
 Formation of economic clusters in world cities due to greater interdependency between firms as a
result of increased specialization – Industrial Agglomeration Benefits
 Development of trans-border economic clusters and corridors
 Examples
 Europe’s major growth axis “The Hot Banana”, spanning London, Brussels, Paris, Zurich, Lyon,
etc.
 US-Mexico Border
 Pearl River Delta – Zhuhai, Shen Zhen, Guangzhou, Hong Kong
 Bohai Economic Rim – Beijing, Shenyang, Tianjin
 Yangtze River Delta – Shanghai, Nanjing, Hangzhou
5. Accentuation of regional disparities and divergence of economic activities
 Inequality in technology: Not all areas have developed at the same pace, with many LDCs in Africa
lagging behind due to a lack of investment in space-shrinking technologies and transport infrastructure
 Inequality in trade: Some countries practice protectionism and form trading blocs and customs unions
that restrict interdependence. Others such as many African nations simply lack the capital to take part
in the global economy.
 Growth has been unevenly distributed across countries, among both industrialized and developing
countries such that the income gap between the richest and poorest countries has increased
significantly
 Even within countries, disparities can become very pronounced, with western China lagging very much
behind the eastern coast
 Examples
 Areas such as North England have experienced significant deindustrialization due to globalization
 Many African countries such as Niger and the Congo remain significantly poor and have benefited
little from globalization

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1.2 UNEVEN DEVELOPMENT IN THE GLOBAL ECONOMY

1.2.1 UNEVEN DEVELOPMENT IN A DEVELOPED WORLD

 Global Distribution of economic activities influenced by the same factors that drive globalization
 Transnational Corporations
 Newly Industrialized Economies
 Space-shrinking technologies
 *Comparative Advantages [Spatial distribution of factors affecting industry location]
 Global variations in economic wealth
 North-South Divide

 Simplistic portrayal of the world in the bipolar era where the north [Core] is richer than the south
[Periphery]
 Not accurate in the 21st century, where countries such as China and India are emerging as major world
economic powers. The world is also now tripolar rather than bipolar.
 Richest 20% of the world benefit from 85% of its economic activities while the poorest 20% benefit
from only 1% of the economic activity.
 Regional variations in economic wealth
 Although Europe is generally quite rich, there are still countries that are less developed and poorer than
the rest, such as Greece and Slovenia.
 National variations in economic wealth
 Countries that are relatively charge can have economic backwaters which are poorer and less
developed than the rest.
 E.g. In China, the western Xin Jiang area is considerably less developed than the East Coast.
 E.g. In Italy, the north is highly developed economically with regional powerhouses Milan, Turin and
Genoa while the South remains plague with problems related to organized crime and unemployment
(27% vs 7% overall). This is due to inadequate infrastructure, an export-based economy and poor
administration. Even though monetary aid was provided in the form of a “Cassa per il Mezzogiorne”
fund, there was no significant improvement in living standards due to a neglect of local needs.

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1.2.2 DEVELOPMENT & INDICATORS

 Development: The use of resources leading to an improvement in the country’s standard of living via
economic means.
 Indicator: Pieces of information that demonstrate large-scale changes or trends, sums up a complex picture
and gives an accurate overview, usually used to assess the effectiveness of policies such as the UN
millennium development goals. Often used to measure inequality.
 Characteristics of good indicators
 Easily Understood
 Related to something that is measurable and reflects an important characteristic
 Data used should be
 Readily and inexpensively available
 Timely
 Available for a large proportion of social groups so that a picture of distribution can be built up
 UN Millennium Development Goals (–related indicator)
 Halve the proportion of people whose income is less than $1 a day – GDP per capita
 Halve the proportion of people who suffer from hunger – Undernourished people
 Children are able to complete primary schooling – Primary enrolment rate
 Gender equality in schooling – Ratio of girls to boys in school
 Reduce under-five mortality – Under five mortality rate
 Halve the proportion of people without sustainable access to safe drinking water – Proportion with
access to improved water source
 Halve the proportion of people without sustainable access to improved sanitation – Proportion with
access to improved sanitation

ECONOMIC INDICATORS

 GDP
 Advantages
 Shows the economy’s wealth, which supposedly reflects the standard of living and quality of life
 Good estimation of other indicators due to close association
 Limitations
 Does not show income disparity, country may have high GDP but most of that money is with the
rich
 Does not take into account income earned from citizens overseas
 Does not take into account informal economies (e.g. Illegal mining, Illegal etc)
 Hides national income disparities
 GNP
 Advantages
 Takes into account income earned from citizens overseas
 Limitations
 Does not show income disparity, country may have high GDP but most of that money is with the
rich
 Does not show how well local economy performs
 Does not take into account difference in exchange rate ($1 ZMB vs $1USD?)
 Does not take into account the “value” of one’s money. E.g. 1RMB can buy things in China that you
will need $SGD to buy in Singapore.
 Does not take into account informal economies
 % of Labour Force in each industry

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Advantages
 Shows how far a country is along Rostov’s development model.
 Limitations
 Does not make exceptions for countries that may earn a large % of GDP through tourism but remain
undeveloped or developed countries with generally equal distribution of industries. E.g. Japan
 Commercial Energy Consumption
 Advantages
 Shows how much a country can pay for its energy consumption
 Limitations
 More energy consumption ≠ More developed (due to inefficiency in energy consumption) E.g.
China can consume large amts of energy but it is not very developed.
 Development of transport and communication facilities
 Advantages
 The development of such facilities shows that the government has surpluses from its budge that it
is able to invest in such facilities = Economy is going strong + Govt willing to develop such facilities
over other industries = High development
 Limitations
 Does not take into account foreign aid
 Employment Opportunities
 Advantages
 Refers to the availability of jobs in a country. Higher employment  Income per capita increases
 Afford more goods and services  standard of living and quality of life will improve.

SOCIAL INDICATORS

 Literacy Rate
 Gender Inequality Index
 Housing
 Access to sanitation and clean water

DEMOGRAPHIC INDICATORS [KIV POPULATION INDICATORS]

 Crude Birth Rate


 Fertility Rate
 Infant Mortality Rate

COMPOSITE INDICATORS

Composite Indicator, takes into account many different aspects of development and combine them into a single
unit of comparison. Both the HDI and MPI identify the same countries as being the world’s absolute most
underdeveloped, with 2 billion people living in multidimensional poverty.

 Human Development Index (HDI)


 Composite measure of development made up of 3 aspects of living standard, namely
 Life expectancy
 Literacy Rate
 Standard of Living (GDP by PPP)
 Advantages
 Holistic index that takes into account many different aspects of development
 Highlights the need to develop other aspects of a country other than its economy.

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 Swaziland has the same HDI as Botswana but less than 2/3 of its GDP per capita
 Jamaica has a similar GDP per capita to Morocco but a much higher HDI
 GDP per capita by PPP is calculated via a logarithmic scale as extra dollars are worth more the
smaller the person’s income is.
 Limitations
 Hides regional disparities as there is only one HDI value per country (Some cities have their own
HDI)
 Does not take into account other aspects of development such as gender equality, which is difficult
to quantify
 Multidimensional Poverty Index (Initiative at Oxford University to combat global poverty)
 Composed of 10 different indicators that assess the levels of health, education and living standard in a
country
 Identifies sub-Saharan Africa as having the highest MPI poverty rates in the world

EXAMPLES FOR INDICATORS

Country HDI GDP per GDP per GII (low Life Expectancy Literacy Infant
Capita Capita better) Rate % Mortality
PPP Rate
USA 0.937 49900 48100 0.256 79 99 5.9
Sweden 0.916 55200 41500 0.055 82 99 2.73
Japan 0.912 46700 33700 0.131 83 99 2.17
Singapore 0.895 51200 60700 0.101 82 92.5 2.59
United 0.875 38000 35000 0.205 80 99 4.5
Kingdom
Qatar 0.834 99700 88300 0.546 82 96.3 6.6
Saudi 0.782 25000 24300 0.682 76 86.6 16
Arabia
China 0.699 6000 8400 0.213 76 92.2 15
Zimbabwe 0.397 550 756 0.544 54 90.7 27
Afghanistan 0.374 620 1100 0.712 60 28.1 119
DRC 0.304 250 370 0.681 49 66.8 75

HDI World Map (Darker = Higher)

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1.2.3 GENDER EQUALITY ISSUES [KIV FEMINIZATION OF MIGRATION]

 Main Indicator: Gender Inequality Index


 A measure employed by the UN based on a scoring system which takes into account labour market,
reproductive health and empowerment (education + political representation) relative to women and
men. A score of 1 reflects a society where both genders are treated equality.
 Current Status of women
 Economic
 Income: Women are 20% less likely to find a job and earn 17% less than men doing the same jobs
 Economic Sector: Majority of women work in informal economies or as unpaid family workers,
lacking job security
 Poverty: Women own less than 2% of all titled land, with 1/3 of all women homeless or living in
inadequate housing facilities
 Social
 Education: 2/3 of women receive less than 4 years of education
 Health: STDs affect 5 times more women than men worldwide; 99% of women who die from
pregnancy complications are in LDCs and all the deaths are preventable
 Violence: 1/3 of all women worldwide will be subject to some form of violence during their lifetime,
with 1 in 5 women will be the victim of rape or attempted rape
 Politics: Only 18%of members of parliaments across the world are women
 Causes of gender inequality (for women)
 Interconnected factors that reinforce the deprivation of women
 Similar to the poverty cycle, the lack of education, health, access to services, political
representation and income operate simultaneously along with social attitudes and gender
stereotypes that further reinforce these socioeconomic factors.
 This effect is often magnified for women as they suffer greater levels of deprivation compared to
men due to their unequal status.
 “Invisibility”
 Women are often overlooked by society, governments and policy makers. Women are key players
in the quinary industry where they perform numerous domestic duties that are often taken for
granted, tasks unrecognized and unpaid for, even though society and the economy will not be able
to function without household labour.
 Women’s capabilities are often not acknowledged in the same way as men, with women being
more likely to be placed in vulnerable positions during wartime as they are more likely to be denied
resources such as food and health care compared to males.
 Cultural Stereotypes
 Lower cultural value placed on women has led to the selective abortion of female children and the
higher mortality of female infants due to deliberate violence or neglect. In India, girls between ages
1-5 are 61% more likely to die than boys of the same age.
 Women are expected to conform to social norms, which may be extremely conservative. In
Afghanistan, women are attacked by acids when they attempt to study in school. In Saudi Arabia,
women are expected to cover themselves up all the time and are not even allowed to drive.
 Fitness
 Women tend to be less fit than men due to genetics. This has caused them to be embalmed with
the title of being the “weaker sex” and are often attacked first in war. Rape is often used as a
weapon of war in conservative countries such as the DRC or in Sudan.
 Advantages of measuring gender equality
 Gender equality represents a significant international development issue that can potentially
undermine efforts to reduce socio-economic development

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 Even though gender equality in general increases as a country becomes more economically developed,
there are exceptions to this trend such as Japan and the Philippines
 Gender equality can be used as a developmental tool
 Gender inequality needs to be taken into consideration because many developmental strategies work
on the assumption that men and women experience the same conditions, even though the contrary is
true.
 Limitations of measuring gender equality
 Gender equality is hard to quantify because the factors that make up the indicator are merely reflective
of social attitudes towards women and do not by themselves cause inequality.
 Women are not a homogenous group and there are significant differences between populations of
women even within local regions
 There is often a gender bias with respect to women, although it is also important to note that men, not
just women, are also an integral part of gender development.

1.2.4 CAUSES OF UNEVEN ECONOMIC DEVELOPMENT

 Colonialism (Historical Reason)


 Domination of a more powerful country over a less powerful one.
 Colonial powers often obtained raw materials which could not be found or grown in their own countries.
I.e. Tea, Wood, etc. These raw materials were used to manufacture useful products, and were very
valuable
 E.g. The Portuguese colonized Angola (African state) in the 15th century and set up plantations to exploit
the favourable physical conditions and the availability of labour there. Unlike Portugal, the climate and
soil conditions in Angola were suitable for growing cash crops. The Portuguese realized that these cash
crops would fetch a high price in Europe and began exporting them.
 This resulted in a strong trading relationship between the colonial powers and their colonies.
Colonies would export the goods to the home countries to be processed for sale.
 In the 1800s, the colonial powers realized that they could value add these products, which could
then be sold for a higher profit. E.g. cotton could be made into clothing. The colonial powers
became richer from the sale of these products, allowing them to develop their economies.
 Development in the colonies was slow. Although the colonial powers developed infrastructure such as
roads and railways, other aspects of development such as education and environment sustainability
were not developed. Many colonies remained poor
 Furthermore, history has shown that many colonies that are abandoned by the imperialist powers have
often become dictatorships that impeded their development.
 Disparity widens as DCs continue to develop technology and industrialize further, while former
colonies continued to export low-value raw materials for which they gain little profit.
 Presence of raw materials i.e. oil (notice they OPEC is so rich even though they are not so developed?)
 Countries that have plenty of raw materials develop faster than countries with no raw materials (excp.
Russia, Nigeria). This is because money earned from selling raw materials can be spent on projects to
develop the country, such as improving infrastructure such as roads, housing, etc.
 E.g. Norway. Norway is well-endowed with natural resources such as timber and crude oil, which can
be used as raw materials for making products such as furniture and petrol.
 However, there are other countries with plenty of raw resources but they do not always develop quickly.
E.g. Nigeria, which discovered crude oil in the 1950s and has since extracted it and sold it overseas for
large sums of money. Yet the majority of people in rural areas of Nigeria remain poor, because the
money earned from oil exports has been mainly used to develop urban areas instead of improving the
lives of the rural poor. Nigeria’s environment is also damaged and water supplies contaminated by oil

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spillage and pollution. Many people affected and become sick. Thus, standard of living and quality of
life in Nigeria remains low.
 Countries such as the DRC also tend to be undeveloped due to poor exploitation of the natural
resources.
 Climate (Physical Reason)
 Climate plays a role in influencing the type of natural vegetation that grows in a particular place.
 Temperate climate favours development to some extent. E.g. the moist and cool climate in Canada and
the USA is suitable for growing many important crops such as wheat and oat. People are able to grow
these crops on a large scale for sale and export. Whereas in tropical climates, there is sometimes
drought due to low rainfall and high temperatures, or sudden rains. (tropical savannah and monsoon
climates)
 The presence of dense tropical rainforests impedes development as it cannot be cut away easily. In the
DRC, dense tropical underbrush has made infrastructure development such as roads very difficult.
Exploitation of the vast copper, diamond and oil resources is also hindered.
 However, with advancements in technology, many limitations of climate can be overcome. For example,
it is possible to control the physical conditions of greenhouses and nurseries where crops are grown.
Modern technology is used to control the amount of sunlight crops receive, the temperature of the
surroundings, as well as the amount of water the crops need in order to grow well.
 However, not all countries have access to modern technology. This is true for many LDCs, such as Mali
and Ethiopia, where high temperatures and low rainfall made climatic disasters such as drought very
common. Droughts result in insufficient water for agricultural activities and agricultural produce, a
major source of income for LDCs, is affected.
 Floods can also affect development in countries. LDCs are more vulnerable to floods than DCs as LDCs
lack the money and resources to manage floods as well as to rebuild areas affected by floods. LDCs thus
take a longer time to recover than DCs, slowing down their development.
 E.g. China experiences floods every year. In 2005, the floods killed 1000 people and caused 12.6
billion USD of damage. With frequent destruction to their properties, these rural people have to
constantly rebuild their lives and livelihoods, thus they continue to experience a low standard of
living.
 E.g. in Netherlands, after the implementation of the Zuider Zee project, floods are no longer a
serious threat to the country.
 Economic Reason
 Cumulative Causation
 Core-Periphery Theory
 Core tends to develop quickly as it has a head start with natural advantages such as abundant
resources and a favorable climate.
 Core area receives employment, which attracts workers from the periphery to the core.
 Multiplier Effect
 With more people living and working in the core, there is an increased demand for goods
and services, encouraging further investments, leading to expansion of new industries and
establishment of new businesses.
 As more jobs are generated, profits and wages increase as the economy improves; the
general wealth of the people also increases.
 Core will then further improve its infrastructure and services to meet the needs of the
people.
 Further development of the core.
 The process of how movement of people and resources from the periphery to the core increases
the wealth of the core is known as cumulative causation

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 Cumulative causation results in uneven development as areas which have better potential will attract
investments and labour, compared to areas which have less potential to develop. Core countries will
drain periphery countries of labour by attracting them to core countries, as well as getting raw materials
from peripheries, hindering their development and leaving the periphery at a disadvantage. This is the
backwash effect, which further causes uneven development.
 E.g. Singapore development attracted workers from Bangladesh and Philippines.
 After a while, this uneven development will disappear over time as the core spreads wealth and
knowledge to the periphery. This can happen when governments deliberately encourage investments
that bring about economic development to the periphery. E.g. Suzhou industrial park, Bangalore Tech
park, etc. This is known as the spread effect, which reduces uneven development.
 Development can thus be viewed as centrifugal growth, which is outward directed growth.
Development of the core, when viewed as centrifugal growth, is directed outwards to the periphery
and eventually benefits it.
 How a periphery becomes a secondary core (Global industrial shifts)
 Governments in the secondary core can attract foreign investors to their economies by
encouraging a particular industry to develop. With such investments  Economies will grow 
Development
 E.g. Development of the automobile industry in Thailand helped the country develop at a faster
rate since the later 1990s. During that time, manufacturing costs in core countries were also
increasing  Japanese car manufacturers moved their factories to Thailand. Local people
employed to work in these factories picked up knowledge and skills in automobile manufacturing
from the Japanese.
 Periphery in turn sucks labour from surrounding countries as people see it as having a higher
potential for development than their own countries. Raw materials may also be imported to
support the manufacturing industry. Thus periphery becomes a secondary core.
 Periphery  Raw Materials, Labours  Core
 Core  Investments and Knowledge, Finished Products  Periphery
 Education
 With more people being able to read and write, people in DCs are more likely to work in the secondary
and tertiary industries and contribute to a higher standard of living within the country. (refer to literacy
rate for explanation)
 E.G. Italy has the highest literacy rate and a high GDP per capita of $27 119, showing that Italy has the
wealth to build schools and train teachers to educate its people.
 Sierra Leone has a low literacy rate of 29.6% because Sierra Leone has little money to spend on
education as the country’s GDP per capita is only $548. Most of its population is involved in agriculture,
hence there is little effort to provide opportunities for rural people to learn to read and write.
 Population size & growth rate

Criterion Advantages Implications Disadvantages Implications


Large pop. Large Encourages foreign Pressure on Country may need to
(cheap?) investment resources import extra food, etc.
Labor Force Allows for fast construction This costs money.
Large of infrastructure
domestic
market
Small pop. Less pressure Country does not need to Small labor Slows construction
on resources spend money to acquire force Slow GDP/capita growth
resources rate
Decreases productivity

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 Political Conflict
 Political Instability can lead to disruption of businesses, mass movement of refugees and the killing of
innocent people. Tourists would also avoid such countries as they are perceived to be unsafe. This also
deters investors from setting up businesses in such countries. Foreign companies would also be
extremely wary of venturing into war-torn or politically unstable countries for fear that their businesses
might be disrupted at any time.
 Political instability can inhibit the development of resources, causing resource rich countries such as
the Democratic Republic of Congo to remain permanently undeveloped.
 E.g. Cambodian Civil War, Sierra Leone civil war since 1990s. HDI of Sierra Leone is 2 nd from bottom.
 On the other hand, Switzerland, ranked 7th the same year, had a GDP per capita of $30, 552 USD. Many
local businesses have flourished, and foreign investors have confidence in setting up businesses in
Switzerland
 Leadership
 Good leadership is important for a country’s development. Countries that are progressing well in their
economic, health and education sectors are run by governments that are efficient and development
oriented. They are also dedicated to meeting the needs and aspirations of the people.
 E.g. Norway (HDI 0.963) has a stable and forward looking government to guide its development.
Petroleum is a major source of income for Norway’s economy. The Norwegian government recognizes
that this can benefit the people as well, apart from petroleum firms. Thus, they set a petrol cap for
petroleum producers so that the rest of the money goes to Norwegians.
 E.g. China’s leader Deng XP has dedicated to building up the economy of the country and improves the
standard of its people by opening up the economy to the world, reforming the economy, and attracting
foreign trade and investment. China has the highest economic growth rate in the world today.
 Bad leadership such as tyranny can lead to poor development due to poor policies
 E.g. in 2000, Mugabe encouraged unemployed “war veterans” to seize land from white farmers, causing
hundreds and thousands to march into white-owned farms, killing animals, destroying crops and
burning buildings. The new owners are mainly subsistence farmers who did not have the knowledge to
use irrigation systems and complex machinery. This caused agricultural productivity to plummet,
leading to losses of 7.5 billion pounds.
 E.g. General Mobutu Sese Seko amassed a huge fortune in DRC through corruption, causing the
economy to collapse.
 Foreign aid and trade
 With the world being increasingly globalized, foreign aid and trade have had impacts on a country’s
development, with certain countries becoming more developed than others due to increased trade and
aid.
 E.g. Zimbabwe received 90 million pounds of aid from the UK in 2011 and has since established major
trade links with China totalling 6 billion pounds of investment over the next 5 years in major sectors
such as diamond mining and manufacturing. This has helped to boost GDP growth rates above 7%.
 E.g. The DRC has received trade deals from China worth 5.6 billion pounds. Chinese investments include
2400 miles of road, 2000 miles of railway, 32 hospitals, 145 health centres and 2 universities.

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1.3 NEW INTERNATIONAL DIVISION OF LABOUR

 NIDL: The fragmentation and geographical relocation of production processes on a global scale that goes
beyond national boundaries

1.3.1 PRE-GLOBAL DIVISION OF LABOUR

 Core-periphery model
 North served as the “core”, labour in it mainly responsible for producing manufactured goods
 South served as the “periphery”, labour in it mainly responsible for producing raw materials
 Resulted in a trade deficit in the South and a capital surplus in the North
 Geographical distance served as a powerful discriminator that excluded certain countries from trading
with others

 Wealthy North “DCs”


 Tend to export many unique goods [iPhone] and services that leads to expensive exports
 Impoverish South “LDCs”
 Tend to export a limited range of commodity products [Timber, Corn] that are easily obtainable and
highly competitive
 Causes their exports to be volatile and reduces their earnings

1.3.2 CHARACTERISTICS OF A NEW INTERNATIONAL DIVISION OF LABOUR

 Change in economic structure of many countries


 DCs are moving towards an increasingly knowledge-driven economy dominated by service and
quaternary sectors.
 LDCs are enhancing and transforming their manufacturing economies from a large-scale assembly-line
technique that is labour-driven to one that is technology-driven and more flexible.
 Change in export types
 DCs are now more specialized at exporting services, technology and tourism services; Their share of
world manufacturing output decreased from 95% to 77%
 LDCs are increasingly exporting more value-added goods rather than raw materials; Their share of world
manufacturing output increased from 5% to 23%
 Constants

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 DCs still dominate in financial trade and many still receive a trade surplus

1.3.3 CAUSES OF THE NEW INTERNATIONAL DIVISION OF LABOUR

Note: The concept that underpins the whole of NIDL is the need for Rationalization to save costs and improve
productivity and profits.

MAIN PLAYERS DRIVING NIDL

 Transnational Corporations that seek to find the best industrial locations worldwide for various functions
 Attempts to obtain the maximum competitive advantage by distributing various functions in various
countries
 Competitive Advantage = Comparative Advantage [cost advantage] + Differential Advantage
 Comparative Advantage: A firm’s ability to produce a good or service at a lower opportunity cost
than its competitors, thus allowing it to sell the good at a cheaper cost
 Differential Advantage: A firm’s ability to make its products perceived by customers to be better
than its competitors
 NIDL is an attempt by TNCs to exploit the comparative advantage across countries and regions.
Differences in market, labour and state incentives drive TNCs to distribute certain functions in certain
regions to obtain the maximum comparative advantage, resulting in specialization of labour and NIDL.
 Newly Industrialized Economies that seek to attract TNCs and foreign investment to develop manufacturing
or service sectors
 Improvements in transport and space shrinking technologies that allow the HQ of TNCs to monitor
worldwide production and coordinate activities globally
 Allows for production processes to be broken up into different parts and carried out in different
locations.
 Basic assembly processes can be moved offshore to LDCs where labour is cheaper
 Improvements in air transport have also increased the speed and cost at which products of different
sections of the production chain can be transported to the final assembly points

PULL FACTORS

 Cheap and efficient labour: The ability of a firm or individual to produce goods or services at a lower
opportunity cost than other firms or individuals; giving the company the ability to sell goods and services at
a lower price than its competitors and realize stronger sales margins
 Certain industries such as the textile industry/steelworks/shipyards, requires a lot of cheap and
unskilled labour. In the 19th century, a huge force of semi-skilled workers operated in these heavy
industries. Today, there are fewer semi-skilled and more highly skilled workers operating in small-scale
light industries which increasingly rely on machines, computers and robots.
 The cost of labour, especially in developed countries (European Union), is high, accounting for 10-40%
of total production costs.
 Examples
 Labour costs in China are 33 times lower than in the US for textiles
 Vietnam’s factory wages of around $50-60 a month is half that of Chinese workers in manufacturing
centres along China’s coast, and is thus attractive to even Chinese firms
 Specialized workforce for knowledge intensive industries
 TNCs need to locate R&D functions and knowledge-intensive functions in countries with a skilled
workforce

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 Certain industries such as the electronics industry, requires specialist trained labour. Thus, it is set up
in places with well educated people, such as Singapore. Examples of such companies include Motorola
and Avimo Aerospace. (Cutlery, Furniture-Making, Electronics). For example, cutlery makers would
want to be located in Sheffield which contains well educated and specialized people, rather than in
Exeter)
 Well-educated labour usually requires pleasant working environments.
 Examples
 Toyota chose the Burnaston site in Derby for its first factory in the EU for its long tradition of
engineering and vehicle manufacturing and favourable working practices, as well as the excellent
skilled and flexible workforce there with more than 20000 suitable job applications.
 Hitachi Consumer Products Private Limited produces electronic goods, while engaging in research
and development activities. It chose to locate its factories in Singapore due to the cheaper labour
costs. It has also made Singapore its regional headquarters.
 New Markets
 The larger the size of the market, the more potential it has. The good demand also tends to be labour
intensive manufactured goods and less of skilled manufactured goods and services
 Locating a manufacturing plant near the market also reduces transport costs and supply chain risks
 Examples
 China has the world’s largest market by consumer size. From 2002 to 2007, the Chinese car market
grew by 21% and is expected to grow tenfold by 2030 from 2009.
 Leading cosmetic firms such as L’oreal an Olay have already entered China’s 13billion USD cosmetic
market in the first half of 2010.
 Economies of Scale
 Producing products in bulk can reduce the average cost of producing the product
 Examples
 Wal-Mart is able to reduce prices by 3.1% as it uses a vast network of distribution centres served
by a private truck fleet to distribute its merchandise, allowing it to restrict its inventory even as it
opens more stores. The efficiency of distribution channels allowed for lower pricing and resulted
in food-at-home prices that were 9.1%.
 Fewer Environmental & Labour legal concerns
 Industries such as textiles, petrochemical, chemical production, smelting and electronics that often
flout environmental and labour safeguards have migrated to LDCs in South America, Asia and Eastern
Europe where there are less safeguards on the environment or labour conditions
 Example
 Union Carbide’s methyl isocyanate plant in Bhopal, India imploded and killed 15000 while affecting
800 000 more.
 In Indonesia, no rules or codes of conduct are observed, and workers work overtime shifts up to
24hrs at one go
 Little or Weak Labour Unions
 TNCs prefer countries with weak labour unions as this helps to reduce possible labour clashes and
allows them to set flexible wages
 TNCs also prefer a female labour force as they are either not unionized or organized by weak state-
controlled unions
 Examples
 Mexico has poor government regulations on workers’ rights. In many cases, TNCs can get away
with not compensating workers for any accidents caused by companies.
 Incentives provided by NIEs or the state [KIV Role of State in economic development]
 States now often provide incentives to attract TNCs and foreign investment. This generally helps to
keep employment up and spur on development.

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 Examples
 In 1995, the Namibian government passed a law called the export processing zone act as part of its
strategy to become an internationally competitive investment location. The government hoped
that EPZs would attract foreign investments to Namibia and boost the country’s manufacturing
capacity
 Development of special economic zones along China’s coast to spur economic development
 EDB Singapore in 1961 developed Jurong Industrial Park – tax incentives, ready-made factory
buildings attracted Texas Instruments in 1969 and National and Fairchild shorty after
 2nd Toyota plant in the EU, Valenciennes in France had an unemployment rate of 20%, hence the
government grants of 60 million and other training aid
 Nissan received 125 million from UK to encourage them to set up a plant
 Along the M4 and M11 corridors, Britain has managed to attract high-tech companies to set up
quaternary industries in this area due to government-sponsored research establishments at
Harwell and Aldermaston and of government aerospace contractors in the Bristol Area.
 In the early 1980s, the government set up enterprise zones where unemployment and the stage of
the environment posed serious problems. Firms that located in EZs where exempt from rates,
received 100% capital allowances on industrial and commercial property, were subjected to
simplified planning procedures as long as they met certain standards.
 In the 1980s, policies were introduced under the Urban Development Corporations to help badly
hit docklands such as London and Liverpool, and other inner-city areas. Governments also made
direct attempt to attract foreign films and encouraged private-public partnerships
 UK government paid 125 million pounds to Nissan to locate in Sunderland
 UK government paid 40 million pounds to Ford to continue production in Merseyside
 Curtail transborder trade barriers and import duties
 Suzlon and Vestas, Indian and Danish wind-turbine makers made investments in US manufacturing as
it is expensive to ship turbines. Building turbines in the US also made them eligible to be sold as “green”
products which earned rebates.
 US – Multi Fibre Agreement in textiles, which limit the import of textiles to the US
 Automobile manufacturing plants of Nissan, Toyota and Honda are located in UK to circumvent the EU
tariff
 Presence of many raw materials
 Firms that deal with the harvesting and extraction of raw materials would selectively choose locations
with large amounts of raw materials, such as Indonesia, to build plantations and woodworks.
 Examples
 Tata Iron and Steel Company, located at Jamshedpur in Bihar, India. For the Tata Company, iron
ore, coal and water were very important inputs that influenced their decision to locate at
Jamshedpur, which was near two rivers, the Subarnarekha and Kharkai rivers, as well as being near
an abundant supply of iron ore and coal at Singhbhum.
 Industrial Agglomeration
 Industrial Parks
 Attracts mainly Secondary Industries along with some Primary Industries.
 Located near edges of cities to allow for expansion
 Science Parks (Usually joint ventures between universities and local authorities)
 Attracts Quaternary Industrial sectors to concentrate R&D efforts
 Example: Cambridge Science Park developed in conjunction with Trinity College, Cambridge
 Opened in 1972, the success of the early firms soon attracted more firms. By 1999, there were
almost 100 companies employing over 2500 people. These companies are mainly high-tech
firms dealing with scientific instruments, electronics, and drugs and pharmaceuticals.
 Examples of agglomeration

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 Nottingham’s lace market  85% of all industries are linked with each other
 Motorsport Valley in Oxfordshire
 Car Assembly in the West Midlands
 Semiconductor Clusters in California (Silicon Valley) and the UK
 Durgapur in the State of West Bengal in India has numerous industries located within it, such as
integrated steel plants, other industries that manufacture steel ropes heavy industries and railway
wagons, and industries that process alumina. (i.e. Durgapur Steel Plant, Alloy Steel Plant, The
Mining and Allied Machinery Corporation, Durgapur Projects Limited, Bharat Ophthalmic Glass
Limited, Philips Carbon Black Limited, Durgapur Thermal Power Station)
 Advantages leading to cumulative causation
 Share and maximize use of infrastructure, thus saving energy.
 Build up a pool of skilled labour
 Reduce transport, labour and production costs
 Companies can enjoy economies of scale or cost savings when they buy things in bulk and share
distribution costs
 Reputation attracts investors  Growth and development
 Improved communications, services and financial investment
 Higher levels of skill and further research.
 Energy given off by one process can be recycled and used elsewhere.
 Stimulate entrepreneurship & innovation
 Cause economic diversification
 Disadvantages
 Increased level of pollution
 Increased competition for sales and labour  Increases cost
 Roads congested with transport  Increases cost
 Water and power shortages may occur
 Increased housing costs and rentals  Demand for workers’ housing
 Prestige
 Some areas such as Italy are renowned for industries such as cars, and are hence chosen by TNCs to
locate their manufacturing plants in.
 E.g. Ferrari has never shifted its production plant away from Bologna, Italy
 E.g. Toyota decided to locate production plants in Burnaston due to its long tradition of car
manufacturing

PUSH FACTORS

 Saturated Markets
 High market penetration rates and high saturation of the home market forces TNCs to expand to
potential markets overseas as staying in a saturated market for a long duration might lead to losses.
 High labour costs and unionisation
 For DCs, on top of paying high labour costs, the average employer has to pay another 20-25% of the
worker’s wage rate for insurance and medical benefits. Union strikes often force firms to take on huge
losses while they negotiate with union leaders for new working pay.
 In LDCs, only 2-5% is required, with little or no union strikes.
 Examples
 Unions in Manchester, Liverpool and France have influential lobby powers and can influence wages
 Depletion of Raw Materials

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 Heavy industries such as iron and steel require nearby sources of raw materials to work. The exhaustion
of raw materials and cheaper raw materials in LDCs resulted in the movement of mining jobs overseas
to LDCs, causing many miners to lose their jobs.
 Examples
 In the USA, Pittsburgh Steel lost 130 000 jobs between 1965-1985

CASE STUDY OF INDIA’S SERVICE INDUSTRY AND ITS PULL FACTORS

 Labour: World’s 3rd largest brain bank with 2.5 million technical professionals.
 Well-educated workforce skilled in the English language
 Produces more than a million graduates each year, including 350,000 engineers
 World-ranked educational institutions include 15 institutes of technology, including the Indian School
of Business MBA
 Low cost of labour, about 15-40% the cost of hiring labour in the USA
 Government: Investment friendly & supportive government policies
 Establishment of the National Association of Software & Service Companies
 Allows 100% foreign ownership in most sectors of the economy
 National Telecom Policy opened up national, long distance and international connectivity to
competition
 Software Technology Parks and Special Economic Zones that attracted companies such as Nokia and
DELL
 Access to regional international markets through membership of regional integration frameworks such
as the South Asian Association for Regional Cooperation
 Market: Large market size with 250-350 million middle class individuals with increasing purchasing power

CASE STUDY: BANGALORE INTERNATIONAL TECH PARK

 Description: Joint Venture between India and Singapore.


 Competitive Advantages at Bangalore International Tech Park (Analysis)
 Raw Materials
 The park houses light industries whose raw materials are light and non-bulky. Hence, raw materials
are not seen as a very important factor of location as the raw materials needed by the various
industries could be easily obtained and transported
 Land + Environment
 The International Tech Park is located 18km east from the city centre and occupies 27 ha. This
allows for future expansion of the international tech park (due to it being at the outskirts).
 The environment also met ITPL’s concept of Work-Live-Play, thus helping to attract skilled labour.
There are also numerous recreational facilities located inside there.
 Benefits of industrial agglomeration
 Energy
 International Tech park has its own energy supply independent of India’s national grid, backed by
non-interruptible power supply and emergency generators. This reliable energy source attracts
corporations as it helps to prevent blackouts, which is common in many other parts of India, and
data loss.
 Labour
 India contributes about 2.5 million skilled technical labour to the world, out of which 20,000 is
supplied by Karnataka. Furthermore, many technical professionals also come from other parts of
India and the world to Bangalore in search of better jobs. This provides a pool of skilled and well-

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educated labour that is crucial to the electronics industries based in the tech park. This also makes
it easier to train the labour force to meet employers’ expectations
 Government
 The Karnataka State government is a partner in this joint venture. The participation of the
government is a positive factor as it signifies stability and legality of the tech park. Official
procedures have also been cut down and incentives given.
 Capital
 The International Tech Park is located only 18km away from the city centre and is in close proximity
to financial institutions. There are even some banks that are set up in the park
 Accessibility
 The International Tech Park is only a 20 min drive from the airport, while being linked to many
major cities in India and the Asia Pacific Region through extensive roads, highways, rail and air.
 Telecommunications facilities are also found within the park, such as International Direct Dialling,
Standard Trunk Dialling, and even video conferencing. Application for telephone lines have also
been simplified.

1.3.4 IMPACTS OF NIDL

 Main Impact: Spatial separation of the production chain due to rationalisation, leading to increased
specialization by firms and the development of the tertiary sector to support this globally dispersed
production chain which subsequently triggered phenomenon such as outsourcing. As a whole, the world’s
economy has shifted from a model based on standardized mass production to one that is increasingly
flexible and multi-skilled.
 Global Industrial Shifts
 Industrialization of LDCs
 Possess comparative advantages [pull factors], causing TNCs to relocate their low skilled jobs
overseas.
 LDCs such as China now dominate manufacturing jobs, but even these countries are increasingly
losing such jobs to the 3rd tier LDCs such as Vietnam and Cambodia.
 Results in an increase in employment opportunities, an increase in the standard of living along
with technological and skill transfer
 Benefits stated above limited to labour intensive industries [secondary industries].
 Increased dependency on TNCs and their countries of origin
 Benefits more applicable for NIEs, which are increasingly becoming secondary cores. NIEs are
becoming increasingly attractive locations for global production, even more so than other LDCs
due to the incentives that they offer.
 De-industrialization of DCs
 DCs retain jobs that require highly skilled workers, but lose their low skilled jobs to LDCs
 Incursion of high costs for secondary industries in DCs due to the growing diseconomies linked to
outdated factories and machinery, higher labour costs and restrictive practices compared to LDCs.
The lack of new technologies also forced such industries to rely on expensive sources of power
such as coalfield and mines.
 Secondary industries in DCs that upgraded their production lines and improved efficiency using
technology reduced the demand for labour due to rapid increase in automation and computerized
control of assembly lines. Rise in productivity coupled with lower labour costs allowed such high-
tech manufacturers to remain in DCs, but jobs were still lost.
 Increasing displacement of manufacturing by service activities in the economy
 Initially occurred in the staple industries such as iron and steel, shipbuilding, textiles but eventually
spread to the consumer durables industries in the 1970s in UK

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 Growth of tertiary sector, channelling of profits from TNCs to country of origin (DCs)
 Allows for more competitive product pricings due to outsourcing of economic activity
 Possible protectionism as a result to safeguard traditional industries
 Tertiarisation [Rise of service sector]
 Increased demands for services to support secondary industries in LDCs and quaternary industries in
DCs.
 Includes producer services such as communications, logistics, risk management, insurance and finance.
 Types of services
 Upstream – Services prior to production (Venture Capital, Market Research)
 Onstream Production; services integral to the manufacturing process– (Maintenance, Quality
Control)
 Onstream Parallel; services required for operation– Internalized, carried out by the TNC (Training,
Telecommnications)
 Downstream – External, specialized firms (Advertisement, distribution)
 Increasing prevalence of a footloose service industry that requires an educated workforce, with IT skills,
access to communication systems, offices or business parks and good government policies
 Services that a TNC needs is increasingly being outsourced to other firms
 Exacerbate global inequalities, widens development gap
 NIDL only benefits countries if the pull factors are strong enough for TNCs to engage with that country.
This depends on several factors
 Geopolitically stable economies
 NIDL favours countries without civil strife, wars, terrorism, social safety issues. Countries such as
North Korea, Democratic Republic of Congo and Iraq have troubles attracting LDCs due to civil strife
and extremism
 Competent Governments
 Countries choked with red tape or pervaded with corruption are shunned by TNCs. Good
governance is one of the main factors why Singapore has developed so fast despite being in a
geopolitically unstable region previously.
 Good and reliable infrastructure
 Many sub-Saharan African nations do not have the necessary infrastructure such as roads and
communications to support large scale manufacturing and investments. Landlocked regions with
no airport facilities are also hindrances.
 Globalization favours and benefits countries with technology, trapping these LDCs in a vicious cycle

1.3.5 IMPACTS OF NEW TECHNOLOGY ON MANUFACTURING [SECONDARY INDUSTRY]

Note: NOT independent from NIDL, in fact many of these impacts are also partly driven by NIDL

1.3.5.1 IMPACTS ON PRODUCTION

 Shift from standardized mass production [Fordism] to flexible multi-skilled production [Just in time
production] **NIDL Driven
 Advanced transport technology – Enabled a more efficient transfer of people and goods across
boundaries.
 Containerisation has reduced cost and time of moving goods across long distances
 Advanced communications technology – Allowed firms to be flexible in their choice of industrial
locations and capitalise on the comparative advantage of different locations
 Broadband Communication
 Internet

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 Improvement in information technology


 Computer assisted manufacturing that has greatly reduced the time required for planning, design
and production of a given product.
 Rise of high-tech and footloose industries
 The advent of technology has led to the inception of a wide variety of industries that are heavily reliant
on R&D and skilled labour (e.g. Pharmaceutical Firms, Biomedical Engineering Firms). These are more
footloose as they require knowledge more than anything else.
 Industries that deal with the trade of information are one of the most footloose industries
 However, such industries are still confined by the needs of skilled labour and good infrastructure, thus
they tend to be located in areas with skilled labour such as Silicon Valley, the M4 corridor, etc (mostly
in DCs)
 Increased specialization **NIDL Driven
 Advancement in technology has allowed production processes to be broken up into different parts and
outsourced to different locations. As a result, firms are more likely to be involved in only one part of
the entire production chain or involved in supporting the production chain.
 Increasing prevalence of horizontal industrial linkage
 Increasing cross-border specialization in Asia due to economic liberalization and the expansion of
Japanese firms into the region.
 Many Japanese SMEs are involved in supplying parts to larger Japanese firms as well as foreign
firms.
 Rationalisation – The re-ordering of production to achieve economies of scale = increase productivity
**NIDL Cause
 Technology has exacerbated the trend of rationalisation
 Involves reducing workforce, closing inefficient plants and changing the nature of the production chain.
 Involves the withdrawal of state subsidies in loss-making industries
 Examples
 Closure of steel-manufacturing plants in the UK that were incurring losses while concentrating
production in more profitable sites
 Withdrawal of state financial support for Proton in Malaysia
 Organization and integration of the production line
 Traditional organization – Fordism
 Slow transport, focus on increasing on-site productivity through specialization of jobs at the
assembly line
 Standardized production at very large volumes to benefit from economies of scale
 Distant relationship with suppliers as the firm controls almost the whole production line
 Heavy time and cost in switching to new products
 Repetitive execution of simple tasks by narrowly skilled workers
 New organization – Just-in-time manufacturing
 Increase in specialization
 Firms also became more specialized by focusing on a specific part of the production chain
rather than the whole chain.
 Increasing diversity of specialization in many production processes, enabling their fragment
into a number of individual operations
 Multi-skilled workers that can switch between various production roles
 Increase in flexibility
 Computer aided designs and advancements in transport increased the speed of transport and
communication.

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 Allowed manufacturing to be made more market sensitive, such that products are only
produced when required. This allows producers to make products that suit individual
customers without a cost compromise.
 Saved space and money from excessive inventories
 Encouraged industrial agglomeration as it was more prudent for firms to establish close linkages
with support services and related companies to decrease time and cost of transport. Close
relationship with suppliers.
 Obsessive preoccupation with quality control as an intrinsic element in all stages of the production
process. The concept of “Total Quality Management” involves building in quality from the
beginning rather than checking for faults at the end.
 Wide range of differentiated products

1.3.5.2 IMPACTS ON LABOUR

 Less manpower required


 Advanced technology such as automation and the use of computer assisted design will reduce the
amount of manpower required
 New just-in-time industries are capital-intensive and employ relatively few people
 Segmentation of labour market
 Core functions of TNCs are performed in the core and secondary functions in the periphery, leading to
a spatial separation of a company’s labour
 Core workers are more valued and have higher benefits and job security as they tend to be more skilled.
 De-skilling
 De-skilling: Breakdown of jobs into smaller units, each to be tackled separately, so that low levels of
skills are required.
 Occurs when there is a mass production of standardized techniques and automation. Workers are
required to have very low level of skills as jobs are broken into simpler units.
 The advent of new automation techniques such as industrial robots and conveyor belts have
accentuated this deskilling process and led to the loss of jobs and a reduction in real wages
 Re-skilling
 Occurs in flexible production where workers are increasingly involved in multi-task operations in work
teams and job rotation.
 Made possible by the rapid changes in product design brought about by computer-aided-design
techniques, allowing for new models and variations to be easily adopted.
 Labour Stability
 Post-Fordist firms tend to employ fewer people and employ part-time and temporary workers.
Workforce size fluctuates based on supply and demand, hence such the jobs are less secure and such
firms provide a less secure base for the local economy.

1.3.6 THE SERVICE SECTOR [TERTIARY AND ABOVE]

 Definition: Services are activities that do not produce or modify physical economic goods, but rather
produce intangible ones.
 Characteristics
 Labour intensive
 Quality of product depends on quality of labour
 Provides valuable support for manufacturing
 Types of service sectors
 Tertiary Industry: Consumer Services

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 Services that are provided to people or companies including retailing, tourism, banking, transport,
arts, entertainment and recreation services, messenger services, inventory management services
 Physical goods may be transformed in the process, but the focus is on interacting with people and
serving the customer
 Quaternary Industry: Information Services
 Services that deal with information, including computing, information and communications
technology, advertising, consultancy and research & development
 Knowledge based, concerned with the production of information
 Quinary Industry: Non-profit/Administrative Services
 Services that include the highest levels of decision making in a society and economy, as well as
governmental services.
 Includes services such as the government, education, non-profit organization, waste management,
healthcare & social assistance, and even domestic labour (homemakers)
 Outsourcing – Cornerstone of the tertiary sector where companies subcontract certain requirements to
external service providers
 Major outsourcing sectors
 Business process offshoring (Database marketing, transcription, billing services, web design,
sales/marketing, accounting, telemarketing, legal processes)
 Information technology enabled services
 Knowledge process of core innovation activities (engineering, product development, R&D)
 Worldwide outsourcing locations
 Argentina/Brazil – Web and Software programming, game development, IT support, network
solutions
 Philippines – Customer support, IT support, programming, animations, transcription
 Case Study: India
 Major cities dealing with outsourcing: Bangalore, Mumbai, Chennai, Hyderabad, Pune, Gurgaon
 Annual revenues from outsourcing amounted to USD 60 billion, poised to increase to USD 225
billion by 2020
 Service sector has contributed over 50% to India’s industry
 Services that India provides for major TNCs
 Call centres
 Information technology enabled services that covers areas in finance, human resources,
administration, health care and telecommunications
 Major companies engaged in services
 Infosys – Venture Start-up Company that is now one of the world’s top technological
companies with 50 offices and development centres employing over 100,000 staff worldwide.
 Tata Consultancy Services – Indian company that has delivery centres in Argentina, Singapore,
China, etc.
 Overseas TNCs such as Citibank, AOL, General Electric
 Benefits of outsourcing
 Outsourcing improves cash flow and accelerates growth, allowing companies to reduce costs and
adapt quickly to changing environments
 Certain services such as consultancy and services can help a business improve its efficiency and
achieve strategic business objectives
 Outsourcing helps large firms to deal with legislative change, emerging technologies and marketing
challenges by providing them access to skills and knowledge they do not have in-house
 Change in Employment Structure over time

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 With close reference to Rostov’s model of


development, it can be observed that as a
country develops its economy, the employment
structure changes as in the graph
 NIDL drives the deindustrialization of the
developed countries, resulting in a drop in
manufacturing

1.4 IMPACT OF GLOBAL ECONOMIC CHANGE ON THE SERVICE SECTOR

1.4.1 DEVELOPMENT OF HUB STATUS

 Hub: A centre of activity or interest or commerce or transportation; a focal point around which events
revolve
 A hub is usually associated with the provision of a specific kind of service (e.g. Banking) where the
quality of the service provided outstrips that of similar services provided in the region
 This leads to agglomeration of various firms that contribute to the provision of that specific service
 Examples of Hubs
 Banking Hubs: Tokyo, New York, London, Hong Kong, Singapore, Shanghai, Frankfurt
 Tourism Hub: Singapore, Hong Kong, Macau
 Healthcare Hub: Singapore
 IT Hub: Bangalore, Mumbai (refer to outsourcing)
 R&D Hub: Singapore, Silicon Valley
 Cultural Hub: Paris, Seoul, Sheffield
 Education Hub: Cambridge
 Reasons behind the drive to develop hub status
1. Deindustrialization due to NIDL shifts (with specific reference to impact on cities)
 Economic Impacts
 Loss of tax income to the local authority
 Loss of income in the tertiary sector due to falling spending power of the local population
 Increased demand for costly state services and state benefits
 Social Impacts
 Increased unemployment
 Socio-economic polarization
 Out-migration of qualified personnel
 Environmental Impacts: Dereliction & Urban Decay
 E.g.
 Manufacturing Jobs in Glasglow declined from 230,000 to 50,000 from 1961-1991
 Barcelona lost 40% of its manufacturing jobs from 1970-1985
 Due to deindustrialization, cities need to replace the jobs lost by developing their service sectors
and compete with other cities. However, due to intense competition in the global economic
system, cities need to concentrate resources in specializing in certain types of services so that
they can occupy a new niche (find a new economic purpose). This leads to the development of
hub status for different cities.

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2. Rising Affluence
 Economic growth leads to rising affluence and a higher disposable income, which enables
customers to demand new services (thus generating supply)
3. Rationalization and Deindustrialization
 Rationalization (Cost-cutting to increase efficiency) and deindustrialization generates surplus
labour (may be skilled) that has to participate in the service sector to keep total employment
constant. Labour-intensive sectors are increasingly being offshored (NIDL) to LDCs
 Rationalization also leads to outsourcing which catalyses the growth of the service sector
 E.g. Singapore
 Importance of services has increased overtime due to a gradual decline in labour-intensive
manufacturing and a focus on tourism and the knowledge economy (quaternary sector).
 The service sector now accounts for 2/3 of the entire GDP growth and 70% of total
employment
4. Changes in the manufacturing sector
 Switch from Fordism to just-in-time production has created demand for producer services in
transport, logistics and communication
 Cities with good infrastructure have taken advantage of such a change and have attempted to lure
in high-tech manufacturing companies and develop hub status in that area.
 E.g. Bangalore
 Often cited as the most globalized city in south Asia, with high-tech manufacturing companies
such as Texas Instruments; Apple; Acer; Hewlett Packard; Philips; Infosys
 Centre for aeronautics, machine tools, engineering
 Construction of townships on the edge of the city to house the employees of these technology
companies
5. Demographic Changes
 Demographic changes creates demand in niche services such as healthcare and social assistance,
which drives the city to develop hub status for such services.
 E.g. Singapore
 With an ageing population, the Singaporean government has set up a committee to promote
the growth of the silver industry, with expenditure by the elderly being $1.95 billion in 2005.
 Services that are part of the silver industry include
 Healthcare & wellness [Improving the capability of the healthcare industry to work with
elderly]
 Leisure & Tourism
 Education
 Financial Products [Growing financial services and products]
 Assistive Technology [Technology that helps the elderly in their daily lives]
6. New culture
 Cultural Industries: Any economic activity related to entertainment and the arts (film, television,
drama, dance, photography, fashion, visual art)
 New culture allows the city to develop itself as a cultural hub
 E.g. Sheffield
 Rapid deindustrialization due to competition from low-cost steel providers in Japan and NIEs
such as South Korea, the shift from Fordism to just-in-time production and withdrawal of
government subsidies led to a loss of jobs in the manufacturing sector
 Sheffield gradually shifted to high-tech production of quality stainless steel
 The city council decided to develop the cultural industries to spur growth of the city and to
develop the city as a cultural hub

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 Buildings built include: Site Gallery; National Centre for Popular Music; Red Tape Studios;
Sheffield Haliam University media school

1.4.2 LOCATIONAL TRENDS IN PRODUCER AND CONSUMER SERVICES

Generally, the service sector is heavily concentrated in cities due to the accessibility to knowledge; the quality
of infrastructure and that of communications technology; the prestige of being associated with certain cities;
and the proximity to customers and other businesses in urban areas

1. Locational Trends in Consumer Services [Tourism, Banking, Arts & Entertainment, Retailing, etc]
 Trend: Many consumer services have moved from the city centre to sub-urban or rural-urban fringe
 Reasons
 Decentralization – Shift of population (potential customers) from the urban areas to the fringe
 Less urban problems – Less congestion, better security and lower cost of living
2. Locational Trends in Producer Services [Advertising, R&D, Consultation Services, Legal Services, etc]
 Trend: Concentration in Global Cities, Decentralisation in other areas
 Reasons for centralization in global cities
 Labour – Skilled labour
 Technology – Advanced and reliable infrastructure in transport and communications
 Agglomeration & Linkages – Accessibility and proximity to associated TNCs, other service
businesses and government partners
 Reasons for the suburbanization of economic activity (Jobs involved are often back-office jobs)
 Space-shrinking technology – Space-shrinking technologies have allowed the service sector to keep
in touch with the rest of the world even in remote areas. This is especially true for foot-loose
industries
 Availability and lower cost of land – Office spaces in urban areas are expensive and often lack
sufficient space compared to that of rural areas
 Lower cost of labour – Staff wages in rural areas are lower even though the staff may be just as
skilled
 No urban problems such as congestion or pollution
 Government Incentives – Financial incentives such as grants from the government play a large role
in encouraging service firms to decentralize

1.4.3 INTERNATIONALIZATION OF SERVICE FIRMS

 Trend: Like TNCs, service firms are increasingly providing their services around the globe and catering to
customers from overseas. Service firms also take part in NIDL apart from TNCs
 Reasons
 Globalization – By driving commercial service exchange and the integration of markets, service firms
can easily access new customers worldwide
 ~NIDL reasons

1.4.4 RISE OF SMALL AND MEDIUM ENTERPRISES

 Definition of SME: Varies, usually by criteria such as the number of employees, invested capital, turnover
and industrial type
 Characteristics of SMEs
 Small number of employees
 Small market share
 Independent businesses managed by the owner, who contributes most of the operating capital

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 Small revenues
 Not listed on stock market
 Reason: The demand for services has led to an increase in the number of small and medium sized enterprises
in both DCs and LDCs. SMEs do not need huge capital investment and cater to niche markets
 Importance of SMEs
 Create employment for the nation’s work force as they tend to employ more labour-intensive
production processes than large enterprises; SMEs contribute to over 55% of GDP in DCs and up to 70%
of GDP in LDCs
 Drive innovation and sustainable development
 They form a flexible economic system by providing support to many larger TNCs. These linkages are
attractive to foreign investors and TNCs, hence speeding up the transition from an agricultural-led
economy to one that is more service-based
 Diversifies the economy and protects the economy from global economic recessions and shocks
 Example: Pakistan
 SMEs constitute 90% of all enterprises in Pakistan, employ 80% of the non-agricultural labour force
and contributes to 40% of GDP
 SMEs help to drive the economy by encouraging innovation and entrepreneurship
 SMEs are largely found in the fastest growing export sub-sectors such as cotton weaving and surgical
instruments
 SMEs are highly efficient in resource allocation compared to TNCs and state-owned companies
 Example: India
 SMEs account for 39% of manufacturing output and 33% of total exports
 SMEs have had higher growth rates than the overall average
 SMEs have a low capital cost but employ over 31 million people in 12.8 million enterprises
 Example: New Zealand
 97% of enterprises in New Zealand are SMEs
 SMEs contribute to total value-added output by up to 40%

1.4.5 DEREGULATION/PRIVATISATION OF PUBLIC SERVICES

 Trend: Public Services (Healthcare, Power, Transport, Telecommunications, etc) are increasingly being
deregulated and passed on to the private sector, which provides these services.
 Deregulation: The removal of government legislature and laws in a particular market
 Reason
 The private sector, in their pursuit of profits, will find the most efficient way to provide such services at
a lower cost and with improved quality.
 Advantages
 Efficiency
 Privatisation leads to competition which spurs greater efficiency, leading to lower costs and prices
for consumers
 Private companies have a greater incentive to produce more goods and services to access the
consumer base
 Private companies also face higher interest rates than government bonds, forcing them to use
capital more efficiently
 In contrast, state-owned companies are inefficient as they tend to be a monopoly and have no real
incentive to improve and innovate
 Corruption & Accountability
 State-owned companies are prone to corruption as decisions are made primarily for political
reasons

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 State-owned companies can also be bailed out by the government, unlike private companies which
are seldom bailed out when they fail
 In contrast, private companies are less prone to corruption as manages are accountable to their
shareholders and to the consumer
 Capital availability
 Private companies can easily raise investment capital in the financial market through stock
offerings or bank loans
 State-owned companies need to compete with other government departments and special
interests for limited capital
 Limitations
 Little Competition and Monopoly
 The quinary sector often has high barriers to entry, hence private firms in such sectors are
protected from fair competition and may have monopoly power
 Accountability
 State-owned enterprises are accountable to the people through the government while private
corporations may subordinate their social objectives in place of profit motives
 Private companies are also not controlled nor subjected to oversight by the public and may hence
avoid providing essential services to members of the public who are unable to pay for them
 Job Loss
 Private companies employ rationalization to cut costs, resulting in some workers being laid off
 Example: US
 Unsuccessful Privatisation: Loss of governmental control leading to economic collapse
 2008 economic crisis was mainly due to the presence of large private banks that mismanaged
public funds for their own profits
 These banks were so integrated into the economy that they had to be bailed out when they failed,
causing the federal government to spend up to $700 billion
 The Financial Services Modernization Act of 1999 repealed governmental regulations on the
merger of banking, insurance and securities firms
 Successful privatization: Railroad Industry
 Governmental regulation stifled the industry and by 1919 the railroad industry was heavily
subsidized
 Deregulation led to a 25-40% drop in the costs of shipping goods
 Example: Singapore
 MAS has embarked on regulatory reforms in banking, fund management, debt and equity markets, thus
promoting a more flexible and conducive environment for financial markets to thrive
 Since 2000, IDA has introduced full market competition in the telecommunications sector, improving
its competitiveness and improving Singapore’s chances of developing an info-communications hub
 Deregulation of the power sector begin in 1995 when the electricity and gas operations of PUB were
corporatized to form Singapore Power Ltd. The government hopes to ensure efficiency in the power
industry and achieve more competitive electricity tariffs, along with better service quality, greater
product innovation and choice of suppliers.

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A2. TRANSNATIONAL CORPORATIONS


Transnational Corporation: A company whose operational activities are carried out in more than one country

**Most NIDL examples can be used here

2.1 CHARACTERISTICS OF TRANSNATIONAL CORPORATIONS (TNCS)

 Main Characteristics
1. Ability to coordinate and control various functions throughout the world
2. Ability to capitalize on comparative advantages across the globe through select
3. Geographical Flexibility – Ability to relocate capital, technology and reassign human resources
throughout the world
 Other properties
 TNCs can exist in primary, secondary or tertiary sectors
 TNCs influence the global economy through their investments and the links they form with other
industrial sectors
 Drive NIDL and globalization

TNC Country Sector


General Electrics USA Electronics
Vodafone UK Telecommunications
Ford USA Automobiles
British Petroleum (BP) UK Petroleum
Apple USA Electronics
General Motors USA Automobiles
Royal Dutch Shell Netherlands/UK Petroleum
Siemens Germany Electronics
Samsung South Korea Electronics
Glaxo Smith Kline UK Pharmaceuticals
Sony Japan Electronics
Toyota Japan Automobiles
Exxon USA Petroleum
Honda Japan Automobiles
AXA France Finance
Volkswagen Germany Automobiles
McDonalds USA Food & Beverage
HSBC Holdings UK Finance
Huawei China Electronics
LG South Korea Electronics
Walmart USA Diversified
IKEA Sweden Furniture
H & M Hennes & Mauritz Sweden Textiles
Monsanto USA Agriculture

2.2 SPATIAL ORGANIZATION OF TNC FUNCTIONS

In general, the factors that cause TNCs to locate certain functions in certain areas are similar to the ones that
drive NIDL (and will hence not be elaborated upon extensively)

 Corporate and Regional Headquarters


 Role

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 Corporate HQ
 Overall control of the TNC
 Responsible for major strategic investment decisions and the allocation of the firm’s budget
 Regional HQ
 Coordinate and integrate the parent company’s activities within the region and act as an
intermediary between the corporate headquarters and affiliates within its particular region
 Initiates new regional ventures and demonstrate the commitment of the TNC to the region
 Spatial Trends
 A relatively small number of cities (including New York, Tokyo and London) contain a large
proportion of both corporate and regional HQ offices of TNCs. 90E% of TNCs are based in DCs
especially USA, France, Germany, UK and Japan.
 Most corporate headquarters are concentrated in the home country, with others being located in
global cities due to factors below.
 Rapid economic growth in East Asia and the integration of the European Union have encouraged
TNCs to located regional HQs in these areas
 Reasons
 Connectivity
 Both headquarters need to be located in areas with global transportation and good
communications infrastructure in order to coordinate functions worldwide
 Accessibility to ancillary services
 HQs need to be in locations with access to high quality ancillary services such as banking,
government agencies, as well as locations with skilled labour
 Agglomeration
 HQs tend to be in areas with the HQs of other TNCs as this facilitates face-to-face contact with
top executives of other TNCs, leading to benefits of agglomeration such as increased
cooperation between companies.
 Research & Development Centres
 Role
 Innovation of new products and new production processes, helping TNCs to stay productive,
profitable and competitive
 Types
 Internationally Integrated R&D lab – Supplies the core technologies and knowledge for the
entire TNC’s operations worldwide
 Locally integrated R&D lab – Apply fundamental technologies and knowledge developed in the
internationally integrated R&D lab to orientate the product towards the local market and
regulatory requirements
 Support lab – Provides technical backup
 Spatial Trends
 Growing internationalization of R&D centres
 Adaptive R&D – Even as TNCs concentrate core research in their home countries, they have
many small foreign laboratories located around the globe to seek inputs of knowledge and
information on how to adapt their products best for the local market
 Predominantly within Global Triad regions
 TNCs tend to keep high level R&D activities within their home countries, which tend to be
located in regions such as North America, Europe and East Asia
 E.g. In the US, only 13% of the total R&D performed by US manufacturing TNCs are located
abroad
 Agglomeration of R&D centres
 Agglomeration of R&D in places such as science parks

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 E.g. In the UK, corporate R&D is disproportionately concentrated in Southeast England with
almost 2/3 of the research undertaken by foreign TNCs located there.
Reasons
 ICT & R&D infrastructure
 Industrial agglomeration (e.g. Science Parks) help to bring together skilled labour and allows for
the sharing of resources
 Skilled labour/Specialized Workforce that may demand areas with a good quality of living
 Incentives provided by NIEs or the state
 Manufacturing Plants & Sales Plants
 Role: To produce & sell the necessary goods for the consumer
 Spatial Trends (Manufacturing)
 Most manufacturing plants that are labour-intensive are located in LDCs such as China, although
TNCs are increasingly moving manufacturing plants to 2 nd tier NIEs such as Vietnam and Cambodia
 Manufacturing plants also tend to be located near markets to reduce the costs of transportation,
although this trend is likely to disappear as transportation costs become cheaper
 Manufacturing plants also tend to be located in Export Processing Zones/Special Economic Zones
due to a combination of various incentives.
 In contrast, manufacturing plants that are capital-intensive or skill intensive (high-tech
manufacturing) tend to be located in DCs with better infrastructure and skilled labour
 E.g. Toyota has 12 plants in Japan, with 51 subsidiary manufacturing companies in 26 countries
from USA to India. It chose UK to locate its European plants due to its excellent skilled and flexible
workforce with a strong tradition of engineering and vehicle manufacturing, as well as reliable
industrial transport links to customers and 230 British and European supply partners
 Spatial Trends (Sales)
 Most sales plants are located in countries with emerging middle classes as this provides the
necessary consumption to increase profits
 Spatial Trends (overall)  Configuration of the production chain
 Globally Concentrated Production – Production is only carried out at a single country and then
exported to world markets. This typically involves a niche market where prestige is highly valued;
thus the TNC only carries out production at a location perceived to be prestigious. E.g. Ferrari,
Fender USA
 Host Market Production – Production is carried out within each market, with certain production
plants being dedicated to each market. This helps TNCs adjust itself to local preferences and
provide rapid and efficient after-sales service. E.g. Nissan, Toyota
 Product Specialization for a global or regional market – Sales plants located throughout the world
serving a global/regional market. This provides the advantages of an economy of scale.
 Transnational Integration (NIDL) – Sales plants and manufacturing plants are located strategically
such that every region is specialized for a certain function, depending on the region’s comparative
advantage.
 Reasons (refer to NIDL)
 Cheap and efficient labour
 Specialized workforce
 New Markets
 Economies of Scale
 Fewer Environmental & Labour legal concerns
 Little or Weak Labour Unions
 Incentives provided by NIEs or the state
 Curtail transborder trade barriers and import duties
 Presence of many raw materials

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 Industrial Agglomeration
 Prestige

2.3 COMMAND AND CONTROL RELATIONSHIP BETWEEN TNCS AND THE COUNTRIES
THEY OPERATE IN

2.3.1 GENERAL CONCEPT

 Command & Control Relationship – A relationship between TNCs and the state where the unbalanced
nature of the relationship allows the TNC to leverage concessions and influence local politics due to the
reliance of the state on the TNC for jobs and FDI.
 Factors that influence this relationship
 Legitimate power that the state wields over the TNC – States choose the incentives they want to provide
to TNCs, and states maintain political stability and protection from crime
 Attractiveness of the state – The more pull factors a state possesses, the less likely a TNC will pull out.
A very attractive state might even compel TNCs to follow the demands of the state
 Influence of the TNC over politicians – TNCs can form lobbies in the government to push for policies
that benefit them; TNCs can also threaten to pull out of a country if demands for incentives are not met
if they have sufficient leverage
 Influence of the TNC over the electorate in democratic countries – TNCs supply the livelihood for many
workers in the country who may lose their jobs if they protest against the TNC

2.3.2 BENEFITS OF TNCS ON THE STATE

 Economic Benefits
 Employment
 Inflow of foreign direct investment creates new jobs in the host countries
 Multiplier effect – Rise in income spurs consumption which drives the host economy and develops
the service sector
 E.g. Toyota employs over 250,000 people worldwide
 E.g. Cargill, a commodity trader, employs over 139,000 people worldwide
 Technology & Efficiency
 TNCs bring in new technology which can be adopted by local firms to improve efficiency. Such
technology is eventually transferred to local firms through labour takeover
 TNCs also introduce competition into the economy, thus spurring local firms to be more efficient
 Tax Revenue
 TNCs pay tax revenues which helps the state to fund its own programs and policies
 Diversify Industrial Base
 TNCs may introduce a new industry sector to the economy, which helps to stabilize the economy
 Social Benefits
 Improved Standard of Living
 Provision of employment and income to citizens of the host economy leads to improved standards
of living as citizens can afford better healthcare and education.
 TNCs may also invest in local infrastructure by building power plants, railways, etc, benefiting locals.
 Some TNCs introduce ideas such as community investment programs which improve the quality of life
for local people by improving infrastructure and paying for university/secondary school places
 E.g. Rio Tinto has implemented a global HIV/AIDS strategy as a response to social and economic
effects of the epidemic

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 Reduces discrimination as people of different nations work together and become more aware and
tolerant of each other’s lifestyle and customs.
 Environmental Benefits
 Some TNCs train their staff in environmental awareness and carry out environmental impact
assessment studies on future sites
 Some TNCs plan for the future using sustainable development guidelines
 E.g. Apple’s policy on the environment dictates that 100% of the energy used to power data centres
comes from renewable energy sources
 E.g. Nokia has a climate strategy that involves cutting energy consumption at manufacturing plants and
making products more eco-friendly
 E.g. Toyota realizes the importance of a good public image and is famous for its Toyota Production
System which eliminates waste

2.3.3 COST OF TNCS ON THE STATE

 Economic
 Economic Vulnerability
 TNCs have the ability to relocate functions from one state to another. This process often leads to
deindustrialization and the loss of jobs in the first state.
 The state may depend too much on the TNC for jobs, which could lead to heavy losses if the
industrial sector that the TNC is in suffers a recession
 Repatriation of profits to home country
 TNCs often repatriate profits back to their home country rather than to the state that hosts them,
leading to slow economic growth in the host’s country
 Non-transference of technology & skills
 Most TNCs have a strict policy on the type of technology that can be exported to other states to
prevent their competitors from potentially obtaining their technology.
 Furthermore, workers in LDCs are often stuck in repetitive jobs that require little skill or technology
 TNCs are also reluctant to spend money to upgrade the skills of the workers when they can simply
move elsewhere
 There is thus almost no tangible benefit to the local population in terms of technology or skills
acquisition
 E.g. Even though farmers acquire genetically modified seeds from Monsanto, those seeds cannot
be reproduced and have to be bought every year. This provides Monsanto with leverage and allows
them to overcharge at the expense of the farmers.
 Repression of local industry
 TNCs can easily wipe out local competition in the sector in which they operate in due to their
technological might and capital, especially in primary industries
 E.g. Del Monte has progressively outcompeted many small holdings in the Philippines due to its
economy of scale in logistics and marketing
 E.g. The use of genetically engineered high-yield seeds by Monsanto has led to the decline in
traditional agriculture industries as farmers switch over to using GM crops due to its higher yield
 Inefficient use of monetary resources
 Grants provided to TNCs are better spent directly on direct development rather than on indirect
development
 Grants provided to TNCs offset the tax revenues generated
 Development of large energy schemes for TNCs can create large national debts for LDCs which
cannot pay it off.
 Social

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 Exploitation of workers
 TNCs often pay workers in LDCs meagre wages and force them to work long hours
 Young children are often employed and membership of unions is not allowed
 Skilled and managerial positions are often filled by foreigners
 E.g. Apple, through electronics manufacturing service providers Foxconn, pays its workers meagre
wages. Excessive demand encouraged supplies to overwork their workers to improve their profit
margins (more than 1/3 of the factories producing iPhones fail Apple’s quality check while many
have violated the laws; 300,000 workers often work for $10 a day). Workers are forced to stand
the whole day and work on the assembly line like machines; some were required to work
continuously without sleep. Workers were also provided with abhorrent housing conditions, with
up to 20 workers being stuffed into a room.
 E.g. H&M, along with other textile TNCs have often kept a blind eye as their suppliers overwork
workers and force them to work in unsafe working conditions. The Rana Plaza collapse led to the
death of 1100 workers.
 Westernisation of attitudes and culture
 TNCs embody the culture of their home country and their operation and sales of products from
their home countries often leads to the slow decline of local culture due to the scale of their
operation and the volume of products in comparison to that of local companies.
 E.g. Even though McDonalds is a USA brand, it is well known throughout the world along with other
global franchises such as KFC. This has led to the introduction of fast food culture to many parts of
the world.
 Products are often meant for export rather than local consumption, thus there is little benefit of any
product produced from TNCs to the local population.
 Raw materials are also exported rather than processed locally
 Environmental
 Environmental Pollution
 TNCs often take advantage of weak environmental laws/ lax enforcement of environmental laws
in the host country and neglect waste management at the expense of the environment
 E.g. Shell indirectly caused 2900 oil spills in the Niger Delta in Nigeria but the Ogoni people have
yet to receive any compensation
 E.g. In Bangladesh, pollution from the textiles industry is so bad that the water turned pink and
schools were forced to close.
 E.g. Apple, through electronics manufacturing service provider Foxconn, exposed workers to toxic
material, with 140 workers injured after using a poisonous material to clean iPhone screens
 Ecological Threat
 Many TNCs that are involved in primary industries such as mining/drilling/agriculture maximize
profits at the expense of the environment
 E.g. British Petroleum’s oversight in the Florida Gulf led to the Deepwater Horizon spill where more
than 4.9 billion barrels of oil were released into the ocean.
 E.g. Cargill’s completion of a port for processing soya in Santarem in Amazon, Brazil, increased the
rate of deforestation

2.3.4 LIMITS OF TNC INFLUENCE

 Time-space compression of competition


 Although time-space compression plays an important role in helping TNCs expand their global reach, it
also forces them to locate certain functions in certain areas.
 The advent of just-in-time production has further promoted the need to repeat certain functions
throughout the global landscape to effectively counter competition from competitors

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 E.g. Denso, a major Japanese automobile has to duplicate many of its manufacturing functions in East
and Southeast Asian countries in order to allow major automobile manufacturers to obtain parts when
demand warrants it.
 Anti-globalization movements
 Anti-globalization movements have gathered momentum with demonstrations against global
capitalism and TNCs in cities such as the Prague (2000), Quebec City (2001) and Geneva (2001)
 Rise of the World Social Forum as an anti-globalization forum
 E.g. Due to intense criticisms from social and labour movements on working conditions in its
subcontractors’ factories, Nike has attempted to develop extensive subcontractor monitoring and
assessment systems.
 Social and Cultural barriers to globalization
 The use of the word “global” hides worldwide discrepancies in culture norms and patterns of social
behaviour
 The continued vitality of local cultures, consumption practices and different forms of kinship/social
relationships poses formidable challenges for the globalizing efforts of TNCs.
 TNCs that appreciate and adapt to local differences tend to reap its benefits
 E.g. Nike, in a December 2004 worldwide advertising campaign depicted the Cleveland Cavaliers’
basketball player LeBron James defeating a Chinese Kung Fu master, a pair of Chinese dragons and two
women in traditional Chinese uniforms. The advertisement was deemed to be insulting and insensitive
in China and generated negative publicity for Nike.
 E.g. Tesco has been successful in South Korea because it not only respected local culture but also
managed to meet the needs of the Korean consumer.

2.4 TNCS AND LINKAGES

 Internalized transactions – Activities that occur within a TNC


 Externalized transactions – Relationships that exist between independent firms (which may also be TNCs)
 E.g. Nokia buying lithium-ion batteries for its phone from Sanyo
 E.g. Apple using Google’s technology for its iPhone

Organization Benefits Costs


Form/Linkage
Single Subsidiary  Full managerial control  Heavy capital investment
 Protection of trade secrets  Conflicts with local firms and
and technology government
 Consistency in production and  Cross-border managerial and
services organizational issues
Outsourcing  Cost competitiveness  Disrupts supply chains
 Flexible inventory  Leaks out trade secrets and
 Reduces investment risk technology
 No direct control of production
Strategic  Sharing of risk  Lack of control of technology
Alliances/Joint  Access to technology;  Problems in managing partners
Ventures knowledge of partners
Franchising and  Low capital investment  Potential infringement of intellectual
Cooperative  Rapid market penetration property rights
Agreements  Good publicity  Costs of monitoring franchisees and
managing ties

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2.4.1 OUTSOURCING OF MANUFACTURING

 Commercial Outsourcing – Principal firm outsources most of the/entire production chain to another firm in
another country
 The principal firm provides original equipment manufacturing (OEM) so that the finished products are
exactly the same as if the principal firm had produced them
 The manufacturer may try to move up the production chain by introducing some original design
manufacturing
 The principal firm’s main job is to specialize in brand management and market those products bearing
its brand name
 E.g. Electronics Industry
 A large group of electronics manufacturing service providers are designing, producing and even
distributing for brand name TNCs such as Hewlett-Packard (90%), IBM (90%), Apple (100%), Dell
(90%)
 These manufacturers tend to be based in NIEs, such as leading Taiwanese electronics
manufacturing service providers such as Quanta, Compal and Wistron, which together accounted
for 68% of total notebook shipments
 These manufacturers integrate various parts into to a notebook. The parts are bought from
companies such as Intel (Cipsets), Seagate (Hard disks), Samsung (Memory chips) and shipped to
the manufacturing plant.
 Industrial Outsourcing – Suppliers only carry out OEM production on behalf of its key customers and do not
engage in original design manufacturing and final distribution
 E.g. Nike outsources its production in Asia to many partners in Hong Kong, Taiwan and South Korea.
These partners have production facilities throughout Asia in Bangladesh, China, Indonesia, etc.
 Nike has contracts with 700 factories around the world

2.4.2 STRATEGIC ALLIANCES

 Strategic Alliances – A type of inter-firm collaboration that only involves certain functions of a TNC. No
equity capital is involved and there is no change in ownership
 Reasons for forming strategic alliances – factors that raise the investment stakes beyond the means of
any individual TNC
 Risky and costly industries such as pharmaceutical and semiconductor industries
 Rapid rate of technological change
 High costs of R&D and new product development
 High competition
 E.g. Airlines
 Major airlines tend to participate in one of the following strategic alliances – Star Alliance, One
World Alliance and SkyTeam Airline Alliance
 This allows airlines to cross-load passengers and reduce excess capacity in any one airline
 Joint Ventures – Strategic Alliances that involve the formation of a separate corporate identity
 Advantages
 Sharing of financial risk
 Inter-firm synergy
 Governments usually require a foreign TNC to offer a minimum shareholding for local citizens or firms;
Joint Ventures help to overcome this entry barrier

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2.4.3 FRANCHISING AND COOPERATIVE AGREE MENTS

 Franchising – An organization form in which the TNC owner of a registered trademark or intellectual
property rights agree to let a franchisee use that trademark or rights provided that the franchisee follows
the guidelines and requirements laid down by the TNC. (Popular in the service sector)
 Allows TNCs to publicize their brand while reducing exposure to investment risks due to unfamiliarity
with local culture, social relations and practices of local customers
 E.g. 7-Eleven; MacDonalds; Burger King
 Outlets may not be necessarily owned by the TNC, but are operated by local franchisees
 Cooperative Agreements – Inter-firm relationships ranging from licensing agreements to non-equity forms
of cooperation
 TNCs may license out patented technology in return for royalty payments
 E.g. Blueray Technology

2.5 CASE STUDIES

2.5.1 H&M [TEXTILES]

 Spatial Distribution
 HQ – Stockholm, Sweden
 Buying Department (R&D) – The buying department dispatches teams to various areas around the
world to obtain information of new culture regarding art, music, film and food. Research is also
carried out by observing various fashion trends and trade fairs. Ideas are then realized as new
clothing designs.
 Production Office – In charge of placing the order with the right supplier and ensure seamless
manufacturing of the products. In addition, the production office also performs extensive safety
and quality testing
 Manufacturing Plants
 None; 100% commercial outsourcing to 800 factories in LDCs such as Bangladesh and China
 Sales Plants
 Located in DCs and in emerging markets such as China
 Germany is H&M’s largest market (410 stores), followed by the US (268), UK (233) and France (192).
 H&M also offers online shopping
 Linkages
 Commercial Outsourcing to factories in LDCs such as Bangladesh
 Economic Impacts
 Employment
 H&M employs 104,000 people worldwide
 Economic Vulnerability
 H&M employs up to 570,000 garment workers worldwide indirectly through linked factories. With
such a huge employment, H&M’s stake in the economy of certain countries such as Bangladesh
can be very high. Any threats by H&M to pull out could lead to a potential economic recession.
 Socio-Environmental Impacts
 Exploitation of workers
 The minimum wage in Cambodia is the equivalent of just £42 a month, a level that human rights
groups say is not even half that required to meet basic needs.
 H&M has also been accused of exploiting child and adult forced labour as cotton harvesters in
Uzbekistan.

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 In addition, a textile factory that produced apparel for H&M in Phnom Penh, Cambodia collapsed
and killed three while injuring several others.
 H&M has recently signed an accord that would legally bind them to invest in improving worker
safety in Bangladesh and other low-cost countries.
 Westernisation of attitudes and culture
 Clothing is an essential part of human culture. As one of the leaders of the textiles industry, H&M
can easily aid in the spread of western culture to the local populace through advertising and
promoting its brand.
 Community investment programs
 H&M collaborates with UNICEF in a project called All For Children. 25% of proceeds from the sale
of certain clothing goes to children in cotton producing areas in Tamil Nadu, India, providing 12.5
million USD each year.
 Environmental Benefits
 H&M promotes the use of organic materials such as organic cotton which is cultivated without the
use of chemical pesticides and fertilizers.
 H&M also has partnerships with environmentally aware transport companies to optimize transport,
thus reducing fuel consumption and increasing the use of renewable fuels and cleaner energy
solutions.
 Environmental Pollution
 Major factories that H&M outsources its manufacturing work to usually flout environmental laws.
This is especially prevalent in Bangladesh.

2.5.2 ROYAL DUTCH SHELL [RAW RESOURCES/PETROLEUM]

 Spatial Distribution
 HQ – Hague
 R&D (international)
 Hamburg, Germany
 Thorton, Chester UK
 Amsterdam, The Netherlands
 Houston, USA
 R&D (Regional)
 Kuala Lumpur, Malaysia
 Upstream Extraction Plants – Areas around the world with oil
 Downstream Refining Plants – Areas around the world that are conveniently located, such as Singapore
 Linkages
 Strategic Alliances
 Shell formed a strategic alliance with EDS, T-Systems and AT&T to improve efficiency and
productivity
 Joint Venture
 Shell has formed the Sirius joint venture in China with PetroChina to tap into China’s oil resources
 Economic Impacts
 Employment – Shell employs 112,000 people worldwide, with 5000 in Nigeria
 Repatriation of profits to home country – Only a small proportion of the profits is given to Nigerians
 Socio-Environmental Impacts
 Environmental Pollution – Operations have contaminated the land with oil and brought about acid rain.
Widespread natural gas flaring has resulted in air pollution. Deforestation has also occurred.
 Civil Unrest – The Ogoni people have continuously protested against Shell due to environmental
damage. Rebels have also attacked pipelines, causing major oil spills

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2.5.3 SAMSUNG ELECTRONICS [ELECTRONICS]

 Spatial Distribution
 Global HQ – South Korea
 Regional HQs
 New Jersey, USA ; Beijing, China; Singapore; Dubai, UAE; Johannesburg, South Africa
 R&D (international)
 Hamburg, Germany; Thorton, Chester UK; Amsterdam, The Netherlands; Houston, USA; Surrey, UK;
Sao Paulo, Brazil
 R&D (Regional)
 Osaka & Fukuoka, Japan; Beijing, China; Tel Aviv, Israel; Moscow, Russia; Houston, USA; Surrey, UK
 Production Plants
 Thailand; Vietnam; Philippines; Guangdong, Tianjin, Jiang Su, China; Hungary
 Linkages
 Outsourcing
 Customer service and processing of personal info to Samsung SDS
 Warranty administration to The Warranty Group
 Economic Impacts
 Employment
 Created jobs for more than 30 000 people
 Multiplier Effect: The Yen Binh industrial zone in Vietnam has attracted 80 service companies which
provide 80 000 jobs
 Non-transference of technology & skills
 Vietnamese workers still stuck at low skilled manufacturing jobs
 Socio-Environmental Impacts
 Community investment programs
 UNESCO and Samsung launched a US$ 1 million two-year project to develop, pilot and distribute
multimedia teacher-training materials on Education for Sustainable Development (ESD) in primary
schools in coastal Hue, a region particularly hit by adverse effects of global warming. Vietnam.
Samsung also provided its technical expertise and know-how for developing materials on ESD.
 Exploitation of workers
 Avg salary of factory workers is $100/month
 Workers in China work 16hrs a day with only 1 day off

2.5.4 BAYERISCHE MOTOREN WERKE AG (BMW) [AUTOMOBILE]

 Spatial Distribution
 Head Quarters: Munich – Major financial and business centre in Germany
 R&D
 International – Munich
 Regional/Support
 California – Tap into the technological expertise available; engage in design work and emission
tests
 Tokyo – Tap into the technological and innovative environment of Japanese carmakers
 Singapore – Research into emerging Asian markets
 Assembly Plants
 Bavaria, Germany – Manufactures cars for the entire European market
 Wackersdorf, East Bavaria, Germany – Manufactures and distributes BMW’s internal parts and
components to its foreign plants in the US, South Africa, Russia and East and Southeast Asia

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 UK – Manufactures cars for the right-hand-drive British market


 Spatial Organization
 Mix of Transnational Integration and Host Market Production

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A3. ROLE OF THE STATE AND SUPRANATIONAL BODIES


State – A politically-bound space within which the resident population is governed by an authority

3.1 ROLE OF THE STATE IN ECONOMIC DEVELOPMENT

 Main Role – Raise the standard of living for its citizens


 Control the direction of foreign direct investment
 Decide on what kind of TNCs to attract and how to attract them (initiatives)
 Lay out economic roadmaps for the country (policies)
 Limit what TNCs can do within the country
 Intervene when necessary to reduce income inequality

*Note, economic policies are usually carried out simultaneously with social development policies such as

3.1.1 NATIONAL POLICIES & INITIAITIVES

*These policies are usually carried out simultaneously rather than separate

 Influence Industrial Structure


 Rural Development & Modernisation of Agriculture
 Seek to modernize and increase the efficiency of agriculture by utilizing technology such as high-
tech farming or genetically modified crops
 Modernisation of agriculture using technology and machinery releases labour off the land for
nearby industry
 E.g. In Guangdong, the modernization of agriculture has led to a labour surplus which has attracted
TNCs
 Promoting Manufacturing and Services
 Manufacturing and Services produce value-added products that have higher returns than
agriculture
 This is mainly done by stimulating particular industries and restraining others through taxes and
subsidies, as well as legislation
 Import-substituting Industrialization (ISI)
 Goal: To manufacture products that would otherwise be imported
 Method
 Done through protecting the nation’s infant industries from external competition with
imports
 Long-term sequential process that involves the progressive domestic development of
industrial sectors through a combination of protection and incentives
 Advantages
 Diversifies the nation’s economy
 Reduces the dependence on foreign technology
 Limitations
 Difficult to develop all sectors of the industry and achieve import-independence in a
globalized age
 A state will inadvertently lose certain comparative advantages compared to other states
as its economy develops, further complicating the task.
 Export-oriented Industrialization
 Goal: Focus on the export of value-added goods or services to other countries

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 Method
 Involves the devaluation of the country’s currency to increase the competitiveness of its
exports
 Suppression and regulation of labour unions
 Subsidizing labour costs an providing tax holidays
 Developing the knowledge industry (quaternary sector)
 Develop Infrastructure
 Development of transportation and communication systems to facilitate the growth of manufacturing
and services
 Develop Human Capital
 Development of the education system to provide a skilled and educated workforce
 Subsidizing retraining schemes to ensure that the workforce stays relevant
 Trade Policies
 Protectionism
 Insulates local firms from overseas competition by restricting imports of goods in the same
industrial sector
 Implementation of quotas and licensing requirements for certain industrial sectors
 Promotion of exports
 Regulation of trade by international bodies
 Average trade tariffs have fallen from 40% in 1940 to around 4% due to international organizations
such as the World Trade Organization
 Governments are also promoting free trade agreements
 Manipulation of the foreign exchange rate
 E.g. China has manipulated the foreign exchange rate to keep the value of the Chinese yen low to
make its exports cheaper
 E.g. Singapore has kept the dollar strong in its effort to keep the cost of imported raw materials
low for its manufacturing sector
 Investment Policies
 Domestic Investment
 Providence of tax incentives such as subsidies to individual firms to make them competitive on a
global scale; used to promote firms that are symbols of a country’s economic might
 Usage of a mix of taxes, subsidies and regulations to encourage investment in key strategic
industries, such as the knowledge industry
 Science Parks [Commercial Enterprises with links to universities]
 Goals
 To transfer technology and business skills from enterprises to the local workforce
 To build up the knowledge industry (quaternary sector)
 Advantages
 Local businesses may obtain new technology from research & development
 Provides revenue to the university
 Provides an avenue for research interns to conduct commercial research and learn from
experts
 Diversifies the state’s economy and attracts inwards FDI for the quaternary sector
 Employment of local skilled workforce for research
 E.g. Singapore Science Park (Biopolis + Fusionopolis)
 E.g. Malaysia’s Multimedia Super Corridor
 Incentives: 10-yr tax holiday, unlimited number of foreign staff, 100% foreign ownership
 Building of Cyberjaya in 1997 which is meant to be a futuristic city
 Foreign Direct Investment [Inward investment by foreign enterprises]

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 Export Processing Zones [Zones with special incentives set up to attract foreign investors in which
imported materials are processed before being re-exported]
 Incentives
 Elimination of customs duties on imports
 Liberalization of capital flows to promote inward FDI
 Provision of infrastructure
 Reduction or exception of corporate taxes on firms operating within EPZs
 Development of EPZs driven by
 Need to attract FDI to counter foreign exchange shortfalls and unemployment in LDCs
 Spread of neo-liberal ideas that encouraged open economies, foreign investment and
non-traditional exports
 Pressure from supranational bodies such as the World Trade Organization and IMF
 Advantages
 Allows the state to control the effect of TNC FDI on the local economy
 Promotes FDI and export-oriented industrialization
 Brings in employment
 Limitations
 Labour abuse
 73 million children aged between 10-14 are employed throughout the world
 Non-transference of technology and skills as most locals are employed in low-skilled
jobs
 E.g. China’s special economic zones located near the coast that generated over 2/3 of total
employment

3.1.2 REGIONAL POLICIES & INITIATIVES

 Regional Development Policies: Subsidies or incentives which are made available only in particular
geographical areas of the region
 Goal
 Revive economically depressed areas
 Create areas of growth potential
 Method
 Targeting of specific industrial sectors or firms
 E.g. The Regional policy of the European Union (Cohesion Policy)
 Aims to reduce regional disparity by boosting the competitiveness of certain regions
 Done by diversifying rural areas which have declining agriculture and restructure declining
industrial areas
 State creates special agencies to promote economic development
 E.g. Economic Development Board of Singapore

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3.1.3 CASE STUDY: SOUTH KOREA [NIE 1 S T TIER]

 Level of State Intervention: High Initially


 Actions by the state
 Influence industrial structure
 Modernisation & Reforms
 Land reform of 1948-1950 removed the old landlord class and created a more equitable class
structure
 Redistribution of Japanese-owned and state properties to well-connected individuals who
helped create a new Korean entrepreneurial class
 Nationalization of banks and control of credit lines
 Opposed the formation of trade unions
 Promoting manufacturing and services
 Development of chaebol (large and diversified firms) that were well financed and supported
by the government (e.g. Samsung, Hyundai)
 Emphasis on the development of more value-added products such as electronics and
automobiles compared to less value-added products such as chemicals and petroleum
 Developing the knowledge industry
 The state rejected inward foreign investment as a means for technology transfer but
purchased technology overseas and adapted it to fit the Korean economy
 Establishment of the Korea Institute of Science and Technology
 Established the Ministry of Science and Technology to oversee all R&D activities
 Investment Policies
 FDI
 Highly restrictive rules which capped the level of foreign ownership
 Building of a strong domestic sector results in low FDI

*Note – South Korea significantly reduced state control over the economy after the Asian Financial Crisis by
liberalizing the financial sector.

Successes Reasons for success


 Dramatic increase in wages & GDP throughout  Government’s recognition that the loss of jobs
the entire economy from 1989 onwards in the labour intensive manufacturing sector
was inevitable and the need to move on to
capital intensive manufacturing and services
which generated more revenue
Drawbacks Reasons for drawbacks
 Increased in income inequality due to the  Need to keep the economy competitive by
state’s decision to keep income low. Average ensuring that workers’ wages remain relatively
wage of South Korean Worker at USD$381 lower compared to other countries
during 1986was insufficient to sustain a decent
lifestyle at USD $588
 Unbalanced industrial sector with few SMEs  Policy of centralized control by the state
present to support the industry giants and  Insufficient support for SMEs
promote the service industry
 Large chaebol were inefficient and even
corrupted

 Future challenges
 Reducing the inefficiencies of the chaebol and distancing their relationship with the government
 Nurturing SMEs

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 Reduce government control on investments


 Capitalizing on different comparative advantages due to competition from Japan and China

3.1.4 CASE STUDY: ZIMBABWE [LDC]

 Level of State Intervention: High


 Actions by the state
 Influence industrial structure
 Modernisation and Reforms
 Land acquisition act gave the government rights to buy land and evict White farmers

Drawbacks Reasons for drawbacks


 Major decline in agricultural productivity,  Anti-colonialism populist policies
leading to the loss of 400,000 jobs and foreign  Widespread corruption of Robert Mugabe’s
exchange; Zimbabwe was once known as the government led to rebels and supporters taking
“bread basket” of Africa over those farming lands rather than real
 Eviction of Whites from farms worldwide; only farmers
300 Whites remain on farms  Majority of white farms were transferred over
 Widespread famine and starvation with 2/3 of to unskilled blacks, who were unable to achieve
the population facing severe food shortage the same level of productivity due to reliance
on slash and burn techniques

 Future challenges
 Restore Zimbabwe’s economy integrity by developing low-skilled manufacturing
 Reduce corruption and government inefficiency

3.1.5 MALAYSIA [NIE 2 N D TIER]

 Level of State Intervention: Medium


 Actions by the state
 Influence industrial structure
 Import-substituting Industrialization (ISI)
 Cities in the interior of Malaysia are geared towards serving the domestic market through the
production of household goods and F&B
 Export-oriented industrialization
 Cities that are located at the exterior dominated by electronics, machinery and textiles
 Develop Infrastructure
 Established ports such as Georgetown on Penang
 Develop human capital
 Ensuring peace between the majority Malays and minorities Chinese and Indians to tap on talent
from all racial groups
 Large companies such as Fairchild attract employees by offering on-the-job and off-site training
 Trade Policies
 The state controlled monetary transfers and fixed the ringgit to stop speculation against it
 Investment Policies
 Domestic Investment/Science Parks – Cyberjaya,
 Providence of tax breaks to international TNCs dealing with electronics such as Microsoft, IBM
and Sun Microsystems
 Wiring of schools for long distance internative learning and online libraries
 Every house will be connected to the City Command Centre, a computer which will provide
government support

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 FDI/Export Processing Zones – Bayan Lepas Industrial Park est. 1972


 Free trade zone for assembling goods in Penang
 HP employs 4000 employees here
 Bosch employs over 3500 employees
 Pay and living conditions have improved over time, with benefits for employees such as
medical and insurance cover, education assistance, vehicle loans
 Setting up of Penang Skills Development centre to create and enhance management

Successes Reasons for success


 Malaysia’s GDP has grown since the  Government policies that attracted significant
implementation of such policies and recession amounts of FDI from TNCs
has never been experienced
Drawbacks Reasons for drawbacks
 Neglect of other developmental aspects such as  Government maintains the need to spend
housing and healthcare by spending vast sums money on investments that will help develop
of money on EPZs and megaprojects such as the the country economically
Petronas Twin Towers
 Repatriation of profits back to home country
from TNCs in the EPZs
 Neglect on the development of primary  Government maintains that agriculture returns
commodities such as palm oil where profits stay are not as large as those from manufacturing or
fully in Malaysia R&D
 Many state-sponsored projects such as  Overly optimistic goals and visions of the state
Cyberjaya and Proton’s expansion have been
delayed for several years due to external
circumstances

 Future challenges
 Further educate its population to take on jobs in the tertiary and quaternary sector
 Reduce reliance on the turbulent electronics sector
 Increase the size of the middle class to promote consumption and reduce reliance on exports

3.1.6 PHILIPPINES [NIE 2 ND TIER]

 Level of State Intervention: Medium


 Actions by the state
 Influence industrial structure
 Modernisation of the agricultural sector
 Import of hybrid rice varieties from China on 60,000 ha of land
 6000 ha of land used to plant a variety of high yield Californian rice with a deal negotiated
under the Rice Growers Association of California
 Improved storage and transport infrastructure will reduce loss of rice which is currently at 15%
 Promoting manufacturing and services
 The low cost of labour in Philippines attracted many TNCs such as Texas Instruments and Intel
to set up their factories in the region
 Investment Policies
 FDI/Export Processing Zones – Subic Bay Economic & Freeport Zone
 Conversion of an old US base with power facilities, sewerage, water supplies and a well-
maintained road network to an EPZ
 Government offered tax incentives of a 4-6yr tax holiday; exemption from taxes and duties on
all imports of capital goods, machinery, raw materials, finished goods
 200 companies representing £680 million of investment creating 20,000 jobs

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 Projected to earn $5 billion worth of software exports annually


 Subic Bay Port Developmental Project – Construction of a modern container terminal which
will reduce congestion at the port of Manila.
 FDI/Export Processing Zones – Fort Bonifacio
 Conversion of an old US Army base into a new urban business centre called the Global City in
a joint private and public sector program
 Global City will include a business hotel, international schools, sports facilities and an SEZ that
focuses on IT
 Impressive IT structure with broad band fibre optic dual loop network and telecommunications
cable system
 Location of 2 trading floors of the Philippines Stock Exchange

Successes Reasons for success


 Philippines’s GDP has grown at over 7% per year  Government policies that attracted significant
since the implementation of such policies and amounts of FDI from TNCs
recession has never been experienced
Drawbacks Reasons for drawbacks
 Weak infrastructure links (Less than 5% of all  Corrupt government with an inefficient
roads are surfaced) bureaucracy
 Inability to stymie population growth; State
unable to reap the rewards of a demographic
window of opportunity
 Increasing social-economic polarization due to
the inability of many to find work
 Talent drain as many Filipino emigrate to find
work

 Future challenges
 Need for Philippines to further value-add their products through original design manufacturing
 Reduce reliance on the turbulent electronics sector
 Reduce emigration and birth rates
 Improve state efficiency

3.1.7 TAIWAN [NIE 1 S T TIER]

 Level of State Intervention: High Initially


 Actions by the state
 Influence industrial structure
 Agricultural reforms
 Reduce the power of landlords and improving food supply
 Encouraging landlords to invest in industrial development through generous compensation
 Promoting Manufacturing and Services
 Emphasis on the manufacturing of bicycles and light electronics for the domestic market
 Establishment of heavy industries such as steel, ship building and petrochemicals
 Emphasis later changed to capital intensive manufacturing of high-technology electronics and
the development of the quaternary sector
 Investment Policies
 Domestic Investment/Science Park – Hsinchu Science Park
 By 2000 there were 300 high technology factories on the park employing 95 000 people
 Several TNCs such as IBM and Philips have R&D facilities and plants there
 Vertically integrated production chain for integrated circuits and semi-conductors

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 Residential and recreational areas including swimming pool, tennis and basketball courts
 £425 million in government investment

Successes Reasons for success


 Progressive development of the service sector  Government policies that attracted significant
which produces more value-added goods amounts of FDI from TNCs
 Impressive economic growth with an average of
6% GDP growth per annum
Drawbacks Reasons for drawbacks
 Increasing lack of skilled labour required to  Conservative immigration policies
sustain capital-intensive industries
 Slow increase in real wages  Loss of comparative advantages such as cheap
labour to 2nd tier NIEs leading to slower
economic growth
 Populist policies that cap the wages of
professionals

 Future challenges
 Maintaining political and economic ties with China
 Growing its economy despite the loss of several comparative advantages to China and 2nd tier NIEs
 Obtaining sufficient skilled labour to develop its knowledge economy

3.2 ROLE OF SUPRANATIONAL BODIES

 Supranational Bodies – Agencies that have powers above that of the nation state; powers obtained from
agreements between member states
 Note that each member state is sovereign and can leave the organization if it refuses to abide by certain
rules, but the supranational body generally cannot force certain rules upon the member state

3.2.1 INTERNATIONAL REGULATORS

 International Monetary Fund


 Goal: Provide financial assistance and advice to member countries
 Prerequisite: States that borrow funds from the IMF must carry out the recommended Structural
Adjustment Policies (SAPs)
 Cut government expenditure and give out fewer subsidies
 Reduce state intervention and reduce taxes on companies and trade barriers
 Promote liberalization and international trade
 World Trade Organization
 Goals
 Reduce tariffs and open up markets
 Promote international financial and insurance services
 Trade-Related Intellectual Property Rights (TRIPS) – Protects patents by individuals or companies
 World Bank
 Goals
 To end extreme poverty, the Bank's goal is to decrease the percentage of people living on less than
$1.25 a day to no more than 3% by 2030.
 To promote shared prosperity, the goal is to promote income growth of the bottom 40% of the
population in each country.
 Provides aid, in the form of money or technology, to LDCs, to help them develop economically or socially.
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the capital to improve their level of development, through projects to improve sanitation and water
supply, or to finance vaccination and immunization programs.
 E.g. World Bank Kecamatan Development Program, started in 1998, provided aid to 25 villages in
Indonesia that year. 890 million USD was supplied to the KDP, in a combination of loans from the
International Bank for Reconstruction and Development, and the International Development
Association. It has benefited 34 000 villages across Indonesia.
 E.g. With aid from the World Bank, the villages in Tirtomoyo managed to dig an underground well with
machines rented from the cities. High capacity pumps were also brought in and a network of pipes
installed. Now the villages have access to clean and reliable water supplies which can be used for
sanitation and irrigation. Their standard of living has improved as a result of aid.
 Impact of international regulators on national economies
 Reduction of sovereignty
 International regulators all work to promote capitalism and trade, hence any country that requires
funds for development will tend to be forced to liberalize its market and remove protectionist
measures.
 E.g. The providence of funds by the IMF to debt-stricken countries such as Greece and Cyprus was
only made possible by government pledges to improve efficiency and cut expenses.
 Impact of international regulators on regional economies
 Promote globalization & the growth of economies with export-oriented growth strategies
 Done by liberalizing markets on a regional scale, which promotes the movement of goods and
capital via NIDL
 E.g. The rapid growth of small, resource poor east Asian states that sought an export-oriented
growth strategy has been attributed to the favourable trade climate brought about by the WTO
 Accentuates global disparities between DCs and LDCs
 Many of these international regulators are often founded by DCs and are hence strongly influenced
by DCs. This influence gives DCs the power to shape international policies and even influence the
national policies of LDCs
 E.g. The new WTO scheme gives DCs control over many economic policies of LDCs. TRIPS covers
many products made in DCs and allows TNCs that invented such products to exert greater control
over them. Similarly, while the WTO has forced many LDCs to open up their markets to trade, it
has been unable to carry out similar policies for DCs, many of which employ protectionism against
imports from LDCs

3.2.2 REGIONAL TRADING BLOCS

Regional Trading Blocs – Collaborative agreements formed at a regional scale to create large markets for firms
of member states while protecting them from external competition

 Types

Removal of trade Common external Free movement of Harmonization of


barriers trade policy capital and labour economic policies
towards non- between member under supranational
member states states control
Free Trade Area ✓ ✓ ✓ ✓
Customs Union ✓ ✓ ✓
Common Market ✓ ✓
Economic Union ✓

 Major Trading Blocs

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Regional Group Membership Type


European Union Austria, Belgium, Denmark, France, Finland, Germany, Greece, Economic Union
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden,
UK
Common Russia, Belarus, Kazakhstan, Ukraine Common Market
Economic Space
East African Burundi, Kenya, Rwanda, Tazania, Uganda Customs Union
Community
Andean Bolivia, Colombia, Ecuador, Peru Customs Union
Community of
Nations
ASEAN Free Trade Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Free Trade Area
Area Vietnam, Laos, Myanmar, Cambodia
North American USA, Mexico, Canada Free Trade Area
Free Trade
Agreement
South Asian Free Bangladesh, India, Pakistan Free Trade Area
Trade Area

 Impacts of trading blocs


 Increase Trade
 Preferential trading rights for members may lead to the reduction of trade with non-member states
 Change flows of FDI
 Encourage regionalism, where national economies are seen as part of a regional market
 FDI that is originally directed to only one member within the trade bloc may now be directed to all
other members within the trade bloc
 Increase economic growth of member states
 Trading blocs have helped to create employment and direct FDI to member states
 Accentuate regional inequalities
 Due to the free-for-all nature of trading blocs, competitive countries gain at the expense of less
competitive countries
 Increase geopolitical influence of member states
 Nation states, when pooled together as a regional trade bloc, have greater influence over TNCs
compared to states acting individually
 However, internal rivalry may reduce such influence. E.g. Both the UK and French governments
competed for Toyota’s FDI in the EU
 Reduce sovereignty of member states
 Monetary unions such as the Eurozone has led to a loss of monetary policy to manage to economy,
and common economic laws means that small member states would have to go along with the
majority

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3.2.3 CASE STUDY: NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

 Type: Trade Bloc (Established 1/1/94)


 Membership
 USA (DC), Canada (DC), Mexico (LDC)
 Aims
 Creation of employment for all 3 countries
 Promote economic competition
 Elimination of trade barriers (tariffs) and protect intellectual property

Aim + -
Create Employment  Canada – Growth of industries  USA – NAFTA only increased the rate
which were expected to decline of deindustrialization of the United
such as the furniture industry. States by facilitating NIDL. Mexico’s
Canada’s manufacturing comparative advantages over the
employment remains steady. USA led to the loss of manufacturing
 Mexico – Maquiladoras jobs in the USA.
(Factories that produce value-  Mexico – Massive US government
added goods from raw subsidies to the corn sector (10
materials) have greatly billion USD) led to dumping in
benefited from NAFTA due to Mexico’s agricultural sector, which
the comparative advantages of depressed wages and forced Mexican
Mexico for low-skilled peasants out of agriculture
manufacturing. This has led to  Canada – High cost of maintaining a
an increase in employment for business drove several firms away
the country’s export driven from Canada to US, which was lower
economy. in costs. This led to a loss of
 Mexico – Along the US-Mexican employment
border there are 2000 US firms
employing 500 000 Mexican
labourers
 USA – The US Gross Domestic
Product grew steadily from 1992
onward, coinciding with the
implementation of NAFTA.
Promote trade and  All tariffs including those on US  Canada – Several firms that were
economic competition agricultural exports have already unable to compete with lower-cost
been phased out US firms have since closed down
 USA – U.S. exports to NAFTA
partners grew 157%, versus
108% to the rest of the world in
the same period. Daily NAFTA
trade in 2006 reached $2.4
billion. U.S. manufacturing
output rose 63% from 1993-
2006, compared to an increase
of 37% from 1980-1993.
 USA – Removal of trade hurdles
significantly sped up the export
of meat products from the USA
to Mexico, leading to an
increase in sales and profit.
 Mexico – NAFTA contributed to
Mexico’s economic recovery
directly and indirectly after the

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1995 currency crisis. Mexico


responded to the crisis by
implementing a strong economic
adjustment program but also by
fully adhering to its NAFTA
obligations to liberalize trade
with the United States and
Canada.
Promote Investment  USA – FDI in NAFTA countries is
$327 billion in 2009
 Canada and Mexico – FDI in USA
is $327 billion in 2009
Improve standard of  Mexico – Increased in GDP per  Mexico – Infrastructure neglect
living (Socio- capita from 3107 to 10,000 USD reduced Mexico’s comparative
Environmental) by 2011 advantage and slowed down
 Creation of the Commission of economic development in rural
Envionmental Cooperation areas, leading to wider social
which concluded that NAFTA inequality and difficult living
would only lead to conditions for the country’s poor.
environmental degradation if Areas such as Monterey and Ciudad
the government policy is Juarez have experienced higher rates
unprepared for the increased of economic growth than the rest of
scale of production under trade Mexico.
liberalization

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APPENDIX: USEFUL QUOTES


Author Quote Meaning
Richard Dowden, “Africa has a reputation: poverty, disease, war. But when Although people may be
Africa specialist outsiders go they are often surprised by Africa’s welcome, poor, it does not
with most Africans friendly, gentle and infinitely polite. necessarily mean that
You will be humbled by African generosity” they are unhappy.
Evo Morales, Globalization creates economic policies where the Globalization only
President of transnationals lord over us, and the result is misery and benefits parties with
Bolivia unemployment. power and influence (i.e.
Jimmy Carter, If you're totally illiterate and living on one dollar a day, TNCs)
President of USA the benefits of globalization never come to you.
Paul Wolfowitz, I like globalization; I want to say it works, but it is hard to
US Ambassador say that when six hundred million people are slipping
to Indonesia backwards.
Jon Meacham, A lot of people, including business leaders, think the States need to capitalize
Pulitzer-Prize future belongs to China. Globalization is not a zero-sum on their comparative
winning author game, but we need to hone our skills to stay in play. advantages to win in a
globalized world
Thomas L. In Globalization 1.0, which began around 1492, the world Space-shrinking
Friedman, New went from size large to size medium. In Globalization 2.0, technologies have
York Times the era that introduced us to multinational companies, it reduced the time it takes
Columnist went from size medium to size small. And then around for information to be
2000 came Globalization 3.0, in which the world went transmitted around the
from being small to tiny. globe
“No two countries that both had McDonald's had fought a Globalization forces
war against each other since each got its McDonald's” states to be dependent
on each other.
John Kerry, NAFTA recognizes the reality of today's economy - The future of USA (and
Secretary of State globalization and technology. Our future is not in DCs) lie in capital-
of USA competing at the low-level wage job; it is in creating high- intensive manufacturing
wage, new technology jobs based on our skills and our and the service industry
productivity.
Dennis Blair, The Industrial Revolution caused a centuries-long shift in Globalization has led to
Director of power to the West; globalization is now shifting the the gradual shift in
National balance again. economic and geopolitical
Intelligence, USA power from the west to
the east
Clare Short, People have accused me of being in favour of Globalization is an
British Politician globalization. This is equivalent to accusing me of being in inevitable fact and it a
favour of the sun rising in the morning. double-edged sword
John B. Larson, Globalization is not a monolithic force but an evolving set
Politician, US of consequences - some good, some bad and some
House of unintended. It is the new reality.
Representatives
Norman Spinrad, It's trite to say that the world has gotten smaller in the Global culture is
American award- age of globalization, but my travels have told me that it's overhyped and there
winning author wrong to think this means there is some kind of uniform remains many small
world culture. pockets of unique culture
around the world
Bill Gates Globalization is forcing companies to do things in new Globalization has forced
ways. companies to switch from
Fordism to just-in-time
production

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CONTENTS
Population Dynamics + Implications of Population Change

Loh Zheng Yi 12S74


H2 Geography

B. POPULATION
ISSUES AND
CHALLENGES

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B. Population Issues and Challenges

LEARNING OBJECTIVES
B1. Population Dynamics

1. Discuss the fertility differentials between LDCs and DCs


2. Discuss how the different proximate variables affect fertility in LDCs and DCs
3. Evaluate the impact of governments’ influence on the proximate variables in attempting to
achieve a desired fertility rate
4. Discuss the variations of mortality between LDCs and DCs
5. Discuss how different factors affect mortality in LDCs and DCs
6. Discuss why the infant mortality rate is regarded as one of the best measures of a country’s
socio-economic progress
7. Compare and analyse the extent of migration with reference to time, distance and
transnational movements
8. Discuss the causes, processes, patterns and results of recent migratory flows
9. Assess the consequences of migratory flows with reference to the feminisation of labour
and to identity and nationhood

B2. Implication of Population Change

10. Discuss the reasons for changes and variations in population composition and distribution
11. Assess the economic, demographic, social and political implications of changes and
variations in population structure and distribution
12. Compare the strategies used in LDCs and DCs in coping with population change
13. Discuss the issues of population dependency
14. Discuss how population structure is affected by changes in family structure (single
parent/single person households), economic change and gender imbalance
15. Critically evaluate the impact of changing population structures on issues related to the
provision of leisure, employment and health and welfare services
16. Discuss the value and limitations of population pyramids in predicting population change
17. Discuss the socio-economic differentials among various ethnic groups
18. Discuss the criteria used to measure inequalities in populations on a global or national scale
19. Discuss the level of inequality that exists between populations and between different sectors
of the same population
20. Discuss the links between Demographic Transition Theory and age structure
21. Discuss the various stages of the Demographic Transition Theory
22. Apply the Demographic Transition Theory to population growth in LDCs and DCs
23. Evaluate the reasons for having pro or anti-natal policies
24. Compare the effectiveness of anti/prenatal policies in LDCs and DCs
25. Analyse how population growth is affected by government planning
26. Discuss the factors that characterise overpopulation and underpopulation
27. Discuss the relationship between population growth and resource utilisation
28. Compare resource use in LDCs and DCs
29. Discuss how changes in society result in the changing appraisal of resources and
environments
30. Evaluate hedonist & conservationist approaches on the sustainability of resource use
and how they impact population change and resource use

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B. Population Issues and Challenges

B1. POPULATION DYNAMICS


1.1 FERTILITY

 Fertility – A measure of reproduction, the number of children born per couple/person/population


 Key Concepts
 Dicusss fertility differentials between LDCs and DCs (AKA compare fertility indicators)
 Discuss how factors affect LDCs, DCs
 Evaluate impact of governments’ influence in proximate factors

1.1.1 INDICATORS OF FERTILITY

 Crude Birth Rate (CBR): Number of live births in a year per 1000 population
Total Number of live Births in 1 year
 × 1000
Total Population
 Total Fertility Rate (TFR): Average number of children born to a woman in her childbearing years (15-49)
Total Number of Births in 1 year
 × 1000
Total number of women in childbearing years
 Age specific fertility rate: Average number of children born to each woman in a particular age group in
relation to the number of woman in that age group
Total Number of Births in the specified age group in 1 year
 × 1000
Total number of women in childbearing years in the specified age group
 Replacement Level: The fertility rate at which a given population is producing enough offspring to replace
itself
 Marked as 2.1 children/women
 Due to more boys being born and daughters dying in early years

1.1.2 TRENDS IN FERTILITY RATES

 Decline in world fertility from 4.92 in 1960 to 2.47 in 2009


 Rapid in East Asia (5.91 in 1965 to 1.81 in 2009), Moderate in parts of Latin America and South Asia
(5.97 in 1965 to 2.78 in 2009), Limited in Sub-Saharan Africa (6.66 in 1965 to 5 in 2009)
 LDCs can continue to grow due to population momentum (Niger – 7.1) (Population Momentum 
The tendency for a population to grow despite a fall in birth rate or fertility levels)
 Although TFR in several LDCs have dropped due to change in cultural values and norms (even as
economic growth have not increased substantially)
 Examples
 Ivory Coast (7.92 in 1975 to 4.52 in 2009)
 Fertility reduction is crucial in LDCs
 Increase economic growth
 To reduce poverty by decreasing strain on economic resources
 Reduce housing issues
 Reduce percentage chance of population momentum
 DCs’ population have dropped over time in tandem with economic development and fall in mortality
rates (Many are <Replacement Level)
 Natural and rational process in response to changing societal and economic conditions
 Change in cultural values and norms

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 Role expectations of women


 Availability of contraceptive technology
 Decline in infant mortality due to improvement in medical technologies (vaccination, etc)
 Examples
 Lowest fertility rates in the world today (Czech republic 1.25, Poland 1.29)
 However in some European countries TFR has recovered slightly (still below 2.1)
 Norway (1.75 in 2002 to 1.98 in 2009)
 However, there is still an increase in population, especially in LDCs (where declines in death rates
have yet to be met by corresponding decrease in birth rates KIV demographic transition model)
 Determinants
 Natural increase (difference between fertility and mortality rates)
 Base size of population (potential for future population change)
 Age structure of population (affects number of women in reproductive age group)

1.1.3 FACTORS AFFECTING FERTILITY

 Biological Factors (Proximate determinants of fertility, modified by socioeconomic and institutional


factors)
 Age of Marriage
 Marriage is considered to be stable sexual unions focused on procreation (giving birth) rather
than cohabitation.
 A lower reproductive age increases the chance of women having children. (Thus women in LDCs
marry earlier  More children)
 E.g. Zimbabwe 19.7 yrs, India 17.4 yrs
 In DCs, women generally postpone their marriages  Low fertility rate due to high age of
marriage, or women enter cohabitation as opposed to marriage.
 E.g. Singapore 27.8, Denmark 30, UK 27
 Limited due to
 Voluntary childlessness
 Interruption of stable sexual unions
 Governmental Policies
 In Niger, the legal age is 15, and TFR now stands at 7.12 in 2009
 In Korea (Rep), the legal age is 18 and TFR is at 1.15 in 2009.
 Use of contraception
 Use of contraception directly reduces fertility rates
 E.g. Iran (74% of married women uses contraception)  2.1 TFR
 Yemen (23% of married women using contraception)  6.2 TFR
 Knowledge + Availability  Usage  Reduce TFR
 Reproductive Technologies
 Infertility can be overcome by assisted reproductive technologies (e.g. IVF)
 Limited impact due to
 High cost of treatment  Uneven global distribution
 Ethical implications of multiple births and disposing of human eggs
 Religious opposition to such methods
 Improved health care & diet
 People in DCs tend to be more affluent and are better off, able to afford a better diet, improved
health care and sanitation.
 This spurs them to have more healthy children, resulting in an increase in fertility
 Note that this is often offset by socio-economic factors.

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 Socioeconomic Factors
 Development (KIV Rostov Model) & Perceived value of children
 Increasing industrialization causes a reduction in fertility
 Traditional societies (Rostov Stage I) are strongly pro-natalist while modern families (stages 4-5)
emphasize small families and individual independence
 Economic value of children (theory of wealth flows)
 In traditional societies, children are viewed as an economic boost to help in household
matters and agriculture.
 Whereas in advance societies, parents have to invest in their child’s education before the
child can contribute financially.
 This will cause fertility to decline as children are now seen as a liability rather than a person
who can make an economic contribution at a young age (e.g. Cost of bringing up a child in UK
can be over 300 000 USD)
 Social value of children
 Companionship, love happiness, marital bond, fulfillment, achievement
 Status of women
 Indicated by
 Female literacy rate
 Literate women have more opportunities and can ensure better survival of their
children. (Reduce Infant Mortality Rate). Reduces TFR also as women need not have so
many children to ensure that one will survive.
 They are also more likely to be career-minded and focus on their careers instead of
family life. (thus increasing age of marriage)
 Literate women are better able to afford and use contraception (reduce TFR)
 These women are able to take control of their own fertility (Even in Kenya, TFR has fallen
from over 8 in 1970s to 4 in 1990s due to women being able to use contraception)
 Level of female participation in the formal economy
 Women who want to work often see children as a liability (excpt: Nordic Countries), thus
they delay marriage/having babies as they want to pursue careers/improve their
standard of living.
 Examples
 Pakistan
 Women who have completed secondary education TFR 3.6
 Women who are not educated TFR 5.7
 Thailand (Literacy Rate of Females near 90%)  Population growth rate of 1% from 1996-
2000
 Afghanistan (Literacy rate of females <15%)  Population growth rate 3-4%
 In Uganda, where there is a low GDI (Gender-Related development index), TFRs have
remained at near 7.0.
 In the Kassena-Nankara region of Ghana, women are lowly treated and expected to be
committed to reproduction.
 Institutional Factors
 Government Policies
 Pro-Natalist vs Anti-Natalist (depending on national needs)
 E.g. China  TFR has dropped from 4 to 2 in 20yrs, 3 times the rate of drop in the UK (where
there is no governmental interference)
 E.g. Singapore
 Implemented Anti-Natalist policy “stop at two” during period of 1945-1970 where there is
rapid population growth

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 Policies
 Singapore Family Planning and Population Board set up in 1966
 Public Education Campaigns
 Sterilization and Abortion (legalized)
 Contraceptives cheap and easily accessible
 Small families improvement scheme
 Incentives for those who are sterilized
 P1 Registration Priority
 Tax Relief, Priority Housing and Paid Maternity Leave
 Penalties for those who have more than 2 children
 Zero maternity leave and allowances
 Led to drop of fertility rates exacerbated by factors such as economic development,
changing attitudes towards marriage and childbirth, empowering of women
 TFR dropped below 2.1  Problems of labour shortage/ageing population
 Pro-Natalist policy “Three or more if you can afford it” during period of 1970-1985 (Declining
population growth)
 Incentives for families with 3 or more kids
 Tax relief and rebates
 Subsidized healthcare
 Priority P1 registration
 Medisave payment of medical fees for 3rd child
 Subsidies for medical fees for 4th child
 More Pro-Natalist Policies and schemes (Baby Bonus, etc) 2000> (Very low population
growth rate)
 Baby Bonus introduced 1 April 2001
 Cash gifts for children and $-
$ contribution to CDA
Baby Bonus CDA Contribution Cap
Cash Gift Child order For each child
Child order For each child 1st $6,000
1st & 2nd $4,000 2nd $6,000
3rd & 4th $6,000 3rd & 4th $12,000
5th & beyond $18,000
for each child

 Parenthood Tax Rebate


 Working Mother’s child relief
 Adoption Leave
 Paid Maternity and childcare leave
 Subsidized childcare centres
 Maid Levy
 Religion
 Many religions favour large families and object to contraception
 E.g. in parts of Africa, Middle East and Asia, the society decrees that men should father many
children as a mark of their virility and as a status symbol. In such society, there are high fertility
rates.
 Contraception is forbidden in both the Muslim and Catholic faith. As such, countries with
predominantly Muslim and Catholic populations tend to have high fertility rates.
 However, in DCs, people are less likely to follow such religious rules.

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1.1.5 FERTILITY EXAMPLES (MORE INDEPTH)

 Benefits of massive populations


 Large labour supply
 In India, due to a large number of young people (median age of Indian expected to be only 29 in
2020) , the economy is expected to pick up pace over the decade. In Bangalore, there are already
more than hundreds of young entrepreneurs.
 Problems caused by massive populations
 Strain on education facilities
 In India, where more than 2.6 million babies are born each year, gaining admission to a good
school in India is tough in the face of competition. At Tagore International School, there are 50
spaces available to 1500 applicants in the general category. Out of 459 million Indians, 126
million were illiterate. This also poses a problem to the economy, where a lack of quality
manpower is a problem. It is expected that India would require 2000-3000 universities, up from
today’s 500.
 Strain on housing
 Lagos is predicted to grow from 6.5 million people to 16 million by 2015, a massive area of slum
and decay where 20% of children will not survive past 5 years old.
 Problems caused by shrinking population
 Tanking Enrolment at Educational facilities
 In Japan, where the population of 18yr olds has dropped to 1.24 million from 2.05 million in 1992,
colleges and universities have found it difficult to get enough people to fill up the available
spaces.
 Falling consumer base
 A falling population reduces the consumer base. In Japan, the demand for cars has dropped as
the number of young working adults has dropped.
 Falling labour pool
 China’s one child policy has reduced TFR from 3.0 in the 1980s to 1.65 in 2009. The supply of
young people (15-19) has decreased by 9% to 59.4 million and is poised to shrink further. This
causes the wages on young rural labour to rise, decreasing the competitiveness of China’s
economy. Reduction of demographic dividend. In 2012, the proportion of China’s population of
working age fell for the first time since 2002.
 Many small to medium size cities in countries with declining populations are likely to suffer as a
result of out-migration, resulting in a weak economy. A 50% drop in birth rate have caused entire
sectors of the economy in German cities such as Leipzig and Magdeburg to shut down.
 Governmental Policies
 Indonesia
 Family Planning program promoting contraceptives and two-child families. Caused population
growth to drop from 2.34% to 1.45% in 1998. Lack of commitment by municipal governments
caused the program to be less effective, leading to an explosion in Indonesia’s population with
4.2 million babies born every year.

1.1.6 SPECIFIC CASE STUDY OF FERTILITY: INDIA

 General Information
 1.17 billion people in 2010
 62 million Indian boys under age 5
 Population Pyramid  Large Base small tip
 Annual population increase of 19 million (approx)

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 Population increase  Exponential


 India began with a population of 238 million and ended with 1.17 billion in 2010
 Previously, India’s high birth rates were countered with high death rates, but death rates have
receded in the first half of the 20th century due to a drop in famines and disease outbreaks
 Year of 1921 known as the Year of the Great Divide as it marked the shift of static population
growth to high population growth.
 Factors affecting fertility
 Institutional Factors
 Government has redoubled efforts to prevent sex-selective abortion
 “Save a Girl Child” campaign
 Decision to choose a baby girl as India’s billionth baby
 “Girl Protection Child Scheme” under which 5000 rupees will be given to the girl when the
girl reaches 18 yrs old. (Delhi Government only)
 5 yr plans to reduce population growth
 Ministry of Health and Family planning set up in 1966
 Establishment of sterilization camps, where up to 8.3 million sterilizations were performed.
(Later abolished)
 Incentives for women to agree to sterilization (E.g. Andhra Pradesh; Cash incentives of $11)
 67% of women aged 25-29 had been sterilized during 1998-1999
 National population Policy
 Comprehensive sociodemographic program promoting later marriage, informed choices
in reproductive health services
 Result
 Female sterilization rose from 27% to 34%
 Socio-Economic Factors
 Development
 North South Divide
 Southern States known to have high literacy rate, long life expectancy and low birth
rates, as opposed to Northern States which are exactly the opposite
 Due to lucrative spice trade which developed the economy in the southern states during
colonial eras
 Thus they are better able to access and use contraception; Women have higher age of
marriage, etc
 Much of India still lives in rural areas (only 11% live in cities of >1 million people)
 Women are more likely to be less educated, higher infant mortality rates, higher
poverty, fewer modern amenities (abortion/contraception)  Higher fertility rates
 Rural areas added 114 million to the population as opposed to 69 million for urban areas
 Contraceptive use higher in urban than rural areas
 Age of marriage of women
 Has risen significantly in lieu of development
 E.g. Rate of 10-14 yr olds being married has dropped to 0% from 20% in 1961
 Perceived economic value of Child
 Most of India’s population lives in rural areas and up to 58% of Ind workers work in
agriculture. Thus children have more economic value  Incentive to have more children
 Cultural factors (Showing status of women)
 Cultural Bias against women

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 High male to female ratio (113 boys to 100 girls), up to 129 to 100 in some states due to
abortion of female fetuses (abortion legalized since 1972, although sex-selective
abortion is illegal)
 Practice of sex-selective abortion has increased in wealthier states where medical
technology is available for such abortions
 Girls receive less nutrition and medical care than boys, and are more likely to suffer
dowry-related violence in marriage.
 Literacy Rate of women
 Only 68% (as percentage of males) in 2010
 Substantial gap between women and men

WORLD FERTILITY RATE

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1.2 MORTALITY

 Mortality – Occurrence of deaths among a defined population, often measured as a rate


 Key Concepts
 Contemporary mortality differentials at global and national levels
 Factors affecting mortality
 Demographic (e.g. age and gender)
 Medical technology (e.g. advances in medical care)
 Public Health measures (e.g. sanitation, vaccination)
 Socio-economic changes (e.g. standard of living)
 Political (e.g. genocide, wars)
 Epidemics (e.g. Spanish ’flu) and pandemics (e.g. AIDS)

1.2.1 INDICATORS OF MORTALITY

 Crude Death Rate – Number of deaths in a population in a given period, (usually 1 yr), as a proportion of
the total mid-yr population, per 1000 people
 Infant Mortality Rate (IMR) – Number of deaths of children under the age of 1/1000 live births
 Child Mortality Rate – Number of deaths of children under the age of 5/1000 live births
 Maternity Mortality Rate – Number of deaths of women from pregnancy-related complications per 100
000 live births
 Life Expectancy - The average number of years a newborn is expected to live with current mortality
patterns remaining the same [Chart Below]

1.2.2 TRENDS IN MORTALITY RATE

 General Decline
 Refer to demographic transition model
 E.g. World IMR has fallen from 95 in 1970 to 41 in 2010
 World Life Expectancy for males had risen from 47 to 67 since 1950s
 Decline in DCs in the late 18th and 19th century due to advances in medical science, improved housing
conditions and sanitation, and improved foot and water supply driven by industrialization.
 Decline in LDCs in the 20th century attributed to a combination of economic development/aid from
DCs, importation of medical advances
 Different between LDCs and DCs

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 IMR of North America  6, IMR of Sub-Saharan Africa 76 (Sierra Leone  180/1000)


 Usual causes of death in LDCs
 Low medical technology resulting in high infant/child/maternal mortality rates
 Poor sanitation + Limited access to clean drinking water  Infectious/Endemic diseases such as
Malaria, Tuberculosis (e.g. in LDCs 55% of deaths are caused by infectious diseases)
 In LDCs the leading cause of death is coronary heart disease 11.4%, followed by, respiratory
infections 9.5%, AIDS 7.2% (resulting in a reversal in the mortality rate). Other diseases 
Malaria 3.0%, Tuberculosis 3.5%, Perinatal Disease 5%, Diarrhoeal Diseases 5.2%, Road traffic
accidents 2.1%
 Usual causes of death in DCs
 Elderly deaths due to natural causes/long term degenerative diseases (e.g. coronary heart
disease 16.9%, stroke & respiratory cancers 9.5%, breast cancer, dementia, stomach cancer,
colon & rectum cancer, diabetes, etc)
 Unhealthy lifestyle leading to degenerative diseases (in DCs 77% of deaths are caused by
degenerative diseases)
 In the USA the leading cause of death was coronary diseases
 Epidemiological transition  Shift in the cause of deaths patterns that comes with the overall decline
of death rates
 Variance within regions
 E.g. Singapore 4.95, Japan 10.09
 Japan  High number of elderly death (elderly more likely to die due to degenerative diseases)
 E.g. Algeria 4.69, Swaziland 14.60
 Proximate Causes of Death
 Diseases (long term, degenerative & short term, infectious)
 Injuries

1.2.3 FACTORS AFFECTING MORTALITY

DEMOGRAPHIC FACTORS

 A young population will have a lower crude death rate than an ageing population.
 Males have higher mortality rates than females; thus a predominantly male population tends to have a
higher mortality
 Men have a greater risk of heart attack (per 100,000 people, 63 men died from heart attack while only 31
women died)

INSTITUTIONAL FACTORS

 Public Health Measures


 Sanitary Reforms
 Reducing Human Contact with infections micro-organisms
 Purification of water, efficient sewage disposal (Cholera)
 1.8 million child deaths each year as a result of diarrhea due to unclean water and poor
sanitation; 88% of these cases linked to unsafe water supply
 1.1 billion people in LDCs do not have access to a minimal amount of clean water
(coverage rates lowest in Sub-saharan Africa, but most people without clean water live
in Asia)
 Food Hygiene, Health education (BSE, aka Mad Cow Disease)
 Elimination of habitats/breeding grounds of vector agents (Malaria)

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 Quarantine, Increasing ventilation, crowd control (SARS)


 Health Education (AIDS)
 Immunization
 Vaccination
 In the mid 1990s, vaccines for tuberculosis, polio, diphtheria, tetanus and measles were
distributed for $1USD per child in the LDCs, averting 2 million deaths by 2001
 Vaccination for measles resulted in the drop of measles-related deaths by 40% from 1999 to
2003
 Flu Vaccination/Chicken Pox Vaccination
 Hepatitis B vaccines now routinely distributed to infants in 77% of WHO member states
 Immunization campaign carried out by WHO in 1967 to 1977 eradicated the natural occurrence
of small pox
 Polio vaccination caused the number of children paralyzed by polio to fall from 350 000 in 1998
to 1918 in 2002
 Improving the environment
 Enforcing restrictions on air pollution
 Preventing the spread of diseases by vectors (e.g. Mosquitoes)
 Medical Advancement
 Through
 Expansion of medical facilities
 Improvement in medicine and treatment
 Health education
 Impact is more influential in LDCs due to readily available technology and foreign aid from DCs
 DCs need to do research, thus the impact is slower (still significant)
 Needs to be coupled with access to medical technologies

SOCIOECONOMIC CHANGES

 Improvements in living standards and nutritional status


 Better sanitation and hygiene
 Better nutrition (makes people more healthy, and thus more resistant to diseases)
 In LDCs people take in an average of 2750kcal per day, as compared to 3450kcal in DCs
 225 million are undernourished in LDCs in 2008
 In Sub-Saharan Africa, every 3rd child is underweight
 More readily available healthcare
 E.g. Density of physicians per 1000 (Burundi – 0.03, Singapore – 1.14)
 Births attended to by skilled health personnel
 Full immunization of 1 yr olds (5% among poorest 20% of Niger Population)
 Americas have 37% of all health workers, but only 10% of the global disease burden, as opposed to
Sub-Saharan Africa with only 4% of all health workers but more than 25% of the global disease burden
 In Africa, although it only costs 15 pence per person to treat pneumonia, even then there is
insufficient healthcare expenditure.
 More exposure to unhealthy and dangerous lifestyle
 Drugs & Drug-induced deaths
 Alcohol & Liver/Kidney problems
 Smoking & Cancer (4.9 million people die each year as a result of smoking)
 Obesity
 More than 1/5 of the population is obese in the UK, and obesity is such a problem that it is
estimated that parents would live longer as a result of being less fat

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 Nearly 1/3 of cancers in the US is linked to obesity


 Only one state in the USA had an obesity rate of less than 20%
 Increases the risk of diseases such as cancer, stroke, diabetes, high blood pressure, etc

POLITICAL FACTORS

 Genocide (e.g. Holocaust extermination of 6 million Jews in Europe) (Rwanda Genocide – killing of 800 000
tutsis)
 Spanish Inquisition alone executed over 10 000 alleged heretics under its Inquisitor General
 Civil Wars (3.3 million dead between 1998 and 2002 in Congo)
 World Wars (WWII  73 million dead between 1939 to 1945)
 Northern Ireland conflict resulted in more than 3500 deaths from the Catholic and Protestant
communities and the British and provincial forces.

NATURE – EPIDEMICS, PANDEMICS, DISASTERS

 Endemic
 Constant presence of a disease or infectious agent in a certain geographic area/population group
(usually due to certain geographical characteristics)
 E.g. Malaria causes 1.3 million to die annually
 200 million acute cases per year (mostly in western Africa)
 Epidemic
 Rapid spread of a disease in a specific area or among a certain population group
 SARS Epidemic Resulted in 916 deaths worldwide
 H5N1 Epidemic resulted in 175 deaths by April ‘07
 Ebola Haemorrhagic Fever (killed 151 people in Sudan and 280 people in DRC)
 Pandemic
 A worldwide epidemic (occurring over a wide geographic area and affecting a large number of people)
 Disasters
 Indian Ocean Tsunami in 2004 killed over 250,000 and improved chances for endemics by
compromising sanitation (LDCs are especially vulnerable to such natural hazards)
 LDCs
 1907 famine in China killed over 24 million people
 Tangshan Earthquake killed 500,000 people
 1931 floods in China killed 3,700,000
 DCs
 Kobe Earthquake – 5,500 casualties
 Minamata Disease (due to expansive mercury discharge) killed 2250 people

OTHER FACTORS

 Suicide
 Euthanasia
 Environment [How dirty it is, etc]

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1.2.4 AIDS PANDEMIC

 AIDS Pandemic kills more than 1.8 million people every year; more than 20 million are dead since
outbreak of HIV (95% of infections occur in LDCs, >50% afflict women and young adults)
 Mainly in Sub-Saharan Africa where over 24.5 million are HIV positive
 Impacts
 Economic Impact
 Financial Cost
 $10 billion USD will be required to fight AIDS in Africa along every year
 Drugs are expensive to buy as they need to be used in the long term (as AIDS is incurable)
 Cost of ARV drugs in Botswana was $8.1 million USD. Even though Botswana is one of
the wealthiest country in Africa, it still has to rely on financial assistance from African
Comprehensive HIV/AIDS Partnership, which committed $45 million to HIV/AIDS
programs by the end of 2002
 Manpower Cost
 People most affected by AIDS tend to be the people with the most potential to create wealth
and manufacture goods which can then be used to develop the economy (loss of manpower)
 Botswana’s economy is likely to be reduced to 1/3 as a result of AIDS destroying the
country’s workforce
 Life expectancy has dropped from 62 years to 48 years in Sub-Saharan Africa
 Most LDCs rely heavily on agriculture, a labour-intensive sector which is heavily
compromised due to the inability of people with AIDS to do physical work
 Resource Cost
 Medical Facilities are stretched thin due to the sheer number of diseases and endemics in
Africa alone
 In Botswana, occupancy rates of hospitals are over 100% and 70-80% of cases are AIDS
related.
 "The bottom line is: we need help. The epidemic has put additional demands on us but is
at the same time draining us of skilled people. We are recruiting here and abroad. We're
getting 100 Cuban doctors. Even the Peace Corps are coming back."Dr Khan, head of
NACA.(National AIDS Coordinating Agency)
 Social
 Children are orphaned as both parents usually die due to mutual contamination. Grandparents in
Sub-Saharan Africa are usually feeble and weak and are unable to support these children.
Grandparents also lose their support
 HIV transmitted from mother to child easily kills the child, contributing to high IMRs
 In Swaziland, Child Mortality Rate is 143 due to AIDS as compared to 73 non-aids related
 90% of HIV transmission is from mother to child during childbirth; can be negated with
improved medical technology and awareness
 HIV positive people might be forced to engage in prostitution or crime to earn a living
 Drop in life expectancy
 HIV and AIDS has had a devastating impact on Botswana. Life expectancy at birth fell from 65
years in 1990-1995 to less than 40 years in 2000-2005, a figure about 28 years lower than it
would have been without AIDS.
 Alleviating AIDS
 Focusing on Preventive measures (e.g. Botswana in 2002 provided free anti-retroviral drugs for its
people)
 Public Education & Awareness
 Education for young people

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 Condom distribution and education


 Targeting of high-risk adult populations
 Prevention of mother-to-child transmission of HIV
 Can be exacerbated by
 Prostitution
 Patriarchal nature of African Society
 HIV Stigma & Denial for fear of social rejection
 In Botswana, since the implementation of MASA (An initiative to combat AIDS), only 1000 people
have signed up by June 2002, which is disproportionately small for a population of 1.8 million
(2002) where more than 24.1% of people of age 15-49 is HIV positive

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1.3 MIGRATION

 UN Definition: Movement of people from one administrative area to another, whether region or
international, usually involving a permanent change of residence for at least a year.
 Terminology
 Emigrants
 Immigrants
 Emigration/Immigration
 Out-migrants/In-migrants – Migrants who move within a country
 Migration flow - Pattern of migration involving large amounts of people
 Gross Migration (total)
 Net Migration
 *Not to be confused with circulation (non-permanent)

1.3.1 CLASSIFYING MIGRATION

 Time
 Short-term migration – Movement of a person to a location other than that of his usual residence for
a period of 3 months to a year; follows circulatory movements of migrant farmers who migrate to the
cities for work before returning to the rural areas during the harvest and planting seasons
 Long-term migration – Movements of a person to a location other than that of his usual residence for
a period of at least a year.
 Voluntariness
 Voluntary (causes)
 Involuntary (e.g. exodus of refugees, re-distribution policies (causes)
 Distance
 Does not reflect the changes in the socio-political environment that the migrant experiences. A
person who migrates from East Berlin to West Berlin in the 1970s to 1980s may experience a
complete change in political system even if the distance is small.
 Origin & Destination
 National Migration
 Movement across administrative boundaries; e.g. Migrant workers in China
 International Migration
 191 million migrants worldwide (2005), up from 176 million (2000)
 3% of global population 49.6% females’
 Net outflow from Asia and Latin America, Net inflow into North America and Europe

1.3.2 TRANSNATIONAL MIGRATION PATTERNS

 Overall: Increase in the number of migrants overtime


 Traditionally  From poorer southern hemisphere to affluent northern hemisphere
 Driven by mainly economic factors
 USA immigration
 USA – Mexico (8 million migrants in 1980s)
 Top countries contributing to USA immigration (Mexico, India, Philippines, China)
 Share of Asian countries has increased substantially from 13% in 1960s to 32% in 2000s
 Japan immigration
 Homogenous culture discouraged migration
 Persistent opposition to immigration so far

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 Hong Kong emigration


 Hong Kong citizens preferred North America over UK
 North Africa > Europe
 6 million people from North Africa living in EU
 Italy and France most popular destinations
 Liberal Policies in Italy, along with proximity makes it difficult to regulate illegal immigrants
 Introduced visa-requirements for visitors from northern arabic countries as well as turkey
 France prohibited new immigration since 1974 but immigrants can bring families into France,
accounting for an inflow of 120,000 a year
 Significant numbers enter France as refugees
 Currently  Shift in poles of attraction from America & Europe to East & Southeast Asia
 Reverse migration trend being observed due to certain factors
 High costs of living in developed countries
 New opportunities in developing countries
 Part of the offshoring process of many manufacturing and service activities
 Qualified personnel going back to native countries with skills and connections
 E.g. Korea, Taiwan, China, India
 25 000 Indian technicians who have worked in Silicon valley went back to India between
2001 and 2004
 Number of students returning to China increased from 5000 in 1990s to 25000in 2005.
 Areas that act as magnets for immigrants
 NIEs of Asia
 Oil Producing countries
 Southern Cone in Latin America
 West and South Africa

1.3.3 INTERNAL MIGRATION PATTERNS

 DCs
 Predominantly counter-urbanisation
 In the USA, many migrants who have migrated to the capital or regional cities such as New York
or Washington D.C. would tend to settle down in areas where they can escape the stress of city
life, such as in Florida.
 In certain countries such as China, migrant workers have an obligation to return to their
hometown when they are old and about to die. Thus, even though they have worked many years
in the capital city, they would still return home, resulting in the return migration seen in the
diagram.
 Migration of mainly professional and retired people to escape properties of urban living
 Reversal of depopulation of rural periphery regions in 19th and 20th century
 LDCs
 Scale of internal migration higher in LDCs due to larger percentage of lower income groups looking for
manual/unskilled work
 Dominance of rural-urban migration
 Mainly undertaken by unskilled, lowly paid migrants which have been displaced from the rural
economy as a result of technological advances in agriculture such as mechanisation. E.g. Rio de
Janeiro in Brazil, Mexico City in Mexico & Mumbai in India.
 May occur due to land fragmentation, which occurs when land is passed on from one generation
to the next, it is subdivided among the children to the point where people can no longer make a

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living from the land because the plots are too small. An example of this are the Minifundia in
Brazil.
 Models
 Step migration model
 Assumes that population movements occur in stages and in waves
 E.g. China – Famine in 1960s caused many Chinese to escape to nearby countries such as Thailand
and Malaysia
 Could be due to limited financial ability
 In the USA, the cost of living in Washington D.C. is 36% higher than that of state capitals such
as Fort Worth, Texas. Hence, migrants move in stages to avoid jeopardizing their own
budgets. Once migrants make enough money in provincial capitals, they would thus consider
moving to the capital city to earn more money. Before they do so, they need to make a living
in provincial capitals, thus resulting in them moving in stages.

1.3.4 CHANGING NATURE OF MIGRATION

 Increase in female migration


 Migration tends to be from LDCs, where men are traditionally the sole breadwinners of their families.
However women now make up 50% of migrants.
 Pull
 Economic: The changing nature of manufacturing has led to more employment being available to
women since the use of heavy machinery is reduced. Such manufacturing jobs are the direct
result of state policies on the establishment of free-trade zones and export-led growth strategies.
 Economic: Majority of females still employed in the informal economy in their destination
country
 Social: In Bolivia’s rural regions, young women migrate in search of funds for a dowry to bring to
their marriage.
 Push
 Economic: Women are generally considered as marginal to the agricultural workforce back in the
rural community, and are therefore surplus labour.
 Migration of skill and non-skilled workers
 Skilled workers required to boost the economies of many countries such as China and Singapore
 Unskilled workers required in many DCs for menial tasks such as construction, sanitation and low-
skilled service jobs.

1.3.5 FACTORS AFFECTING MIGRATION

1.3.5.1 PROXIMATE FACTORS (SELECTIVE MIGRATION)

 Age
 People of age 25-45 are more likely to migrate
 Emergence of recent international retirement migration
 Later in life, flexibility decreases and inertia increases
 Retirement brings about a major change
 Sex
 Males are more likely to migrate
 Females restricted by traditional stereotypes
 However, more females are migrating independently to meet their own economic demands
 Education

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 People with higher levels of education more likely to migrate


 21% of all immigrants have at least 17 years of education as compared to 8% for native
Americans
 Foreign students do not return to their home countries after education – Since 1978 250 000
Chinese students have remained abroad while only 130 000 Chinese students have returned
overseas
 Level of Skills
 High level skilled labour more likely to have migrated (due to insufficient numbers at home)
 Very low level skilled labour (e.g. Farming, Cleaning) likely to be migrants due to unwillingness of local
population to work in such sectors.

1.3.5.2 PUSH-PULL MODEL

 Imbalance in economic activities and opportunities creates potential ‘push’ and ‘pull’ factors which drive
and sustain population movement
 Assumes rational behavior on the part of the migrant
 Perception of the pull factors
 Push Factors
 Environmental
 Natural disasters
 Economic Factors
 Lower standards of living
 Lack of job security
 Lack of jobs in LDCs prompted transnational migration from the LDCs to the DCs, such as that
of Turkish migrant workers into Germany.
 Insecurities in having a farming job pushed many rural workers in China to work in the cities
 Forced labour
 Human trafficking (e.g. Slave trade/forced prostitution)
 Natural Disasters
 Famine
 Many North Koreans escape North Korea primarily due to widespread famine and hunger
 Social Factors
 Lack of academic freedom
 Crowding and pollution
 Complicated human relations
 Racism
 Violence & Crime
 Loneliness
 Lack of housing
 Loss of opportunities
 Political Factors
 Instability
 Persecution
 In China, the authoritarian government has cracked down brutally on intellectuals, resulting
in a massive migration of students from China to the USA. 36% of these students have
declared that the most prominent pull factor for the USA, as well as many other DCs, is the
academic freedom.
 War, Genocide/Religious Persecution
 The Rwandan Genocide (ethnic) led to massive emigration of Hutus into neighbouring Zaire.

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 The separation or British India into India and Pakistan in 1947 initiated widespread
movement of 15 million people. In the face of potential persecution on religious grounds,
Muslims moved to Pakistan, and Hindus to India.
 Pull Factors
 Environmental
 Includes favourable climates with ample precipitation, fertile soils and scenic locations
 Economic Factors
 Job Prospects (Perceived)
 Singapore, an LDC in 1965, has managed to increase its GDP from $974 million to $208 billion
in 2011. Even countries such as China, which are still officially LDCs, have seen double-digit
economic growths. China’s GDP has also superseded many countries to become the 2nd in
the world. As a result of reform policies in many LDCs, LDCs are now witnessing a reverse
migration trend in which people from DCs come to LDCs due to various factors.
 Competition is fierce, but not as fierce as in DCs, where many businesses have no choice but
to fight for the last bit of available cash. Furthermore, setup costs are also lower in LDCs due
to the availability of cheaper labour. Furthermore, reform policies in China have caused
foreign direct investment to reach $185 billion in 2010, as opposed to $430 million in 1982.
 High standards of living (Perceived)
 Since the 1950s, Mexicans have migrated to the USA, which has a much higher GDP per
capita of $47000, as opposed to Mexico’s $9000. Furthermore, the economy in USA is also
much more dynamic and stronger than Mexico’s showing that Mexicans who went to the
USA to work would tend to have a higher salary.
 Social Factors
 Good working environment
 Simpler human relations
 Better education
 20 of the world’s top universities are based in DCs such as the United States, as well as the
United Kingdom. The number of international students in DCs has increased by 5% every
year, above the global average of 3%, to over 2.3 million students, thus showing that
educational opportunities are also a pull factor for migrants to DCs.
 Reunification of families
 Political Factors
 Political Asylum
 Since the formation of the UN, the number of worldwide conflicts has dropped as compared
to the 19th century, which saw WWII and a number of proxy wars. There are currently 240
000 asylum seekers in OECD, as compared to more than a peak 600 000 asylum seekers in
the last century.
 Freedom of speech
 National Policies
 The Indonesian Transmigration Policy and the Brazil Frontierway Policy offered the promise
of land or peasant farmers, who migrated in large numbers to the peripheral areas of the
two countries.
 New town policy

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1.3.6 IMPACTS OF MIGRATION

1.3.6.1 DEMOGRAPHIC IMPACTS

 Population growth
 Migration is the drive force behind demographic change
 Net immigration in Germany and Italy now accounts for all remaining population growth
 Natural increase in USA accounts for 60% of population growth, but share from international
migration has been increasing (from 24% in 1980s to 42% in 2000s)
 Immigration adds to population growth directly and indirectly
 Natural increase of foreign-origin populations is often greater, although the figure often falls to
near that of the native populations in the long term.
 TFR of UK’s immigrants is 2.5, as compared to that of locals, which is 1.84.
 TFR of Algerian immigrants decreased over the years from 4.22 in 1980 to 3.19 in 2000, which is
closer to the French TFR of 1.82.
 The European Union projects that to keep its older dependency ratio constant, it would need to
import over 700 million working adults between 1995 and 2050. For the Republic of Korea, it
would need to import 5 million people.
 Accentuates unevenness in population at all levels
 More net immigration to attractive areas, e.g. Sunbelts, top-tier cities, etc  thus promoting regional
inequality
 Population Decline in sending countries
 Due to selective nature of migration, the population of the source country becomes increasingly
dominated by females and the aged.

1.3.6.2 SOCIO-CULTURAL IMPACTS

 Rights and living conditions of migrants


 Internal Migration
 China’s floating population of 70 million denied privileges and shut out of most job opportunities
except for the toughest and most undesirable jobs.
 Source of social instability
 Risk exploitation and violation of human rights
 Exploitation of welfare
 Illegal immigration tend to discourage work
 Attracts immigrants seeking benefits
 Lowly skilled immigrants provides less benefits as compared to costs
 Illegal Immigration
 Usually consists of lowly skilled workers that are not desired by the host country
 From Mexico to USA
 National Identity of Migrants
 The misalignment of state boundaries with the distribution of nations has resulted in many political
conflicts, which leads to transnational refugee migrations.
 This introduces socio-political tension within previously stable states as these new migrants may not
identify themselves with values that the state promote (e.g. Freedom, Democracy) or may be
discriminated against and as a result become radicalized and rebel against the state (e.g London
Bombings)
 Causes of Identity Reinforcement

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 Foreign culture [failure of multiculturalism] : Muslims that have migrated to other countries are
perceived to be threatening, and as a result likely to emphasize their own subcultures rather than
integrate into the mainstream. The presence of visibly and religiously different newcomers are
thought to challenge closely held notions of who the “we” is in society, even if they comprised of
only small portions of foreign born population.
 Rapid Pace of social change: Countries which only had small minority groups have become
massive immigration destinations overnight, with insufficient legal and institutional preparation.
Many foreigners are also perceived to be burdens on education, health, transportation and public
safety systems. The 2nd generation of foreign immigrants face even more pressure to conform to
social norms yet cannot do so as they still follow the norms of their forefathers.
 Economic Inequality: Uneven global distribution of economic goods has led to allegations that
immigrants do not contribute to the economy and are instead leeching off the economy. Under
the pretext of their fiscal expenses and the costs of integrating them into society, many societies
lose sight of the totality of long-term benefits, which are significant
 Social insecurity and unrest: The public’s expectation of what immigration to expect tends to
diverge from reality, which causes the public to denounce immigration as being “out of control”.
There is also a perceived linkage of immigration to rising crime rates and terrorism, which
completes the circle of fear and anxiety that drives social exchange.
 National identities can only be diluted if the factors that drive social polarization are reduced.
 E.g. Case study: Transmigrasi Programme [Taken from senior’s notes; source name not available]
 Ethnic conflict in Kalimantan as a result of a government-ordered resettlement program
 Objective of reducing population pressure in overcrowded islands of Madura and Java
 In 1960s: 100,000 Madurese were relocated from Madura to Borneo, comprising an indigenous
Dayak population
 Large socio-cultural differences became apparent due to
 Religion—Strictly Muslim Madurese were offended by predominantly Christian Dayaks
 Language—No common language
 Employment—More modernized Madurese with higher professional skills displaced local
Dayaks from their employment, even in official positions. Madurese in the agricultural sector
utilized modern farming methods which caused environmental degradation.
 Created social dissatisfaction between both ethnicities, resulting in ethnic massacre of Madurese
minority in 2001
 Tens of thousands of Madurese were displaced, escaping to neighbouring islands by boat
 Conflict remains an intractable problem: Some Madurese are second-generation in-migrants who
will experience larger inertia and resistance to leaving their hometown if the government orders
a relocation of Madurese out of Borneo
 Impacts related to the feminization of migration
 Driven by globalization and the New Economic Division of Labour, where many women now take part
in the informal economy or light manufacturing.
 Increased Exploitation of women
 Women often found in gender-segregated and unregulated sectors of the economy (service)
 Women often lack access to social support systems (women usually have less experience and
knowledge on areas where they are going as compared to men)
 Female migration is disruptive to the family unit  Females, although empowered, face
considerable obstacles during migration.
 Women have little opportunities to be integrated into the society.
 Proliferation of labour trafficking agents who specialize in trafficking female labour from the
source to the destination country, providing meagre amounts of pay for the female labour

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 Women are also increasingly targeted in the sex trade, which is a lucrative but highly exploitative
business.
 Reinforcement of gender stereotypes against female migrants in destination country
 Female migrants in destination countries tend to be viewed lowly as members who work in low-
skilled jobs (e.g. Indonesian maids)
 Undermines traditional gender stereotypes in source country
 Women in Philippines are now increasingly viewed as the key breadwinner on top of men, and
play smaller roles in parental care and traditional household roles

1.3.6.3 ECONOMIC IMPACTS

 To the migrants
 Benefits of increased wages
 To the receiving country
 International divisions of labour
 Professionals and highly skilled migrants welcomed
 Lowly skilled migrants rejected
 Alleviates vacancies in certain areas e.g. Blue-Collared workers
 In Singapore, the influx of foreign workers has contributed to the growth of the construction
industry by over $30 billion in 2011.
 Exacerbates problems of unemployment
 Increases foreign direct investment
 This can help create jobs, such as the Intel & Micron Wafer Fabrications Plant in Singapore, which
has helped to create 720 jobs for Singaporeans.
 To sending country
 Remittances
 Remittances to LDCs by overseas resident workers have increased by USD $10 billion in 2004,
reaching $126 billion
 Biggest remittances receiver (India - $8.4 billion; Mexico - $13.2 billion; Philippines - $0.8 billion);
12.7% of the Philippines’ GDP is directly contributed by overseas remittances.
 Remittances 2.9% of GDP in LDCs
 Direct link to poverty reduction  Dependency on remittances can be as high as 90%
 Spur economic growth as an important source of foreign exchange
 Remittances can be used unproductively (consumption) or productively (investment in
infrastructure, etc)
 Over dependence on remittances causes countries to overlook more sustainable productive,
wealth generating and equitable development paths that work towards ensuring equal
economic opportunities at home (so jobs generated nationally)
 Regulation of remittances could drive them underground, redirect their destinations and use.
 Brain Drain
 For sending countries
 Costs
 Education & Health Costs not paid back in terms of economic contribution
 Lose potential talents  Long term impact on economic growth
 Benefits
 Possibility of remittances & return migration (Total remittances $126 billion in 2004)
 Male-out migration in China resulted in 16% increase in household disposable income while
grain output only dropped by 2%.
 For receiving countries

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 Costs
 Issues of integration
 Formation of ethnic enclaves
 Resource pressure due to increased number of immigrants
 Benefits
 Economic benefits of highly qualified labour without the need to pay for health or
educational costs
 Promotes economic growth in certain sector
 Alternative source of people and labour at a time of decreasing population and labour supply
 Brain Gain (opposite of brain drain)
 Currently effects of brain drain still more significant than that of brain gain

1.3.6.4 ENVIRONMENTAL IMPACTS

 Sending Countries
 Reduced deforestation, erosion
 Remittances support increases consumption in sending countries on green investments
 Receiving countries
 Increased water consumption
 Increased energy consumption
 Rise of squatter settlements (e.g. Mexico City, Rio de Janerio)

NET MIGRATION RATE OF THE WORLD

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B2. IMPLICATIONS OF POPULATION CHANGE


2.1 POPULATION COMPOSITION AND DISTRIBUTION

2.1.1 POPULATION COMPOSITION

 Characteristics of the population


 Age, gender, ethnicity, language, occupation, religion
 Helps planners provide services and facilities for the future

2.1.2 POPULATION DISTRIBUTION

 Projections
 Shown on a map by dots, where each dots represents a population density
 Can also be shown in terms of areas
 This however, does not take into account variation in factors within the area. (e.g. China may be
densely populated, but western regions are much more sparsely populated as compared to
eastern regions)
 Suggests that the whole area is uniformly inhabited, which is not true
 Lorenz Curve, showing inequalities in population distribution
 The greater the curvature of the line, the greater the deviation from an even distribution.
 Uneven and dynamic
 Measured in (Total number of people/ Total land area)
 Factors affecting population distribution
 Physical Factors (affect LDCs more than DCs)
 Land
 Soils
 Fertile soils rich in minerals and alluvial deposits support high agricultural activity, such
as in Nile, Egypt. The presence of fertile soils is also important in countries which are
highly dependent on agriculture, such as Ethiopia, where 75% of the population depends
on farming.
 In India, the success of the green revolution further developed agricultural industries in
North-eastern India, bringing jobs and cash there.
 Raw materials
 Mineral and energy resources attract population settlement. E.g. California gold rush in
1848; San Francisco grew from a small town of 200 to one over 36 000 people.
 Relief
 Steep slopes prevented agriculture and infrastructure building. In China, the mountainous
areas inland are sparsely populated, as opposed to the flat areas in eastern China. This could
be due to such areas being relatively inaccessible compared to areas that are less steep.
 Altitude
 Influenced by altitudes, harsher climates tend to be present at high altitudes, discouraging
settlement. > 50% of the world’s population lives in areas between 0 and 200m above sea
level. In the UK, areas that are higher than 200m above sea level (Dartmoor) are sparsely
populated.
 Higher altitudes tend to be associated with bad soil quality, heavy snow, steep slopes and
low accessibility

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 Low lying areas with good soils, particularly those near water, tend to have high population
densities, such as in UK, China and Japan. In Japan, most of the population is concentrated in
the low lying coastal areas from Tokyo to Fukuoka (up to >6000ppl/km2), rather than being
evenly spread out.
 Water
 Supply
 Rivers provide a source of fresh water. China’s population tends to be concentrated in
valleys of China’s major rivers (Huang He and Chang Jiang) while India’s is located near
the Ganges river.
 Transport
 About 2/3 of the world’s population lives within 500km of the coastline. In Europe, the
Rhine is the most important river and serves as a way to transport goods since the days
of the Roman Empire. In France, the river Seine serves as an important commercial
waterway and runs through areas of high population settlement, such as Paris.
 Biological Factors
 Vegetation
 Areas with thick forests or having little vegetation tend to discourage settlement as people
are required to help out
 Presence of diseases such as Malaria
 Discourages settlement and are more prevalent in lower altitudes. In Ethiopia, this limits
settlement in the low lying areas.
 Non-Physical factors (Affect DCs more than LDCs)
 Socio-Economic Factors
 Employment opportunities
 Employment prospects are perceived to be greater in urban complexes, thus triggering both
internal rural-urban migration and external migration into urban complexes. In UK,
population movements have largely followed the pattern of industrialization, as the UK
moves from primary to tertiary industries (in London).
 Nearly 1/7 of England citizens live in London, which is the central of UK’s service-oriented
economy.
 In India, once textile manufacturing complexes, Hyderabad and Madras are now boosted by
domestic and craft industries and a new growth in high technology
 Core-periphery model – populations tend to move in the same way as industrialization
 **Refer to migration
 Political Factors
 Political Stability
 Population tends to be sparse in areas that are politically unstable such as Chechnya, which
discourages settlement and inward migration.
 Populations are also sparse in war zones, such as the DMZ between North and South Korea.
 Forced resettlement policies can also result in a change in population density.
 Social Factors
 Presence of foreign local communities
 Technological factors
 Influences the extent to which resources can be tapped and used to support a population. E.g.
Green Revolution which increases the yield of wheat and other basic foods.
 Technology allows for the building of urban metropolises, which are able to support a much
larger amount of people than villages. However, over population can exert stress on the
population, leading to a drop in the quality of life.

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 Allows for areas which were once deemed unsuitable for settlement, such as deserts to be used
(using technologies such as solar cells, irrigation systems, etc) e.g. Dubai
 Highly limited in LDCs with no ability to pay the costs of acquiring technology.
 External influences
 Medical aid by DCs to LDCs helps to increase their population numbers.
 Also influences other factors, such as water and resources. Countries such as Singapore are able
to deal with water shortage issues by importing water from neighbouring countries.
 Variations
 Regional variations
 Initial - uneven distribution of resources
 Development may further increase or decrease regional variations due to
 Technological, Political & Socio-Economic factors
 Formation of new growth areas
 Characteristics
 Technological innovation
 Favourable government policies encouraging settlement
 E.g The setting up of Special Economic Zones by the Chinese government attracted
industries to set up their bases in certain areas, such as Shen Zhen and Shanghai, which
in turn attracted labour and inward migration into these areas.
 Along the M4 and M11 corridors, Britain has managed to attract high-tech companies to
set up quaternary industries in this area due to government-sponsored research
establishments at Harwell and Aldermaston and of government aerospace contractors in
the Bristol Area. This in turn attracts people to work there, resulting in the M4 corridor
being more densely populated than the rest of the UK.
 Growing economic activity
 Due to shift in industrial base away from secondary to tertiary (service) industry

2.1.3. POPULATION PYRAMIDS

 Illustrates a country’s age and sex structure


 Used to predict short and long-term changes in population
 Captures a region’s current population structure at a particular time frame
 Types
 Progressive
 Characteristics
 Birth rate exceeds death rate
 Wide base, narrow top
 Large difference between 0-4 and 5-9 due to high mortality rates (CDR and IMR)
 Countries tend to be in stage 2 of the DTM (Saudi Arabia, Philippines)
 Shows
 Undeveloped health care systems – each age group is significantly smaller than the previous
 High death rates may be the result of war, etc
 High young dependency ratio
 Intermediate
 Characteristics
 Smaller base and wider top than progressive pyramids
 Slope becomes more steep
 Lower birth rates and higher elderly death rates
 Lower IMR and CDR

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 Countries tend to be in stage 3 of the DTM (Argentina)


 Regressive
 Characteristics
 Small base and wide top
 Low birth rates, overall low death rates (very low CDR, IMR)
 Steep slope
 Greater % of females that at the oldest age groups
 Shows
 Countries tend to be in stage 4/5 of the DTM (France, Sweden, Germany)
 (Within a village) may shows rural depopulation
 High aged dependency ratio
 Features of population pyramids
 Bulges
 > 70 For old age groups, females outnumber men for biological reasons
 20 – 40 Period of immigration or evidence of a baby boom or counter urbanization (movement
out of city into urban areas to see better lifestyle)
 50 – 90 Return migration from urban regions
 Indents
 A period of higher death rates than normal, due to emigration (rural-urban), war or famine
 Less females migrate due to family ties, social or religious reasons
 Deficits in births, due to economic crisis or war
 Broad shapes show that people are living longer
 Broad bases
 High birth rates, may be natural or caused by immigrants
 Peak
 Shows life expectancy
 Lowest bar
 Estimates of fertility rate
 Along with death rate, determines the rate of natural change of a population’s numbers
 How far pyramid tapers
 Determines death rate (factors affecting mortality  refer to notes)
 Important events affecting population pyramids
 Industrial Revolution 1800-1920
 Baby boom I & Emigration of Europeans for USA
 WWI and WWII
 Post war baby booms
 Deaths in 20-30s age group
 Great Depression
 1939-1933 Decline in birth rates
 Other regional events
 Value of age-sex pyramids
 Government planning
 Population engineering  Prediction of future trends and building policies to reduce dependency
ratios, sustain economic growth
 For informative, consulting purposes
 In illustration, healthcare companies would want to do business in countries that are likely to be
in the recessive age-sex pyramid, while companies seeking places to develop manufacturing
facilities would look for places with a large economically active young population.
 Limitations of population pyramids

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 Do not provide information on the underlying population problems


 Data source may not be reliable
 Prediction cannot take into account national emergencies such as war/epidemic

2.1.4 POPULATION PROJECTIONS

 Definitions
 Population Estimates: Short-term forecasts based on reliable data concerning past and present
births, deaths and migratory patterns; usually over 5 years
 Population Projection: Long-term forecasts based on assumptions about fertility, mortality and
migrations, up to 100 years
 Usually provides a few different projections, based on varying levels of fertility
 Usefulness of population projections
 Allows governments to assess the balance between resources and population growth (KIV population-
resource relationships)
 Plan and provide adequate socioeconomic resources for each age structure
 Reduce young and old dependency ratios to sustain economic growth
 Reduce unequal resource distribution
 Improve balance between population growth and available resources
 Plan for population policies
 Useful to state governments as well as international agencies (e.g. UN)
 UN requires this to assess the balance between resources and population growth in LDCs so as to
provide support if required.
 Limitations of population projections
 Validity of calculations depends on the reliability of assumptions made about the input data.
 Future trends on fertility are the hardest to predict
 Usually assumes a constant fertility and mortality rate
 Migration data usually left out due to unavailability, inaccuracy and difficulty of defining
“migration”
 Does not take into account special influences (such as wars, famines, economic recessions, social
change, etc)
 Economic recessions will depress fertility rates
 Social changes in African states (more socially acceptable for women to take contraception, etc)
 AIDS and Malaria can kill people and depress fertility rates
 Medical advancements and speed in which medication is provided to people in LDCs
 Limits to growth not taken into account
 Data used is highly limited and inaccurate in LDCs

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2.1.5 POPULATION DEPENDENCY

 Dependency Ratio = (Economically Dependent/Economically Active)


 Categories of population based on age
 0-14 : Economically inactive young
 15 – 64: Economically active adults
 >65 : Economically inactive old dependents

2.1.5.1 AGEING POPULATION

 Ageing Population  Long term impact of fertility rate being below replacement level.
 Japan’s at 1.37
 UK’s at 2
 Singapore’s at 1.22
 Effects
 Economic:
 Shrinking of the work force due to less economically active people as the population ages.
 E.g. In Singapore, the median age has risen from 23 in 1947 to 37 in 2010 as a result of an
ageing population. As more people go into retirement, there is less labour available to fuel
economic growth, negatively affecting the economy and resulting in a decline in standards of
living as the economy runs out of steam.
 It is estimated that from 2000 to 2020, the absolute change of labour force both sexes in DCs
will increase by a mere 13.8%, as compared to an increase of 819% for LDCs. Europe will
experience the largest drop in labour forced by -8.9% while South and Southeast Asia will
experience the largest increase in labour foce at 285% and 105.8% respectively.
 An older workforce tends to upgrade themselves with new knowledge and skills less often as
compared to a younger workforce due to the fact that financial incentives for additional
educational qualifications are virtually non-existent above the age of 30.
 In Britain, only 49% of workers from 50-54 participated in job-related training in the past
month, compared to 57% for employees aged 25-29.
 Older workers, perceived to be less valuable to the economy, would be laid off first in an
economic recession, and as a result of their outdated knowledge or skills, may be forced to
endure long term unemployment, which are devastating on their savings and could potentially
create new social problems such as beggars.
 Older workforces perceived to be less creative, innovative and receptive to change, causing the
economy to suffer in the face of competition arising from globalization.
 Increases the strain on governmental resources as governments are forced to set aside monetary
resources to develop healthcare facilities and fund healthcare programs for the elderly.
 For welfare states, the pressure is even higher as states would need to periodically provide
pensions to the elderly even after they have left work and the old age dependency ratio
increases.
 It is estimated that for countries facing an ageing population such as Germany, the old age
dependency ratio would increase from 23.4 in 1980 to 42.3 in 2030.
 In Britain, 2008 there were 3.2 people of working age for every person of pensionable age.
This ratio is projected to fall to 2.8 by 2033.
 Health expenditures in Japan on old people will increase from the current 29% of total health
expenditure to 49% in 2025. As a result, taxes would be raised and the younger population
would have to sacrifice more in order to support the increasing number of elderly. If taxes
are not raised, budget deficits are likely to emerge.

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 An ageing population also reduces the financial resources available for investment in a country,
as elderly tend to save less and spend out of their savings account, as compared to their younger
counterparts as they lack a proper income.
 OECD savings per capita has decreased from nearly $350 per capita in 1995 to nearly $250
per capita in 2002 due to an increasingly aged population that saves less. Currently DCs
account for a majority (68%) of world total investment and if its savings decreases, there will
be less resources available to finance investments, unless LDCs managed to develop as
quickly to make up for the drop in global savings rate.
 Social
 Conflicts arising from the cost and practicalities of coping and providing daily care for those in
need.
 Currently 30% of all UK elderly develop dementia before they die, and this problem is likely to
become more commonplace as the population ages.
 This problem is also seen in China, where there is expected to be an increase of 300% in the
number of elderly with dementia, with 1.21 million new dementia cases per year.
 Other chronic diseases such as cancer and coronary diseases, coupled with the fact that there are
less able men and women to look after the elderly, exert enormous pressure not only on the
families of the elderly, but also on social services.
 In Singapore, the number of persons aged 65 years and above is estimated to escalate from
8.7%1 in 2008 to about 19% of our population in 2030. This entails the need for more elderly
friendly facilities such as studio apartments and other infrastructure such as railing to be set up.
However, the setting up of such facilities may require resources such as land which society might
not be willing to give up. In Singapore, this has led to petitions in Toh Yi over HDB’s decisions to
build studio apartments in exchange for several ball courts. Thus, an ageing population also
drives an increasing demand of elderly friendly infrastructure and housing that might be met with
resistance from society.
 Political
 Enactment of policies to cater to the elderly
 In response to Singapore’s ageing population, the government has allocated several sections of
2012’s budget to care for the elderly, such as increasing healthcare support by expanding long
term and community based care, as well as enhancing the affordability of healthcare by
expanding subsidies for Singaporeans.
 Alleviating the impacts of an ageing population
 Reducing Dependency Ratio
 1994, Japan passed legislation which increased in stages the eligibility age from 60 to 65 by 2013
for men and by 2018 for women.
 In the UK, pensional age has also been raised from 60 to 65, which would result in the addition of
2 million people to the workforce.
 Reducing Pensional Benefits
 Japan has also decided to reduce pensional benefits by 5%, while in the UK, benefits under the
state earnings-related scheme have begun to be based on lifetime earnings, rather than the 20
highest years.
 Increase number of live births
 In Japan’s case, Japan lawmakers came up with a new plan called the Angel Plan in 1994 to
encourage fertility by creating an infrastructure which supports the working parents.
 In Sweden, the government gives 72 weeks of shared parental leave for all new mothers and
$5200 USD for the first child.
 Singapore  Refer to fertility
 Increasing immigration (for both economic and demographic advantages)

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 In the UK, highly liberal policies which even allows for the families of foreigners who have settled
in UK to join them have led to a large influx of migrants into the United Kingdom.
 TFR of UK’s immigrants is 2.5, as compared to that of locals, which is 1.84.
 Improving support for the ageing population
 Japan has developed the Gold Plan in 1989, a plan which seeks to increase the support for the
ageing population by increase the number of infrastructure and support structures such as
280,000 hospital beds and 17,000 day care centres throughout the country.
 As a welfare state, UK provides the National Health Service which highly subsidizes healthcare for
the elderly. UK also provides the elderly with pensions to help them gain the financial support
required.

2.1.5.2 YOUNG POPULATIONS

 Low aged-dependency ratio, high young dependency ratio


 Economic Impacts:
 Partitioning/Management of resource
 Due to the limited resources of a country, a high child dependency ratio would thus mean that
each family would have to allocate fewer resources to every child, resulting in poverty due to the
overstretching of available resources.
 Although DRC and the Republic of Congo have a similar GDP, the GDP per capita of DRC is much
lower than that of the Republic of Congo, at only $200 compared to nearly $3000 for the Republic
of Congo.
 Apart from poverty, a high child dependency ratio also leads to a shortage of other resources
such as educational facilities required, as well as healthcare facilities. The government would
then be forced to spend money on providing the additional infrastructure, which could lead to a
negative impact on economic growth at present.
 Demographic Window of Opportunity
 Presence of a large labour force in the future, which can be used to drive economic growth,
especially growth in the agricultural sector, which many LDCs highly depend on.
 A high child dependency would in turn mean that a country is likely to have many talents and
skilled labour due to the presence of a large group of children.
 For example, in China, the youth dependency fell by half (influenced by the one child policy) from
1987-2000 while its aged dependency remained relatively unchanged, allowing China to fuel
economic growth through the use of a large labour force. This has allowed China’s GDP to rise
from $270 billion in 1987 to $1.2 trillion in 2000.
 Thus, a high child dependency ratio may not always be a bad thing as if properly curbed by
policies, it can create a bulge of able workers to fuel economic growth.
 Uncontrolled Fertility Rates
 Resulting in insufficient job opportunities and poverty.
 Unemployment is an especially severe problem in many LDCs, with youth unemployment rates of
up to 56% on South Africa. Such a scenario is mainly caused by a young population, which tends
to be more sexually active.
 This fact, compounded with little government emphasis on the use of contraception as well as
many having received little education or no education at all, results in a high fertility rate, which
in turn creates problems for the economy in terms of employment as the economy is unable to
provide sufficient jobs to accommodate the large and young population.
 Furthermore, this directly exacerbates the problem of poverty as young people are unable to find
jobs.

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 In such a situation, many young people, especially girls, become victims of sexual harassment and
abuse, or even sexual trafficking. As their children face the same prospects, generations of people
become increasingly trapped in a viscous cycle of poverty.
 HIV Pandemic
 Due to the nature of HIV/AIDS, it can not only reduce the life expectancy of a populace, but also
jeopardize a young person’s chances for employment and undermine many other areas of youth
development, such as schooling.
 A combination of poverty, unemployment and HIV/AIDS can severely limit the potential of the
young population in terms of both economic contributions and social contributions.
 For example, Botswana’s workforce is likely to drop by 1/3 due to the effect of AIDS/HIV, which
would seriously undermine Botswana’s economy.
 Alleviating the impacts of a young population
 Governmental Policies to curb population growth
 E.g. One Child Policy
 Reducing fertility
 Refer to Factors Affecting Fertility (1.1.3)

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2.2 POPULATION CHANGE AND PLANNING

2.2.1 DEMOGRAPHIC TRANSITION

 Objectives
 Discuss the links between Demographic Transition Theory and age structure
 Discuss the various stages of the demographic transition theory
 Apply the demographic transition theory to population growth in LDCs and DCs

2.2.1.1 DEFINITIONS

 Demography
 Scientific study of the human population primarily in relation to their size, structure and development
 Concerned with statistics and all aspects of population studies
 Demographic transition
 Gradual change in the manner of population growth over time, particularly the aspects associated
with the effects of the spread of industrialization and urbanization on fertility and mortality.

2.2.1.2 DEMOGRAPHIC TRANSITION MODEL

 Characteristics
 Descriptive and conceptual framework based on the demographic experiences in western Europe
which have undergone the industrial revolution
 Used to chart the changes from high levels of births and deaths to low levels of births and deaths over
time through 4 (originally) separate stages.

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 Attempts to explain a country’s current socio-economic progress based on the demographic stage
 Stages
 Stage 1 – High fluctuating
 Characteristic of Europe in the 14th century, when one third of the population died due to the
Black Death. Periodic famine and diseases contributed to the high death rate, such as the Great
Plague of London, 1665. Fertility levels were high, at 4-5. CBR = 35/1000 = CDR.
 Characteristic of hunter-gatherer populations, such as the Kalahari bushmen and isolated
Congo/Amazon forest indigenous tribes
 Stage 2 & 3 – Early expanding & Late expanding
 Europe, 18th century. Growing economies brought higher incomes and a steadier food supply,
along with scientific advancement (e.g. Edward Jenner’s use of vaccination against smallpox).
Increased medical knowledge and public health control brought down mortality rates. Large
families were the norm by the 19th century.
 Fertility then started to fall, driven by new economic circumstances that made children less
attractive, along with falling mortality rates and lower IMRs. Fertility fell rapidly during WWI.
 It is becoming more evident that Sub-Saharan Africa may be entering this stage, although more
remains to be seen.
 Stage 4 – Low fluctuating
 After WWII in Europe, continued medical advancement further lowered mortality rates, while the
introduction of new contraceptives further reduced fertility rates, which became largely a choice
of couples then.
 Potential 5th Stage – Low Declining
 Low birth rate, high death rate that leads to a gradual decline in population. Death rate is mainly
caused by ageing population. Low birth rates caused by socio-economic reasons (refer to A1.1)
 Assumptions
 Suggests that all countries develops from a primarily agrarian society to an advanced urban-industrial
economy (rostov’s model of development)
 Decrease in mortality due to socio-economic changes
 Explaining the transition
 Industrialization and development helped reduce mortality and fertility due to its effects on the
factors that affect mortality and fertility (refer to 1.1.3 and 1.2.3)
 Mortality decreases first as it is controlled by external factors such as level of medical technology,
nutrition, sanitation, etc.
 Fertility is much less responsive to socio-economic changes with decreases in birth rate occurring
sometime after decrease in death rate (changes in mindset take a longer time)
 Application of DTM
 Follow the course of demographic change for a country over time
 Locate countries at a particular time
 Provides a generalized pattern to forecast changes that are likely to occur over a specific period of
time
 Provides a useful point for academic inquiry into the “ideal” sequence a country’s population might
follow
 Application of DTM to developed countries
 Serves as an effective descriptive model as the DTM was constructed using data obtained from
developed countries and follows the population change since historic times.
 Serves as a good predictive model to set government policies and estimate future changes
 Does not take into account effects of migration on the demographics of DCs
 Limitations of applying DTM to LDCs
 Eurocentric model with unique historical setting

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 LDCs commonly have greater difficult in reducing birth rates due to population momentum
 Different socio-economic conditions in LDCs now as compared to DCs before
 Factors affecting rate of demographic transition
 External Intervention
 Fall in mortality rates in LDCs much more rapid due to a lack of the need to do research for
medical advancement (simply import technology from overseas). This is especially true in
Africa, where anti-malarial drugs and vaccinations were simply brought in and used, resulting
in a drop in mortality rates.
 Does not significantly improve a country’s socio-economic conditions, thus there is little
change in birth rates.
 Different cultures, influencing the way societies view family status and the role of women
 E.g. Under Islam, the family is the most important social unit and there are strict ideas about
family life
 Iran and Iraq have encouraged increases in family size to spread the country’s influence.
(currently their birth rates are low due to wars and tariffs)
 Children in many LDCs viewed as symbols of wealth and virility  Higher built in momentum
for population growth Social relations and land inheritance arrangement meant that children
were prized.
 In many LDCs, women also want larger families as it raises their status, although the
emancipation and education of women means that they can raise their status in other ways.
 Increased decision making by women
 Due to greater accessibility to education and deferment of marriage
 In Bangladesh, 44% of women cited poverty as the main deterrent for having more children,
while 26% cited awareness of contraceptives as the reason for not having more children.
 Difficulties in providing universal education
 Due to lack of funds and trained educators
 Lack of opportunities for women
 Considerable lack of opportunities to enter workforce due to mismatch of skills and little
formal education
 Conservative ideologies
 This may have contributed to India’s persistent high fertility rates despite a rapid drop in
mortality rates, even with governmental intervention.
 Population momentum in LDCs
 Influence of governmental policies
 Due to weak economic growth in post-WWII eastern European states, mortality rates
increased as a result of declining health services and a resurgence of diseases such as
Tuberculosis.
 One-child policies in China severely limited population growth and led to a large fall in
fertility rates after a period of rapid growth.
 Migration policies
 In America and Canada, population growth is largely driven by immigration from Europe
rather than through natural increase. However, since the immigrants were largely
Europeans, the DTM has prevailed in North America, although current TFR in the USA is
slightly higher than replacement level, with the bulk of population growth due to
immigration. (600,000 citizens annually)
 Deterministic model
 Implies that countries will eventually reach stage 4 but unique demographic transition patterns in
LDCs may hinder this transition (e.g. continuous High BR, Low DR)

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 Does not reflect unique demographic rates of every country (e.g. Islamic countries with stage 2
Birth rates but stage 3 death rates)
 Does not reflect timeframe in which countries will stay in present stage and how long they took to
reach the present stage
 E.g. Singapore only took 30 years to complete all 4 stages while UK took 140 years
 Some LDCs have been stuck in the same stage over the past 30 years (e.g. Chad and Ethiopia)
 Suggests that demographic factors responds to development factors
 Demographic factors have a significant impact on economic factors
 E.g. India and Bangladesh’s young population may impede economic development

2.2.2 POPULATION POLICIES

 Population Polices – Policies that deliberately seek to manage aspects of a country’s population, including
size, composition, etc
 General direction in which a state should develop
 Intervene and influence population dynamics via state-regulated processes
 Dynamic – are reevaluated periodically and initiatives in it can be changed (e.g change from 2 is
enough to 3 or more if you can afford it)
 Can be indirect (adjusting taxation, education costs) or direct (laws that directly impact fertility)
 Goals
 To maximize the positive aspects of the population (demographic window) on development
 To minimize the negative aspects of the population on development (resource consumption, poverty,
etc)
 Trigger mechanism
 Unrestrained population growth that exacerbates poverty, unemployment, etc.
 Declining population growth rates (esp below replacement fertility rates)
 Uneven age-sex structures due to sex-selective abortions, wars, etc.
 Uneven population distribution resulting in rural areas experiencing slow rates of growth
 Undesirable population composition that is unable to maintain current economic growth
 Types of policies
 Policies for fertility and reproductive health
 Promoting the use of contraception
 Anti-natal policies
 Seek to lower fertility rates via family planning programs
 Common in LDCs that experience rapid population growth
 Usually controversial
 Pro-natal policies
 Seek to increase fertility rates, especially in countries experiencing population decline
 Often make use of incentives such as paternity and maternity leaves
 Mortality policies
 Seek to reduce mortality through an increase in health services, increasing the rate of
development, getting aid from NGOs, etc. (refer to mortality)

2.2.2.2 FERTILITY POLICIES

 China’s one child policy


 Details
 Triggered by large scale famines in China and the need to maintain population-resource relations;
China, with 7% of the earth’s land, needs to support 21% of the earth’s population

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 Uses disincentives (taxes) as well as propaganda to promote one child families


 Has evolved since its inception
 Minority groups are now excluded from the one child policy
 Famers can have another child if the first is a girl
 Certain cities, such as Shanghai, are excluded due to extremely low fertility rates
 10% tax and other penalties imposed on families with only 1 child
 10% income bonus for families with only 1 child
 Advantages
 Has saved China from adding 200-400 million people
 Increasing sense in developed areas that the one child policy has become a proactive choice by
families
 Limitations
 Gave rise to children who were spoilt from young
 Has also led to more sex-selective abortion and tilted China’s girl to boy ratio
 Ageing populations in many developed cities, such as Shanghai where more than 22% of
residents are over 60.
 Increasing dependency ratios in Chinese families
 Singapore’s two is enough policy
 Liberalization of abortion
 Introduced due to rapid population growth
 TFRs dropped to below replacement levels after the introduction of this policy
 Singapore’s pro-natal policy
 Government encourages women to bear more children
 Transition from "Two is Enough" to "Three or more if you can afford it"
 Baby bonus scheme (Cash gift)
 1st /2nd child - $4000
 3rd /4th child - $6000
 Baby bonus scheme (CDA) (Contribution cap)
 First/Second child – $6000
 3rd/4th child - $12 000
 5th et al - $18 000
 Can be used to pay fees for children enrolling in approved preschools, medical insurance under
Medishield
 Income tax relief scheme
 Working mother’s child relief
 1st – 15% income
 2nd – 20% income
 3rd et al – 25% and cumulative until 100%
 Parenthood tax rebate
 1st - $5000
 2nd - $10 000
 3rd et al - $20 000
 Paid maternity leave
 Extended to 16 weeks
 First 8 weeks paid by employer, subsequent weeks by government
 Paid childcare, infant care leave
 Six days of paid leave for any parent
 Housing and Educational policies

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 Families get priority in flat allocation if they want a bigger home after the third child’s
birth
 Married couples have increased priority in getting a flat
 Priority given to children from three-child families when competing for school admission
 Community Support for parenthood
 Healthy Start Programme (HSP)
 Help low-income families enhance their parenting skills and parent-child interactions.
 Provides the child for a chance to receive early childcare education/development.
 Parenting Skills + Family Development + Child Development
 Family service centres around Singapore
 Provides social services to families with problems and provide consultation services
 National Family Council formed on 1 May 2006
 Advise people on family matters and promote the building of resilient families in Singapore, while
consulting the public on government family initiatives
 Promoting Work-life balance by MCYS
 Singapore Family Friendly Employer Award
 Employer Alliance on Work and Family was founded
 WoW (Work-Life-Works) Fund to provide financial support for companies to develop and
implement family friendly work practices ($20,000 max)
 Five-day work week for all civil servants
 Provision of childcare subsidies ($600 for working mothers, $150 for non-working)
 Encourage women to remain in workforce, decrease financial burden
 Effectiveness
 Highly limited, with TFRs hovering near record lows at 1.18.
 This could be due to various social norms that are entrenched in Singapore, such as the mother
being the primary caretaker of the child and the father being the primary earner
 Due to the highly competitive nature of Singapore, employers are constantly under stress and are
thus unwilling to hire pregnant ladies who are perceived to be non-productive.
 As a result, many women are afraid to have children because it might compromise on their
financial security and cause them to lose out many chances to women with no children, who are
probably more attractive to employers.
 Pro-natal policy in Sweden
 Details
 Highly generous policies with up to 12 weeks of maternal and paternal leave each, along with
another 72 shared weeks of paternal or maternal leave.
 80% of the income paid by the government
 A small cash bonus is also given to each family for every kid conceived, along with a small cash
gift every month.
 Penalties are given if the parent is not employed while having the child.
 Effectiveness
 Highly effective
 Social mindsets have been changed such that both parents are now seen to be the caretakers of
the child, rather than the mother being the sole caretaker.
 Many fathers are now increasingly seen in different parts of Sweden with baby strollers and often
share such responsibility with the mothers.
 Pro-natal policy in Norway
 Details
 Highly generous policies that provides 9 weeks of maternal leave, 10 weeks of paternal leave and
27-37 weeks of shared leave

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 Up to 100% of the income is paid every month


 A small cash bonus (up to $7000 USD) is given to the family for every kid conceived
 Effectiveness
 Highly effective
 Many Norwegians do not worry about the cost of raising a child when they have one.
 It is also a social norm for a mother to work and care for her child at the same time
 Since so many families choose to have children, employers have no choices but to offer attractive
paternity packages to attract staff.
 Norway’s policies have also reshaped social mindsets into accepting the role of the father as not
just a support, but a primary caretaker of the child.

2.2.2.3 MIGRATION POLICIES

 Ensuring flow of highly skilled individuals


 US governments passing several immigration laws to make it easier for highly skilled individuals to
enter USA
 French laws to woo skilled migrants
 Japanese attempts to woo skilled healthcare workers to counter its ageing population
 Minimum wage laws
 Makes employing citizens prohibitively expensive compared to illegal immigrants
 Emergence of a significant black labour market used even by large corporations
 Improving the welfare of semi-skilled labour
 Reducing unemployment and redressing low wages in sending countries
 Reduces impact of illegal immigration
 Policies to help smooth the immigration of foreigners
 Assimilation (conformation to a country’s culture)
 Segregation (ignorance)
 Integration (combination & cross-cultural exchange)
 Mutual engagement
 Multiculturalism (culture of tolerance for different ways of life)
 Inclusionary citizenship
 Politicians turn a blind eye to substantial illegal immigration
 Exclusionary citizenship
 Immigrants are treated as a lower class compared to citizens (e.g. Singapore)
 Policies to prevent exploitation of women
 Stepping up regulation of service sector
 Ensuring basic rights and access to medical and social services.
 Policies that limit migration
 Policy of containment practiced across the communist bloc forced many potential migrants to stay at
home, preventing their movement through the use of authoritarian tactics such as military
intervention and heavy penalties.
 12 of the 15 EU states have placed limitations on the number of workers from Eastern European
countries that are allowed into their own countries to work. This number has since increased to 13
out of 15 in 2007 as Ireland and UK joined while Finland drop out
 In Australia, tougher immigration policies favouring professional migrants have resulted in the
rejection of more than 20 000 PR applications.
 In Britain, worries about the abuse of student visas have led to a tightening of student visa rules
through the vetting of students on their ability to speak English as well as preventing graduates to
study in England unless they managed to obtain a skilled job paying more than 20,000 GBP a year.

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 Forced migration policies


 Indonesia’s transmigration program in 1949 to move 48 million people from Java over a 35 year
period, adopted to relieve congestion in the inner islands
 Migrants perceived new environments to be better
 However the program was perceived to have failed due to massive return migration, unsuitable
agricultural sites and mismanagement and neglect of sites.
 Policies that ensure that migrants remain a temporary feature
 Singapore’s dependency ceiling and foreign worker levy

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2.3 POPULATION-RESOURCE RELATIONSHIPS

2.3.1 CONCEPTS OF CARRYING CAPACITY, OPTIMUM POPULATION, OVERPOPULATION


AND UNDERPOPULATION

2.3.1.1 CARRYING CAPACITY

 Definition: Largest population of humans a particular area can support sustainably


 Applicability
 Used to link population size and resource availability
 E.g. Some areas in Western Africa (Sahara desert) are considered overpopulated with only 18
people/km2 while areas in western Europe with more than >155 people/ km 2 are not
underpopulated
 Characteristics
 Dynamic concept - Changes with technology & development
 Typical population growth chart (see below) – J Curve (Population “crash” model)

 S-curve – Stabilization model

2.3.1.2 OPTIMUM POPULATION

 Definition: The population level which allows for maximum utilization of available resources
 Characteristics
 Ideal concept; population is seldom at this level
 Hard to quantify; usually approximated
 Can be indicate by certain measurements

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 Life expectancy
 GDP per capita
 Employment
 Level of development
 Standard of living
 Migration flows
 International trade flows
 Dynamic, changes with time as
 Technology improves
 Population structures change
 Trade opportunities alter
 New raw materials discovered to replace old ones which are exhausted
 Flaws
 Impossible to define a universally acceptable definition
 Difficult to define maximum economic return
 Optimum population may not be desired if it results in overcrowding
 GDP per capita can be a bad indicator as it does not equate high standards of living for all citizens
 Base size of a population is a crude indicator of its economic potential as there can be varying
population structures (depending on sex, age, etc)
 Can be unsustainable over the long run, eventually leading to overpopulation
 Examples: China’s attempt to achieve optimum population by keep its population in check and increasing
food production
 Increasing food production
 Pooling together of labour, land and equipment into cooperatives and communes
 Increasing the use of mechanized labour; use of high yield varieties, better irrigation, multicrop
technique
 Population control
 One child policy (attempts to stabilize the population at 1.2billion)
 Glory certificates given to couples with only one children
 Introduction of eugenics law which dictates that any person with harmful mutant genes can only
marry if they agree to sterilization or long term contraception.

2.3.1.3 OVERPOPULATION

 Definition: A level of population that results in a fall in the standard of living and the quality of life as
current resource availability is insufficient.
 Absolute overpopulation – Maximum utilization of resources + Limit of production but standard of
living still low for the majority of the population
 Relative overpopulation – Current productivity unable to support present populations at a good
standard of living, but can be further increased to provide a better standard of living.
 Rural overpopulation – Found in densely populated and underdeveloped areas with high fertility rates
and declining agriculture outputs (e.g. Yunnan)
 Urban overpopulation – Found in urban cities where companies have moved out due to declining
demand for their products, resulting in surplus labour (e.g. Detroit)
 Characteristics
 High densities of population often lead to overpopulation
 Overpopulation can also occur in areas of low population, depending on resource availability
 E.g. in Northeastern Brazil, which is considered overpopulated despite having only 2 people/km 2
 Indicators of over population

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 Increase in emigration rates


 High population densities
 High levels of unemployment due to a surplus workforce
 Low and declining standards of living
 Low GDP per capita
 Causes
 Population growth exceeding economic development
 Exhaustion of non-renewable resources
 Decline in demand for labour due to economic downturn

2.3.1.4 UNDERPOPULATION

 Definition: A level of population that is unable to fully utilize the resources of the country effectively; The
current level of resource is able to support a larger population without lowering living standards or
increasing employment
 Absolute: Siberia, Antartica
 Relative: Insufficient populations to utilize resources fully (e.g. Stage 5 DTM countries with declining
populations)
 Characteristics
 Further increases in population lead to a rise in the standard of living due to increased productivity
and exploitation of resources.
 Countries that are underpopulated can export surplus food, energy mineral resources
 Indicators
 Moderate income per capita
 Slowly rising standard of living
 Low unemployment rates
 High immigration
 Excellent growth potential
 Causes (refer to population distribution 2.1)
 Environmental Limitations (restricts economic development)
 Climate
 Harsh temperatures, low rainfalls deter human settlement in areas such as Siberia, Northern
Canada (Northwest territories, Nunavut), Greenland (part of Denmark), Gobi Desert (near
Mongolia), Sahara Desert (Sahel Belt, near Niger)
 Vegetation
 Natural vegetation in an area may be an obstruction to development; e.g. in Vietnam
 Soils
 Taiga and tropical rainforests have infertile soils which are not suitable for agriculture once
the forest is removed
 Terrain
 Unsuitable terrains such as Andes Mountains
 Consequences of underpopulation
 High rate of immigrations
 Underpopulated countries tend to encourage a high rate of immigration to help develop the
economy; however such a high rate of immigration can lead to clashes between the locals and
the foreigners
 Foreign economic development
 Underpopulated countries try to attract more foreign companies to help develop and extract the
country’s resources. In Canada, 40% of businesses are foreign owned. In Brazil, many beef cattle

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ranges are owned by European MNC. Large amounts of foreign investment can be useful to boost
the economies of LDCs and DCs but they need to be carefully controlled.
 Regional Disparities
 Underpopulation is usually a relative concept (cities tend to not experience underpopulation). As
a result, these underpopulated areas usually experience less development (e.g. Xin Jiang, China;
Tibet, China), resulting in a lower standard of living for people in these regions. This could lead to
riots against major cities and aggravate the situation when people migrate from these regions to
the cities (causing over population in the city area)
 High standard of living
 The majority of underpopulated countries (Finland, Canada, Sweden, Australia) are DCs and tend
to have a high standard of living, which is likely to further increase when population increases as
the resources can be further developed.
 Examples of “underpopulated countries”
 Brazil
 Reasons behind underpopulation
 The majority of the western side of Brazil is sparsely populated, with about 0-1 person/km2,
although it is rich in resources.
 The population is unable to exploit these resources due to a lack of capital and technology
know-how to develop the area.
 Attempts to increase the population
 Building of the state capital, Brasilia 1000km away from the coast, in an attempt to improve
development of the inner areas. Since the 1960s, the immediate region surrounded Brasilia
has improved development, but Brasilia has also increased rural-urban migration from the
Amazon basin area.
 The Great Carajas Project
 Large scale project aimed at increasing mining, ranching, forestry and industrial activity
in an area the size of UK and France.
 Extraction of iron ore deposits
 Funded by foreign central banks, which then gain privilege access to minerals that are
found.
 Deforestation and forced relocation
 Exception: The southeast coastal belt is heavily developed and populated by 90% of Brazil’s
population.
 Canada
 Reasons behind underpopulation
 In the northeast territories, 60% of its population are indigenous tribes which do not have
the technological knowhow to develop resources
 Only 5% of its land is arable due to harsh climates
 Most of its resources are expensive to develop and subjected to market priceinflation.
 Attempts to increase the population
 Expansion of road network, although this is largely insufficient as 90% of the area is more
than 100km from the nearest road and more than half the population depends on air
transport for year round access

2.3.1.5 CORELATION TO POPULATION DENSITY

 Uneven balance of resources within the country


 A country may have a population that is too big for one resource but yet too small to fully utilize
another type

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 Uneven balance of population within a country


 Regional variances in large countries such as China, Russia
 Population density not directly proportionate to GDP per capita
 Countries with a low population can have a high GDP per capita (e.g. Canada, Australia)
 Countries with a high population can have a low GDP per capita (e.g. Bangladesh, Egypt)

2.3.2 POPULATION-RESOURCE THEORIES, T HEIR ORIGINS AND VALUE

 Emphasis on the conservationist and hedonist view

2.3.2.1 MALTHUSIAN THEORY (CONSERVATIONIST)

 Assumes that
 Population growth is geometric (if unchecked
 Food supply growth is arithmetic
 Thus, population growth will outstrip that of food supply eventually, leading to famine, war, diseases
(positive checks on population)
 People are both consumers and producers, thus population can drive economic change and are may
not be a consequence of economic change. However, people consume more than they create.
 Once population ceiling is reached, population growth will be kept in check by
 Preventive checks
 Deliberate attempts to reduce fertility rate (e.g. One child Policy)
 Positive checks
 Events that lead to a shortening of life span, and eventually reduces population size
 E.g. Wars, Famines (Irish Potato Famine 1845-46 halved population size by 1990)
 Famines resulting in increased mortality highly prevalent in densely populated and poor areas of
China and India before 20th century.
 Increase in population  Increased demand for agriculture land  Increased deforestation 
Increased environmental damage  Decreased productivity  Increased mortality (positive
checks)
 E.g. In the Sahel region, serious environmental problems that lead to severe soil and pasture
degradation have continuously placed a limit on population growth, resulting in low population
growth of less than 2%, considerably lower than the African average, despite high fertility.
Economic development is also limited. Sahel countries are regularly food deficit countries. In
Niger, the country regularly receives food aid to prevent famine, allowing it to attain a 3.3% in
population growth rate with a 7.1 TFR. In Chad, famine has provoked people to attack others to
get more food, resulting in civil disruption which further increases mortality and keeps the
population in check.
 Limitations of the Malthusian theory
 Geometric Progression of population can be kept in check by
 FACTORS AFFECTING FERTILITY (REFER TO 1.1)
 Immigration out of the country
 State policies on fertility (e.g. One Child Policy)
 Arithmetic increase of food production can be improved by
 Technological changes (GM Food, green revolution, high tech farming, blue revolution)
 Green Revolution increased wheat production in India by 10 million tons. India is now no
longer a major food deficit country.
 Improvements in food distribution as communication technologies are improved
 Improvements in mining methods and recycling measures

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 Current problem lies in the uneven distribution of resources/food not in the inadequate production
of food/resources
 5% of the world consumes 23% of the world’s total energy
 World trade results in the rich getting a larger share of the world’s food supply as compared to
the poor
 Peasants in poor countries often sell cash crops which can be sold at higher prices but cannot
replace subsistence
 Factory owners and landlords hold on to more income than peasants and accumulated mass
fortunes (e.g. richest 1% in US has nearly 20% of the total household income)
 Sustainable resource use can cause more environmental damage than unsustainable resource use.
E.g. Current logging practice causes considerably less damage than some forms of sustainable
management which require more intensive harvests of a wider variety of species.
 Application of the Malthusian theory
 Paul Ehrilich and Lester Brown (American commentators) argue that Africa today faces serious issues
in balancing food production with population growth, but the main solution lies in restricting
population growth rather than increasing food productivity.
 However, many LDCs criticize such an approach and are more focused on development rather than
keeping the population in check.
 Neo-malthusian advocates will insist that consumption (economic) growth and long-term
sustainability are incompatible and a solution must involve preventive checks on population or else
the system will collapse.
 Malthusian theory applies more on the south rather than the north, which have problems related to
declining populations rather than increasing populations.

2.3.2.2 MEADOW’S LIMITS TO GROWTH MODEL

 A report published in 1972 by Donella Meadows and Dennis Meadows that stated that if present trends
on population growth and resource utilization continued, then a sudden decline in economic growth will
occur within the next century
 Asserts that when population grows exponentially, there would only be a short window of opportunity to
take preventive action
 Suggests plants for global equilibrium
 Stabilization of population growth, use of resources, industrial growth and economic development
 Emphasis on improving food production and conservation

2.3.2.3 IMPACT = POPULATION * AFFLUENCE * TECHNOLOGY

 Developed by Paul Ehrlich and John Holdren


 Impact = Environmental impact caused by resource depletion or waste accumulation
 Affluence = Level of consumption by that population
 Technology = Processes that enable the population to obtain resources and transform them into
useful goods and wastes
 Limitations
 Ignores characteristics of population structure and dynamics that will affect a population's impact on
the environment. For example, a bigger aging population may have less impact on the environment
that a smaller younger population who has a higher consumption demand.
 The model ignores issues of both social variability e.g., how different cultures may act differently,
given the same population size and affluence. Two cultures with similar technology and affluence that
through differing cultural norms have different impacts on the environment.

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 The I=PAT model ignores any complexities posed by the environment as a source of materials or as a
sink for pollution. For instance, global warming vs global cooling.
 It does not consider how the environmental impact of a given pollutant will vary based on the
vulnerability (or carrying capacity) of the specific environment being affected. E.g., different
environments may have different sensitivity to the same impacts.

2.3.2.4 BOSERUP’S THEORY (HEDONISTIC)

 Alternative Theory to Malthus


 Assumptions
 Proposes that as population increases, farming becomes more intensive due to innovation and the
introduction of new methods and technology (e.g Green Revolution)
 Therefore, an increase in population stimulates agriculture production (argues that places with food
deficit should increase their populations to spur innovations in agriculture)
 Low population densities inhibit agricultural progress, slowing down development.
 People create more than they consume
 Population increase must be accompanied by social and economic structural changes to bring more
people into the economy, which boosts the economy.
 Population growth  Provides incentives for societies to innovate in their food supply systems 
Develops economy  Further increase in population
 Farmers can increase productivity of their land
 Farmers are usually restricted to only improving productivity and not buying extra land as extra
land is expensive/not available.
 Intensification usually utilizes new technology (such as new seeds, high yield varieties) or better
storage of crops
 Even simple irrigation technologies such as pumping can produce substantial benefits
 Or reduce consumption
 Applications of the Boserup Theory
 Major innovations in agriculture have occurred at times of population stress
 Green Revolution in Asia following times of famine in India.
 Land scarcity in Asian countries forces populations to intensify agriculture to support growth.
 Sub-saharan Africa, on the other land, lacks the population density to intensify agriculture.
Sufficient agriculture lands also meant that populations had little incentive to intensify
agriculture rather than finding more land for agriculture.
 Improvement in resource gathering methods
 Over the years, market prices of almost every valuable metal has dropped even after taking into
account inflation
 Achieved by developing more sophisticated techniques such as radar imaging for locating mineral
deposits; recycling minerals, substitution of plastic for metals.
 Case Study: Machakos, Kenya
 Machakos in 1930 was an area of disaster with very limited development potential and a small group
of impoverished farmers.
 Rapid population growth in the 1900s, along with droughts prompted the population to find ways to
increase food production.
 The residents restricted forest clearance and started to manage water resources better, reducing
extensive soil erosion. These practices quickly became the norm in Machakos.
 Careful management of soil, water and slopes, along with the planting of both cash and food crops
quickly turned Machakos into a relatively wealthy district of Kenya.

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B. Population Issues and Challenges

 Improvement in transport infrastructure connected Machakos to urban markets in Nairobi and other
cities.
 Social and economic changes also required; in Machakos, the temporary absence of men who migrate
to diversify the family’s income prompted women to either work on the fields on hire workers, which
helped to develop the economy  Increase population

2.3.3 DEVELOPMENT AND RESOURCE USAGE

 Resources: A word that encompasses labour, entrepreneurial skills, investment funds, fixed capital assets,
technology, knowledge, social stability, cultural and physical attributes

2.3.3.1 GLOBAL VARIATION IN RESOURCE USE

 Resources are spread unevenly throughout the world (Notion of balance vs space required for population)
 E.g. 5% of the world’s population consumes 23% of the world’s energy
 20% of the world’s population consumes 80% of the world’s resources
 13% of the world lacks drinking water
 DCs use up much of the world’s resources as compared to LDCs
 Other factors: Geopolitical Conflicts  Refugees, trading blocs, trade wars, economic sanctions
further aggravate resource inequality

2.3.3.2 MANAGEMENT OF RESOURCES

 Resources are increasingly being managed to ensure that they are sustainable
 Promotion of recycling campaigns; reusing certain resources such as plastic to generate new materials
 Sustainable development
 A pattern of economic growth in which resource use aims to meet human needs while preserving the
environment so that these needs can be met not only in the present, but also for generations to
come.
 Takes into account the carrying capacity of a place  implies that population and economic
development cannot increase forever
 Ecological footprints: A standardized measure of demand for natural capital on the earth’s ecosystem
that may be contrasted with the planet's ecological capacity to regenerate
 Also includes the space required to generate technology/goods that are imported into DCs from
LDCs.
 Implications for the earth’s development: An additional planet might be necessary for everyone
on earth to achieve the same standards of living as those of North Americans.
 World Crisis of sustainable development
 20% of the world population are extremely poor
 Increasing resource inequality as LDCs have to provide materials for economic development in
DCs and provide for their own people at the same time
 Not simply in terms of money but also taking into account environmental pollution
 Environmental crisis seen as an international problem
 Attempts to take action: Agenda 21
 Action at different scales from local governments to national governments
 Range of strategies aimed at regulating legal and economic controls, management,
cooperation, monitoring and assessment
 Needs to be complemented with local efforts to reduce environmental damage.
 Promotes the conservationist (Malthusian) view

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CONTENTS
Urbanization + Urban Dynamics + Urban Management

Loh Zheng Yi 12S74


H2 Geography

C. URBAN ISSUES
& CHALLENGES

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C. Urban Issues and Challenges

LEARNING OBJECTIVES
C1. Urbanization
1. Discuss the factors causing initial and subsequent growth of urban settlements/ urbanisation
2. Discuss the relationship between urbanisation and its relationship to urban growth
3. Distinguish between counter-urbanisation and sub-urbanisation and re-urbanisation
4. Discuss the economic and social factors resulting in different forms of decentralisation of
population in the DCs
5. Evaluate the economic, social and environmental consequences of decentralisation
6. Compare the urbanisation trends in LDCs and DCs
7. Discuss the characteristics and functions of world/global cities
8. Compare and account for the global growth of mega-cities
9. Compare the reasons and consequences of the growth of primate cities in LDCs and DCs
10. Compare the trends and characteristics between world cities, global cities and primate cities

C2. Urban Dynamics


11. Evaluate the usefulness of Bid Rent Theory in explaining urban zoning
12. Compare and account for the different land use zones in different cities
13. Compare the relative importance of historical forces, state planning, decentralisation and the
global economy in influencing the urban structure of cities
14. Discuss the changes of the central city over time
15. Compare and account for the location of the different functions in the central city
16. Assess the range of public and private initiatives used in urban regeneration
17. Assess the success of the re-imaging of cities
18. Discuss the reasons for and effects of gentrification
19. Use examples from selected cities to highlight the dynamic nature of the central city

C3. Managing Urban Environments


20. Discuss the nature and causes of inner city decline
21. Discuss the problems of homelessness in large urban areas
22. Analyse the problems arising from decline and decay in the inner zones and some suburbs
23. Analyse the relationship between social and demographic changes in urban areas and their
effects upon the size, type and location of housing developments
24. Assess the strategies used to manage housing problems in selected urban areas
25. Discuss the transport problems in urban areas
26. Compare the impact of transport problems in urban areas in LDCs and DCs
27. Assess the strategies used to manage transport problems in selected urban areas
28. Discuss the factors causing the segregation of social groups in urban areas
29. Compare the extent of social problems between urban areas in the LDCs and DCs

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C. Urban Issues and Challenges

C1. URBANISATION
1.1 CONCEPT OF URBANISATION AND ITS RELATIONSHIP TO URBAN GROWTH

1.1.1 DEFINITION OF URBANIZATION

 Urbanization: A process by which a society is transformed from essentially rural to predominantly urban
such that an increasing proportion of the total population lives in towns and cities.
 Associated with: Towns, Cities, Lifestyles
 Proximate factors driving urbanization
 Migration to urban areas
 High birth rates in urban areas
 High death rates in rural areas (push factor)

1.1.2 FACTORS DRIVING URBANIZATION

1. Initial advantage : Favourable environmental settings such as


 Rivers and Lakes
 Historically the sites of the births of the first civilizations (e.g. Ur, located near the Persian gulf)
 Provision of water supply
 Opportunities for trade (e.g. Singapore), acting as port cities
 Fertile Land
 Presence of raw resources (e.g. Iron)
2. Economic Advantages (presence of a larger population)
 Specialization and the division of labour
 Trading networks
 Agglomeration Economies (sometimes a corporate strategy)
 Linked economies help to save transport costs, etc.
 Attracts more investors
3. Social Advantages
 Complex organizational structures
 Governments  Policies which drive urbanization
 Social stratification
 Bright lights effect: Perceived benefits of living in a city i.e. better job opportunities, higher standards
of living
 Socialization opportunities
4. Multiplier Effect
 Benefits of urbanization in turn drives further urbanization
 I.e. Perceived advantages of urbanization  Agglomeration of people  Linked industries and
economic advantages  Increase employment  Setting up of government  Increased demand of
services  Expansion of economy  Attracts more people  Increased urbanization
 E.g. Development of Brasilia by the Brazilian government helped to stimulate the flow of foreign
investment  Increase in urbanization rates

1.1.3 HISTORICAL TRENDS OF URBANIZATION

 Emphasis on initial advantages

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The first cities tend to be set up at areas where the environment is highly favourable (e.g. Ur, Babylon
(Persian Gulf) , Giza (Nile) , Harappa (Indus Valley)
 Important milestones in urbanization
 1750s-1800s
 Increase in the use of technology and industrialization
 1800-1914 (Industrial Revolution)
 The use of steam engines revolutionised the transport system by introducing new transport
services such as trains, which bought people into cities
 Rise of the Industrial City – Setting up of new factories and growth of new cities around these
factories; Workers stayed near the factories
 Economies of scale increased productivity and heightened levels of output
 Need for ancillary services further drove people into cities to look for jobs
 Leading to increased pace of urbanization for DCs in the 19th -20th century
 E.g. In Cardiff (industrial city in Britain)
 1801-1901: Cardiff changed from a pre-industrial city of 1870 people to a post industrial city
of 163,333 people
 Located in South Wales – A leading region in iron and coal production
 Exporting of coal and iron drove ship building industries in Cardiff
 As trade and communications grew, more people started to work in the docks
 This attracted fleeing immigrants from Ireland.
 1500s -1900s (European Colonization)
 Colonization involved the setting up of colonial capitals and cities that served as the administrative,
military and commercial capitals in the region
 Development of steam ships further drew global sea trade and prompted the development of port
cities such as Singapore
 The growth of these cities (Urbnization) were led by rural-urban migration of locals to these cities
as well as the migration of Europeans to these cities
 Further development of electric trains.
 Late 19th century (Globalization)
 Increased urbanization in the USA, driven by industrialization, migration and transport
improvements
 E.g. New York, one of the alpha ++ cities in the world today, has achieved a high urban growth
through the development of technology-based industries, infrastructure, education, etc.
 Post 1970: Urban Population of LDCs > Urban Population of DCs
 1975: 3 megacities (city with > 10million) (London, New York, Tokyo)
 2008: Urban Population > Rural Population
 2011: 21 Megacities
 2050: 70% of the total population will be living in urban areas

1.1.3 RELATIONSHIP WITH URBAN GROWTH

 Urbanization first and foremost includes urban growth, which is the increase in population in urban areas
 However, urbanization also includes other subtle changes such as
 A rise in the urban lifestyle (cars, etc)
 A demographic change whereby fertility rate and mortality rates decrease
 A change in the structure of the economy accounting for the dominance of services and
manufacturing over primary industries such as mining and farming.

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1.2 URBANISATION TRENDS IN LDCS AND DCS

 Overall
 Growth of very large cities (e.g. Guang Zhou, Lagos, Mexico City)
 Overall increase in urban growth and urbanization (from 50% in 2009 to predicted 69% in 2050)
 Trends in LDCs
 Most LDCs experiencing urbanisation rates in excess of economic growth rates
 Sprawling area of slumps
 High urban primacy – high concentrations of people and investments in the single largest cities of
African nations (especially in Thailand, Bangkok)
 Cities in LDCs tend to include rural areas within their boundaries to gain access to vital urban needs,
such as water and energy. (such as Shanghai, which contains large amounts of rural farmlands in its
6km radius)
 Statistics
 High to very high urban growth rates that accelerated after WWII (2.2% growth in the 1990s)
 17% of LDCs experienced very high growth rates of >4% annually
 Growth of megacities largely in LDCs
 Asia will have 63% of the global urban population in 2050 (3.3 billion people)
 Declining annual urban growth rate (3.8% in 1960s to 2.6% today)
 Several cities in China grew more than 10% per annum due to pro-urbanization policies which
reclassified certain areas as cities or marked areas for economic development (Shen Zhen)
 Large amount of slums in many cities in LDCs (e.g. Manila, where more than 1/3 of the people live
in slums)
 However, rate of urban growth is slowly down
 Factors driving the trend in urbanization
 Shift in economic activities and employment structures from agriculture to industry and services,
prompting more people to leave the farmlands for the cities for jobs.
 Twin processes or high rates of natural increase along with rural-urban migration
 Modernisation of agriculture (e.g. Green Revolution) replaced manpower with machines, bringing
about higher rates of rural unemployment which drove people into the cities for jobs.
 Bright lights effect + improved transportation & communications
 Trends in DCs
 Moderate, even declining urban growth due to decentralization
 Most DCs have already achieved high levels of urbanization (crossed urban transition in 1950)
 Statistics
 500,000 new urban residents/month
 0.3% growth in the 1990s
 Nearly ½ of all cities grow at less than 1% annually
 40% of cities even experienced negative growth in the 1990s
 Factors driving the trend in urbanization
 Historically driven by the industrial revolution (1750-1850)
 Growth now driven by immigration of people from LDCs/rural areas, rather than natural increase

1.3 SUB-URBANISATION, COUNTER-URBANISATION AND RE-URBANISATION IN THE


DEVELOPED WORLD

 Decentralization: The relocation of people, employment and services from the inner and central areas of
cities towards margins of the built up area, leading to suburbs, urban sprawls and counter-urbanization

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1.3.1 SUBURBANIZATION

 Suburbs: A commuter belt/residential area located at the periphery of a city, within the commuting zone of
an urban area
 Suburbanization: The decentralization of people, employment and services from the inner part of the city
towards the margins of the built-up area.
 Took off in the late 19th and early 20th centuries
 Targeted at mainly affluent, middle class people with the ability to move
 Suburban population usually not counted as being part of the urban population (when answering DRQs)
 Factors driving suburbanization
 Social Factors
 Deterioration of the inner city regions leading to mass unemployment, falling standards of service
provision and a lack of community (inner city decay)
 Aspirations to escape the working-class life
 Economic Factors
 Drop in farmland prices made it cheaper to purchase buildings just outside the city region
 Rising wages increased the ability of the middle class to buy new housing
 Lower interest rates, better infrastructure in suburbs
 High land prices in the urban core
 Low mortgage interest rates
 Massive highway subsidies
 Transport
 Improvements in transport systems from the 1880s-1980s leading to railways, electric streetcars
and buses
 Trends
 Acceleration of sub-urbanization process after WWII especially in North America (50% of Americans
lived in Suburbs in 2000)
 Suburbanization of
 Residential Sector **
 Specific driving factors
 Increase demand for housing
 Public construction projects involving the building of highways and new houses
 Increasing automobile ownership further increased the accessibility of the city core from the
suburbs.
 Case Study: Los Angeles
 Description
 Suburban Metropolis where 14.5 million people stayed over 88000km 2 of suburbs
 1500 km of road networks threading through the suburbs
 Many drive-in establishments with wide streets
 Plenty of shopping centres
 Causes
 Congestion & pollution in the urban core
 Coincidence of city economic takeoff with the arrival of the automobile (forced public to
adopt the automobile)
 Availability of cheap land
 Lax planning controls
 Media promotion of the suburban dream
 Example: Stoneleigh, London
 Located southwest of London, consisted of 3 farms

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 Following the arrival of the railway in 1923, development intensified and by 1933 there was a
3,500 acre sites with 3000 homes.
 Further development took place with shops, schools, a cinema and post offices being built
 Retail Sector
 Specific driving factors
 Residential flight to the suburbs
 New merchandising techniques
 Business opportunities in suburbs
 Moving of retailers to the suburbs in great numbers, resulting in large regional shopping malls being
set up (e.g. Walmart Hypermarts)
 Office Sector
 Specific driving factors
 Lower rents in the suburbs
 Better access to transportation than in the congested inner city (e.g. expressways)
 E.g. General Foods, IBM, Reader’s Digest, Union Carbide left NYC for the suburbs where the
rents are lower and transportation more accessible.
 Results in the building of suburban office parks
 Manufacturing sector
 Specific driving factors
 Lower rents than urban core
 Easy accessibility to major road networks
 Edge Cities: Perimeter cities created by the relocation of housing, industry and commerce to the outskirts
of the urban areas
 Main cause: An intensification of suburbanization
 Functionally independent of the urban core as it contains all the specialized functions of a city
 Boundaries determined by driving time
 Unplanned, loosely organized
 Defining feature: Huge regional shopping centre
 Example: Tyson’s Corner (Washington D.C.)
 An edge city built around an intersection of interstate highway 66, the Washington Beltway and
the access road of Dulles International Airport
 Since the 1960s, it has grown into a business district with an area of 2400 ha, 30000 residents and
75000 jobs.
 Classified as a rural region with little urban governance
 Example: Golders Green, London, UK
 Was once a rural location with little amenities
 Development was privately financed by an American syndicate which built a tram link between
Charing Cross and Golders Green. A railway from Hampstead to Golders Green was opened in 1907.
The underground line attracted 1.5 million passengers in 1908.
 Development was rapid during 1904-1906, where roads were lit and houses were slowly built.
 By 1925, the population had reached 13,400 and shopping complexes, church, banks, cinemas,
schools and a police station had been added to the district.
 Exurbs
 Boom towns that house the working class population when they are driven out of inner city areas due
to gentrification, etc.
 Located in remote areas and lack many amenities  long commute times
 However, many businesses are starting to move to the Exurbs following the information revolution and
the flexible economy.
 Cause

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 Highly affordable housing


 Exurbs became more popular when the cost of living in suburbs gradually increased due to the
suburban post war boom. Families also seek to escape high taxes, congestion and crime in the inner
city areas.

1.3.2 URBAN SPRAWLS & MEGALOPOLIS

 Urban Sprawls: Unplanned suburban growth with continuing outward development on the periphery of
urban regions and development of car-centred uses of space (e.g. Drive-ins , freeways, etc)
 Usually results in many productive farmlands being developed.
 E.g. Mexico City
 8000 people/km2
 High rates of natural increase and rural-urban migration
 Gradual extension of subway and road systems unable to keep up with urban growth, leading to
congestion, slums and air pollution.
 Megalopolis: Urban units with a minimum population of 25 million
 Formed due to expansion of sub-urban areas until the areas of various urban cities coalesce
 Polynucleated regions
 E.g. Guangzhou Region, Boston-Washington Corridor

1.3.4 COUNTER URBANIZATION

 Def: A process of population decentralization away from large urban settlements to rural areas/ smaller
towns, villages
 Results in a decline in the urban population with growth in the rural areas
 * Different from sub-urbanization, people do not commute back to the city to work
 E.g. Net migration from main metropolitan areas to the rest of UK average 90,000 people per annum
 In USA, people are increasingly moving to sunbelt states such as Florida and California from
metropolitan areas
 Driving Factors (similar to suburbanization)
 Social
 Inner city decay
 Economic
 Rising wages, increased mobility of the middle class
 Technological
 Mass production of automobiles
 Infrastructure development
 Environment
 Pollution in urban areas
 Rural areas perceived as open spaces with clean air
 Effects of counter urbanization
 Displacement of working class individuals in the rural areas due to cost of living being inflated
 Owners of small enterprises out-competed by large enterprises
 More dispersed pattern of urban settlements and the growth of smaller cities

1.3.5 IMPACTS OF DECENTRALIZATION

 Economic Impacts – Loss of economic dynamism


 Depletion of tax base and purchasing power of the inner city area

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 Suburbs usually not counted as part of the whole city, thus suburban residents get to avoid paying
taxes to the city government.
 The government is thus less able to afford public services such as sanitation, maintenance and
repair services due to a lack of income, resulting in properties that gradually decay.
 The movement of the rich out of the area leaves the poor behind, who are less able to purchase
goods and services than the rich.
 Resulting in a downward spiral of conditions
 Changes in employment opportunities
 Jobs in the service economy is gradually moved to the outskirts of the city, resulting in increased
unemployment in the inner city region
 Retailing and services
 Lower demand for local convenience stores
 Infrastructure and transport
 Increased expenditure for transport and water networks, resulting in more noise and air pollution
as well as traffic congestion
 Social consequences
 Social segregation and spatial polarization
 Fall in urban populations with mainly (white) middle class residents moving to the suburbs, leaving
behind more disadvantaged, less mobile minority groups in the inner city region.
 These minority and poor groups of people might cause crime rate to increase.
 Resulting in the disintegration of community life and identity
 Environmental consequences
 Land conversion
 Farmlands converted to residential areas
 Destruction of natural habitats
 Increased pollution due to increased traffic intensity
 Increased energy and water consumption

1.3.6 INNER CITY (DECAY)

 Geographical Def: An area of the city that is between the city centre and suburb
 Metaphorical Identity: An area with high density substandard housing that concentrates poverty and
deprivation, primarily associated with the working class and immigrant population
 Ghetto – An urban residential district that is almost exclusively the preserve of one ethnic or cultural
group
 May occur in regions that are prospering
 Causes
 Mainly by the impacts of decentralization, which causes property prices to drop and drive out more rich
people, leading to a drop in the investment of local authorities and a decline in the quality of services.
 Industrial causes
 Economic recessions (oil crisis in 1970, banking crisis in 2008) led to the closure of many
manufacturing plants  loss of jobs
 Decentralization of manufacturing due to obsolescence of infrastructure, inner city congestion, etc
 Political causes
 Inner city lacks government support, seen as unattractive to many companies
 Unintended urban renewal policies encouraged the decentralization of industrial functions, freeing
the industry from the inner city
 Poor urban planning that results in substandard construction of residential areas
 Characteristics/Problems

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 Economic decline and unemployment


 Contracting industrial base
 Closure of branch plants and small local firms, depressing the local economy
 Failure to attract new industries due to the high cost of industrial land, local taxes, crime,
undesirable environments, etc.
 Government investment funnelled to suburban areas rather than the inner city
 Underclass trapped in an unending cycle of socioeconomic problems
 Physical dereliction and absence of amenities
 Lack of continued investment, maintenance and improvements causes properties to decay and
become derelict.
 Aesthetically ugly landscape
 Prevalent socially disadvantaged groups
 High levels of unemployment with only low-wage jobs available
 Many elderly, odd job workers and ethnic minority groups
 Pervasive sense of decay and neglect
 High incidences of anti-social behaviour
 Disintegration of community life and identity
 Concentration of ethnic minorities in parts of the inner city
 Leads to discrimination of the inner city in jobs d housing markets
 Concentrates racial tension

1.3.7 REURBANIZATION – GENTRIFICATION

 Def: The movement of affluent, usually young, middle class residents into poor inner city areas (especially
business elites that play a major role in the service economy; excludes the working class)
 Established and extensive practice in many North American cities (such as Greenwich Village and Brooklyn
Heights in New York), Australian and European cities (Islington London)
 Commercial Gentrification – Redevelopment of inner city areas by real estate companies purely for profit
into residential zones.
 Causes
 High commuting costs
 Locational Advantage: Inner city areas closer to CBD district; services more readily in inner city
areas; Commuting from suburbs can be expensive
 Rent Gap – Difference between potential rent and the actual rent under present land use
 Many properties in the inner city seen as being below the market value, thus seen as good choice
for investment
 Conversion of multi-family housing units and derelict industrial spaces into luxury condominiums
and cooperative apartments
 Government/Local authority action
 Gentrification aided by government policies and activities which seek to drive urban regeneration
by reinvesting capital in the inner city region
 (+) Impacts of gentrification
 Social and Environmental
 Regeneration of inner city districts
 Increased investment in property improves the appearance of the local environment
 Neighbourhood upgrading by relatively affluent incomers who move into a poorer neighbourhood
 Economic
 Opportunities for local businesses as a result of increased wealth in the district
 (-) Impacts of gentrification

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 Social
 Social disharmony of existing working class residents as new groups enter the community
 Working class residents are displaced as house prices rise
 Sharp transition
 Economic
 Higher rental and purchase prices inflate overall cost of living in inner city locations
 E.g. Lower East Side in New York; Islington in London
 Loss of businesses for local traditional low order shops
 Environmental
 Higher car ownership increases congestion on local streets as a result of a lack of parking space.
 Did not reverse the trend of decentralization – For every family that moved into the inner city, 8 moved
out.

1.3.8 REURBANIZATION – URBAN RENEWAL

 Definitions
 Re-imaging – Remodelling of the perception of settlements by countering the negative aspects of the
physical environment and providing new functions, services to attract investment, retailing, etc.
 Regeneration – Long term process that seeks to reverse social & economic decline while creating
sustainable communities
 Rebranding = Re-imaging + Regeneration
 Aims
 Increase attractiveness of city to tourists and to foreigners to live and work in and to provide the city
with a new economic infrastructure, compete for investment
 Counters decentralization, may focus on an entire city or simply the CBD area (2.2.2)
 Change the perspective that people have on the city, creating a brand identity
 Usually initiated by the government due to increasing unemployment and widening social polarization as a
result of urban city decay
 Strategies for urban renewal
 Public-Private Partnerships involving Flagship Projects
 Projects are kickstarted by local governments and then later worked on by private developers.
 E.g. Pittsburgh’s golden triangle
 Governments become co-developers in more risky redevelopment projects
 Cornerstone of economic development strategies in almost all US cities
 Assembly of finance, land, building materials and labour to produce or improve buildings for
occupation and investment purposes
 Mainly commercial, residential projects
 E.g. London Docklands Development Corporation
 Flagship project of the Urban Development Corporation’s inner city policy
 E.g. Regeneration of King’s Cross area, London
 St Pancras station had its platform extended to take in Eurostar trains; Midland hotel was
refurbished as a luxury hotel; P&O properties redeveloped Regent’s quarter into shops, hotels,
restaurants, bars along with a few arts facilities
 E.g. Regeneration in Liverpool
 Liverpool City Council, the Northwest Development Agency and the European Regional
Development Fund helped to reimage the city
 2 billion pounds from the public and private sector were used for flagship projects such as
Liverpool One retail and Office Development, Kings Waterfront and expansion of John Lennon
International Airport.

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 Liverpool subsequently moved from 17th to 5th in UK’s retail hierarchy, attracting over 3 billion
pounds of investment. Unemployment fell to 4% and the population increased.
 Cultural Industries and Heritage Reconstruction
 Relies on the use of the knowledge economy and creative industries (activities such as printing,
publishing, film production, radio, sports, fashion, tourism, etc) to catalyse urban regeneration
 Heritage Tourism
 Developed to preserve old monuments and heritage while increasing their economic value
 E.g. In the UK, many brownfield sites have since been refurbished into tourism sites where
tourists can try to understand UK’s industrial past. This has generated £244m in profit.
 Includes attractions of natural history, agriculture/industrial, transport, military, landscape,
artistic, historical figures
 E.g. In Singapore, the Urban Redevelopment Authority has preserved 4 major conservation
areas: Civil District, Chinatown, Kampong Glam and Little India, and presented it as selling
points for heritage tourism
 E.g. Cheongyecheon – Heritage tourism (redevelopment of past urban landscapes as heritage areas)
 8.4km public recreation development project , costs $900 billion won
 The Cheongyecheon stream attracted over 120 million visitors to Seoul.
 E.g. Guggenheim Museum, located in Bilbao (flagship project in the overall urban renewal attempt)
 A museum of modern and contemporary art, one of the best designed museum in the world.
Along with other policies that helped revitalise Bilbao’s economy, it helped Bilbao’s population
to grow by 600 people since 2000 and reversed the trend of depopulation.
 The Guggenheim museum earned more than 144 million in one year, more than its start-up
cost.
 Urban tourism and downtown development/24hr cities
 Development of tourism and leisure facilities to attract tourists and foreigners to live and work in
a city
 Development of 24hr cities
 Traditional perception of city centres: Unsafe, only used for work and services
 Policies directed to remove this perception and create a new image for city centres as places
where workers can relax
 Building of new bars, nightclubs, restaurants
 Setting up of night transportation services
 More police patrols and surveillance to increase safety
 Promoting street life (e.g. encouraging street cafes, street markets (night markets), street
performances)
 Disadvantaged multicultural districts on the fringes of the city centres have been redeveloped
and marketed as new destinations for leisure and tourism
 E.g. Clerkenwell, London
 Regeneration efforts spurred a wide variety of commercial functions into the area, such as
high-end bars and restaurants aimed at the urban elite; new-style offices with high design
specifications to attract media and advertising industries; Designer shops; Digital printer shops;
Most brownfield sites have been converted into residential estates
 + New functions have increased the area’s vitality and buzz, serving as magnets for young
professionals and the urban elite
 - Social changes have taken place, forcing some older and more established families out of the
area
 - Some places have become hotspots for noise and nuisance to local residents
 E.g. Singapore

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 Shophouses have been converted into the Boat Quay complex; an agglomeration of bars,
restaurants aimed at city employees and foreign elites
 + Increases the city’s vitality and makes night life more vibrant
 - Replacement of the popular and lively local population with a rich middle/upper class
 - Questionable functions such as the flea market that lack spontaneity
 - Bland development of condominiums at Robinson Quay
 Advantages of urban renewal
 Advertising the city as a tourist destination and engaging promotion events (Olympics, World Fairs, etc)
to attract footloose economic activities. Multiplier effect can result in the generation of new businesses.
 E.g. 1992 Olympics game at Barcelona helped to catalyse urban regeneration by spurring the
construction of flats, restaurants, shops and commercial facilities at brownfield sites, effectively
extending the CBD eastwards
 Locals can make use of new facilities available to tourists
 Availability of low-skilled and management-level employment
 The Cheongyecheon project included the support of businesses in the Cheongyecheon district via
grants and subsidies.
 Improved environmental conditions
 The Cheong ye Cheon project resulted in the removal of an aesthetically unappealing highway and
regeneration of the Cheong ye Cheon stream that helped to beautify the city.
 Improvement of transport facilities
 The Cheong ye Cheon project included extra traffic flow measures that provided extra parking,
reduced parking fees and improved the loading and unloading systems
 Disadvantages of urban renewal
 May subject a city to seasonal variations of tourism (e.g. Olympics)
 Diversion of funds to aesthetic projects rather than benefiting residents
 City may subsidize loss-making visitor attractions for benefits of private businesses
 The newly developed areas experience the same problems as gentrification as land prices increase and
poor residents are forced to evict the area.
 Traditional jobs and commerce are forced to evict the area, leading to a loss of heritage in the face of
modernization
 The Cheongyecheon project led to the closure of the Cheongyecheon flea market, one the largest
street markets in Seoul. More than 60,000 shops were closed as well.

CASE STUDY: PITTSBURGH RENAISSANCE (MAJOR URBAN RENEWAL PROJECT THAT


INVOLVED THE WHOLE CITY)

 Strategies
 Private-Public Partnerships
 Pittsburgh Renaissance led by Mayor David Lawrence and the Allegheny conference on community
development.
 Civic leaders with ties to the business community donated more than $50 million to the University
of Pittsburgh
 Property-led regeneration
 Renewal of Pittsburgh’s golden triangle (downtown area) by building new highways and the
Gateway centre towers and the Point state park
 Building of Nine Mile Run (redevelopment of old industrial areas), Pittsburgh Technology centre,
South Side works
 Cultural Industries/Urban reconstruction
 Investment in the University of Pittsburgh by building a new medical school

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 Building of Pittsburgh convention centre, world’s first green convention centre


 Advantages
 Economic revival by diversifying the economy
 8 fortune 500 companies based in Pittsburgh
 Provided a more livable city for people to live in (29th most livable city)
 Disadvantages
 Displacement of the poor, working class people
 Destroying Lower Hill District forced out 1239 families, most of which were blacks
 Several districts were sacrificed to help the whole city renew
 East Liberty district was completely bypassed with the building of the new highways, causing more
than 80% of the business to be lost in 20 years.

CASE STUDY: LONDON CBD AREA

 Strategies
 Public-Private Partnerships involving Flagship Projects
 “More London” development scheme has helped Southwark establish a foothold in finance,
professional business services and legal firms such as Norton Rose and Ernst & Young
 Development of former rail and industrial land at King’s cross by London & Continental Railways
and the London Mayor & Greater London Authority. Repopulation of derelict warehouses and
factories by creative arts firms. Opening of the Channel Tunnel Rail Link to bring in more traffic
into the area.
 Canary Wharf developed to create a new business centre
 Michael von Clemm, former chairman of Credit Suisse First Boston (CSFB), came up with the
idea to convert Canary Wharf into back office. The project was sold to Olympia & York and
construction began in 1988
 Cultural Industries and Urban Reconstruction
 Growth of creative arts sector has contributed significantly to growth in London’s business service
employment in recent years. Many creative arts businesses have relocated to Canary Wharf and
Wapping from Fleet Street. Areas on the city fringe such as Clerkenwell occupied by publishing
firms.

CASE STUDY: SINGAPORE CBD AREA

 Strategies
 Public-Private Partnerships involving flagship projects
 Designation of an office district, with retail relocated to orchard road. Land Development
corporations such as Capitol Land are then called in to develop certain areas.
 Concept plan that acts as a guiding framework for Singapore’s physical development over the
next 50 years
 Building of many new high-end condominiums near Marina Bay such as The Sail @ Marina Bay
that caters to foreign expatriates and foreign professionals
 Cultural Industries and Urban Reconstruction
 Adaptive reuse-cum-conservation efforts (e.g. Lau Pa Sat)
 Iconic cultural infrastructure (e.g. Esplanade)
 Urban tourism and downtown development
 Development of an efficient transport system to serve downtown Singapore (e.g. Circle Line)
 Introduction of night-time commercial activities such as hotels and pubs

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 Bayfront development – Marina Bay Sands, Gardens by the Bay – which serve to create a vibrant
new 21st century downtown around the Marina Bay and reinforce Singapore’s global city image

MEASURING & ASSESSING THE SUCCESS OF RE-IMAGING

 Fieldwork for measuring the success of re-imaging


 Primary
 Place Check
 Photographic Evidence
 Blog sites
 Land use surveys
 Environmental Quality surveys
 Interviews
 Pedestrian and traffic flow
 Secondary
 Local newspaper
 Developers’ websites
 Census Data
 Shop occupancy rates
 Digitised health and crime maps
 Benchmarks for assessing success
 Sustainability
 Environmental Impact
 Public Participation
 Equity (winners and losers)

1.4 CITY TYPES

1.4.1 WORLD/GLOBAL CITIES

 Range = The limit of a city’s sphere of influence


 City = A urban settlement that has the whole range of functions (Finance – Housing) in one settlement,
providing higher order of services than in smaller settlements
 World Cities: Cities that lie at the top of the global urban hierarchy; Cites of power defined through their
positioning in global networks based on trade, innovation, political strength and communications
 Global Urban Hierarchy: The ranking and classification of cities based on the size of the population
and the range and importance of the functions performed by the city (E.g. Finance, Culture,
Manufacturing, Politics, Housing)
 Driven by the New International Division of Labour (NIDL) such that world cities get the most high-end
functions
 E.g.
 Finance – New York, London, Tokyo, Shanghai, Singapore, Hong Kong, Frankfurt, Seoul, Sydney,
Zurich, Taipei
 Culture – Beijing, Paris, Los Angeles, Bueno Aires, Istanbul, Vatican City
 Political Centre – Washington D.C., Beijing, Moscow, Brussels, Johannesburg, Mexico City, Berlin
 Education (universities) – London
 Other functions: Centres of creative innovation; news, fashion; culture industries; management,
planning and control centres of corporations and NGOs

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2nd tier world cities – Cities that are playing increasingly important roles in the global economy; seen
as attractive to investors due to less intense competition and less urban problems (e.g. Harbin)
 GaWC Inventory of World Cities
 Assessment of cities based on their advanced producer services (e.g. accounting, finance, insurance);
measure of how deeply a city is integrated into the world city network
 Alpha ++  London, New York
 Alpha +  Highly integrated cities that complement London & New York, mostly located in Asia
pacific and providing advanced services
 Alpha, Alpha –  Important world cities that link major economic regions and states into the world
economy
 Beta  Important world cities that link their region or state into the world economy
 Gamma  World cities linking smaller regions or states into the world economy/world cities with
functions other than advanced producer services

 Cities with sufficiency of services  Cities that have sufficient services such that they are not overly
dependent on world cities
 Characteristics of World Cities (see urban management)
 Urban Problems
 Stark Socio-Economic polarization + Income stratification due to high concentrations of wealth
 Transport problems
 Housing issues
 High competition
 World cities tend to compete with each other to attract foreign professionals, foreign investment
and tourists
 Within the city, many local SMEs and TNCs also compete with each other for market share and
profits
 High level of urbanization and development
 Dominant tertiary, budding quaternary industry
 Strong financial sector with stock exchange

1.4.2 MEGACITIES & PRIMATE CITIES

 Megacity: City with more than 10 million people


 Arbitrary definition as the boundaries of any city can constantly change
 Mostly located in LDCs (except Osake-Kobe, Tokyo, London, New York)
 Driven by concentrated growth (growth of economy, politics and technology in 1 place, driven by the
globalization of economic activity), natural increase and migration

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 Primate City: A large city that disproportionately dominates a country or region in terms of both
population and the range and importance of the functions performed by the city (population of primate
city is twice as large as the next largest city)
 E.g.
 LDCs: Mexico City, Bangkok, Bueno Aires, Cairo, Tehran
 DCs: Seoul, Athens, London, Paris
 Indicates
 Imbalance in national/regional development with a progressive core and a lagging periphery
(core-periphery effect). Positive feedback cycle causes the primate city to receive even more
investment, causing an increase in the degree of primacy.
 Driven by
 Spatial Biasness in allocation of resources (either materials or monetary)
 Tendency for government to improve existing infrastructure than build new ones due to a
lack of government capital.
 A lack of government capital also forces governments to allocate resources in a way that will
have the largest impact; that means investing in cities that already have the foundational
infrastructure.
 Governments that cannot ensure a more equal distribution of developmental rates across
the country will tend to focus on developing only 1 city, leading to primacy.
 Sometimes, the rest of the country is covered in land with little resources (e.g. desert) and
cannot be developed easily.
 Growth pole development
 Due to spatial biasness and other reasons, a growth pole is developed that causes cities
receiving inward investment to be more attractive than surrounding cities. The attraction of
more foreign direct investment by these primate cities reinforce the disparity.
 Due to the “backwash effect”, areas surrounding the primate city tend to be ostracized and
not given sufficient resources for development.
 The primate city becomes a growth pole and attracts even more rural migrants and
investment, reinforcing a positive feedback cycle that leads to even higher levels of primacy
 Colonial Reasons
 Colonial powers tend to centralize the administrative body into 1 specific city in the country.
When these colonies gain independence, such cities tend to be the seat of the new
government due to existing administrative structures.
 Furthermore, colonies tend to have export-based economies that cause most functions to be
concentrated in cities that are easily accessible by boat or train.
 E.g. Dhakar (Senegal), Luanda (Angola)
 Globalization of Economic Activity
 TNCs deliberately allocate certain cities to host their HQ and other important functions,
leading to some cities experiencing higher primacy.
 Primacy in LDCs
 More prevalent due to colonial reasons and spatial biasness in the allocation of resources due to
low GDP.
 High rural-urban migration rates with most migrants going for the largest city due to perceived
opportunities
 Many LDCs do not even have any other prominent cities apart from the primate city
 Greater social and environmental awareness in DCs
 Lower national inequality
 Primacy in DCs

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 Less prevalent as most areas are already urbanized and developed, with a large proportion of
people living in urbanized areas. DCs also tend to have high levels of GDP, allowing them to control
development rates and develop the country evenly.
 Low rural-urban migration rates
 Greater social and environmental awareness in DCs
 Lower national inequality
 Impacts of primacy
 Consequences
 Brain drain from rural areas due to increased rural-urban migration from the rural areas to
primate cities
 Drains resources from areas that need to be developed, resulting in uneven development and
a reduction in growth prospects for other parts of the country.
 Socio-economic polarization on a national scale
 Advantages
 Primacy may also aid a country in promoting a certain city to a world/global city
 Multiplier effect more evident in primate cities due to more people and the concentration of
major functions.
 The presence of many upper-class residents helps to create niche markets that results in a
more diversified market place

CASE STUDY: BANGKOK (KIV URBAN MANAGEMENT)

 Background
 Largest city in Thailand, 5.7 million inhabitants (69% of total urban inhabitants or 10% of total
population)
 Important centre of politics (seat of government and the King), education (8 out of 11 universities)
and economics (responsible for ½ of the country’s GDP)
 Concentrated infrastructure (80% of the telephones, 72% of all cars)
 Problems
 Traffic Congestion
 Due to high levels of private car ownership coupled with a poorly developed road network (Only
8.5% of Bangkok’s roads
 More than 2.6 million vehicles drive through Bangkok everyday
 Housing Problems
 1200 slum settlements with 240,000 households that lack proper sanitation and clean water
 Socio-economic Polarization
 Large informal economy consisting of a dominant prostitution sector that feeds sex tourism
 Up to 1 million prostitutes from Northern Thailand, Laos or Myanmar
 Up to 200,000 children are involved
 Solutions
 Traffic Congestion
 Encouraging pedestrianism
 Building of a 23km Skytrain system
 Excise tax on products and services that harm the environment
 Bangkok Agenda 21 – Seeks to increase public awareness on environmental pollution
 Housing Problems
 Forced Resettlement – up to 37,000 slum households were evicted in 1998 but not given new
places to live

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 Relocation Housing – Creation of 2 new housing programs (Baan Mankong & Baan Eur-Ah-Torn)
to target slum dwellers and help them secure long-term land leases as well as to provide
affordable housing with basic infrastructure and service areas.

CASE STUDY: PARIS (KIV URBAN MANAGEMENT)

 Background
 Largest city in France, 11.7 million inhabitants (Next largest city, Lille has 1.8 million inhabitants)
 Seat of the France Government
 Causes
 Historical: French power and monarchy is historically centralized in Paris, with the national road and
rail systems built in a radial pattern with Paris as the hub.
 Geographic: Paris is strategically located on the Seine River, providing an important trade road in
historical times.
 Globalization of Economic Activity: Concentration of high-quality luxury fashion and cosmetic items in
Paris. It is also the country’s leading centre of tourism, engineering, metal manufacturing and light
industries.
 Problems
 Traffic Congestion
 35% of all daily commuters use cars with a low occupancy rate (1.25 people for every 4.5 seats)
 Housing Problems
 Lack of affordable housing, up to 5000 homeless people
 More than 100000 families waiting for 12,000 houses
 Socio-economic Polarization
 Within the peripherique (ring road), housing in urban areas is expensive and aesthetically
appealing, but in the suburban zone (beyond the peripherique), housing is cheap and mainly
occupied by poor migrants.
 High unemployment rate of migrants, with 14% of migrants unemployed compared to 9% of
French. 26% unemployment rate for North African migrants.
 When a 14 000 m2 area outside the gated community of Villa Montmorency was proposed to be
used to build subsidized housing, many upper-class residents rebelled with arguments from
xenophobia to ecological factors.
 Solutions
 Traffic Congestion
 Velib Scheme (see Urban management)
 Discouraging car usage by improving public transportation, resulting in traffic volumes in central
Paris falling by 20%.
 Creation of Traffic Free Zones
 Imposing a speed limit of 30km/hr in some districts to keep traffic away from the Lourve and
narrow major roads in the heart of Paris
 Housing Problems
 Forced Resettlement – up to 37,000 slum households were evicted in 1998 but not given new
places to live
 Relocation Housing – Provision of subsidized housing; 7 million euros put into producing 1270
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C2. URBAN DYNAMICS


2.1 BID RENT THEORY (LAND VALUE MODEL)

 Bid Rent Theory – An economic model of land use which provides the basis for other urban zoning models;
states that rent prices is inversely proportionate to the distance from the city centre
 In a free market, the highest bidder that can afford to pay the rent will obtain the land
 Bid Rent – The value of land that different functions are willing to pay, dependent on the profitability
of the function relative to the rent of the of land used
 Bid-Rent Curve – A visual representation of this theory that shows the overlay of different bid-rent
curves; functions which can pay more than other functions for land at a certain location will obtain the
land, resulting in different urban functional zones at different distances away from the CBD

 Cause – The city centre is generally regarded as the most accessible area within the whole city due to
the confluence of transport networks and human traffic. The differing needs of such high accessibility
for different functional zones has resulted in differing land uses.
 Applicability to different zones
 Commercial Zones
 Commercial activities tend to be located in the CBD due to the prestige factor of locating in the city
centre, the ease of access to clients and the proximity of ancillary services such as banking
 As more businesses vie for the limited space, there is an increased competition for space in city
centre, leading to higher prices.
 Residential Zones
 Less applicable as residents take into account not just accessibility, but also other factors such as
crime and congestion which reduces the attractiveness of the centre city
 Residents that are richer tend to be located further away as they can afford to commute to work
 Industrial Zones
 Require less accessibility than commercial zones thus located further away
 Implications
 Establishment of Urban Density Gradient – Land use intensity being directly proportional to bid-rent
 Distinct belts of residential, commercial and industrial zones following distance from city centre

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 Limitations
 Limited definition of accessibility – With the advent of the internet, even places in the suburbs can be
considered accessible if the function of a certain zone can be carried out through telecommuting (e.g.
call centres)
 Less accessible central city as compared to previously – Nodal points out at the edges of cities, with the
centre being blocked by traffic congestion, high human traffic.
 Favouring of peripheral locations – Increased car ownerships and dispersion of population to suburbs
help to draw in both businesses and residents.
 Exclusion of other factors in determining locations – Other factors such as quality of life, presence of
internet, crime (recall that the inner city may be near the centre, but property prices are generally
depressed) may cause certain functions to relocate away from the city centre
 Does not consider any governmental initiatives to determine specific zones of specific functions.

2.2 FUNCTIONAL ZONING: THE CHANGING NATURE OF THE CENTRAL CITY AND
INDUSTRIAL LOCATION WITHIN URBAN SETTLEMENTS (MANUFACTURING AND
SERVICES)

 Functional Zoning – The division of a city’s area into specific zones for specific functions
 Commercial Zone
 Found at the CBD area and in small pockets throughout the suburbs
 Residential Zone
 Low class working residential zone  Inner city
 Middle Class/Upper Middle Class residential zone  Suburban Zone
 Upper Class residential zones  Gated communities within the Inner city (gentrification)
 Industrial Zone
 Historically located in the Inner City area, have since been moved out to the suburbs and other
specialized industrial zones.
 Occupied by a mixed area of traditional, old industries and low class residential districts (bunks,
etc for workers)
 The working class stays near the industrial zones to minimize transport costs and save $
 Usually not high-rise as factories tend to occupy single floors and bunks tend to be below 5 floors
to save building costs.
 **Zone of Transition
 Not formally a zone, but generally defined as the area between the CBD and the Inner City

2.2.1 ZONE-IN-TRANSITION

 Definition
 Most decaying yet most dynamic area found
just outside the CBD
 Characteristics
 Usually occupied by brownfield sites (old
manufacturing areas & railways) or old housing
estates (products of de-industrialization), but
tends to be more diversified today following
efforts of urban renewal and regeneration.
 Current changes
 Increasing percentage of commercial functions as the CBD expands outwards into the zone of
transition due to limited land space.  Directly leads to a decline in traditional functions

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 Zone-in-transition are important areas with a high potential for revitalizing a city.
 Diversification occurring as commercial activities overflow from the CBD.
 Examples of urban regeneration in ZITs
 Clarkwell, London (Primarily Urban Rebranding)

2.2.2 CENTRAL BUSINESS DISTRICT

 Varying definitions depending on different factors, such as


 Rental Values or Land Values – CBDs tend to be located at the area with the highest land values (see
bid-rent curve)
 Building Heights – Due to limited land space, vertical development in CBDs tend to result in tall
buildings
 Building Functions – CBDs tend to be disproportionately occupied by commercial functions such as
banking, retailing, trading, etc.
 CBD Types
 Pre-industrial CBD (simple
clustering of functions)
 E.g. in North Africa, the
medina area of cities in
Tunisia are still retained
despite urbanization
 Core & Frame
 Core contains more
important functions and those that can afford to pay the rent
 Frame contains less important functions, or important functions that cannot afford to pay the
core rent.
 Polycentric CBDs
 Located in most of the world’s cities, have many cores that may be specialized in a certain
function (e.g. finance)
 E.g. In London, although the nation’s main financial district lies in the old city of London district,
several banks such as HSBC and Citigroup have relocated to the Docklands, forming a secondary
financial core. Westminster is the area of government and the South Bank an area of mixed city
functions.
 Characteristics of CBDs (some are assumptions)
 Intensive use of land
 Dense packing of skyscrapers, vertical segregation of skyscrapers into different commercial
functions, intensive vertical development
 Nucleus of urban area
 Centre of commercial functions
 Contains most administrative functions (governmental buildings)
 High traffic (both pedestrian and vehicles)
 Reversed phenomenon at night
 High accessibility
 Intersection of major metro lines and roads
 Lack of permanent residential populations
 Most of the CBD area is dedicated to commercial functions
 Few residents can afford the rents there
 Agglomeration of industries (commercial industries)

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 I.e. Banks and trading companies are usually located close to each other for the benefits of
agglomeration, such as the rapid circulation of capital, commodities and labour
 Reasons behind land use in the CBD
 Bid-Rent Theory
 Only certain functions would choose to be located at the CBD as some are able to do without the
benefits provided by the CBD. (hence only commercial functions are located there)
 Causes the CBD to be located at the area of Peak Land Value Intersection
 Only commercial facilities that require the centrality and can pay for it will get the land
 Small ring of CBD functions that require centrality but cannot afford to pay rent – Transport
terminals, Newspaper offices, Broadcasting Studios
 Industrial Linkage
 Forces several companies that deal with each other to stay in close proximity to each other.
 Usually involves those selling financial products
 Challenges facing CBDs
 Centrifugal forces caused by suburbs that are getting increasingly more attractive
 Limited accessibility due to traffic congestion, peak hour rush
 More widespread car ownership – Suburbs get more attractive as long distances are less of a problem
as compared to before.
 Structure and Land Use Pattern over time
1. Centralization
 Accessibility
 Transport accessibility
 Accessibility to a large concentrated labour market allows employees to match job vacancies
with specialized workers easily
 Agglomeration & Industrial Linkages
 Critical mass of specializations in the area (skills, knowledge, inputs, markets) encourages
growth and innovation
 Personal face-to-face interactions greatly increases individuals’ abilities to persuade and
interact  Cross pollination of ideas
 Benefits of economies of scale
 Knowledge spillovers – The sharing of new knowledge (e.g. information on market trends,
market predictions, potential clients, etc) is a form of competitive advantage
2. Decentralization (Decline of Industrial City, Rise of Suburban towns and Edge Cities)
 Negative Externalities of CBD areas & Inner City
 Crime & Anti-social behaviour
 Exponential increases in Bid-rent resulting in inflation and loss of competitive edge
 Traffic congestion, environmental pollution
 Concentration seen as a liability rather than an asset
 Loss of jobs in the CBD and inner city as manufacturing moves into the suburbs
 Positive Externalities of Peripheral (edge cities) and Suburban Zones
 Refer to Suburbanization (1.3.1)
 Industrial Shift to services from manufacturing
 Causes the industrial city to decline as manufacturing is no longer profitable in the city
centre.
 Unskilled functions delocalized into rural areas
 Information Technology  Causes distance to be a less important factor
3. Recentralization (1.3.7-1.3.8)
 Gentrification
 Urban Renewal

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2.3 INFLUENCES ON URBAN MORPHOLOGY

2.3.1 HISTORICAL FORCES (E.G. COLONIAL CITIES)

 A city’s history often leaves its legacy on the city in terms of urban layout
 Colonial Cities
 Present day cities once part of European colonies show functional zoning that mimics that of the
European way of functional zoning.
 E.g. In Nairobi (Kenya), the de-facto status during European colonial times was that wealthy European
colonists and immigrant Asians will live on the ridges of highlands to the north and west of the town
centre. Today’s functional zones reflect this status quo, with Europeans concentrated in Murthaiga and
wealthy Asians and Africans located in Parklands and Westlands (secondary core). People are still living
by colour and status, and generally keep their own space and only interact with members of their own
community.
 E.g. In Singapore, a previous British Colonial City, old districts which were created during the colonial
era such as Chinatown, Little India and the Civic District have been preserved today in the city’s layout
as a mark of heritage.
 Historically significant cities
 Many historical cities show their historical legacies in their urban layout
 E.g. Beijing, while state planning dominates the urban layout, the entire city is still centred around the
Forbidden City, with 6 ring roads located around the Forbidden city and an arterial 8-lane road that cuts
across the Forbidden City. Furthermore, the centre of the city is still dominated by political uses such
as The Great Hall of the People and the Zhong Nan Hai Area containing the headquarters of the China
Communist Party, maintaining the status quo of the past.
 E.g. Paris still retains the road network that was built in historical times, with the old city area still
centred around Champs-Elysees that runs from La Louvre to the Arc de Triomphe. Most of the road
network in the old city area remains tiny and unsuited for high traffic. This is in contrast to the Defense
area in Greater Paris, which is a planned city area.
 E.g. Kyoto (Japan) Kyoto was built in AD 794 as a planned imperial capital using a grid system that still
remains today with major east-west streets having numbers as names (e.g. 4th Street)
 Industrial Cities
 The cities of many DCs tend to have brownfield sites which are a result of the city’s industrial past.
Industrial cities also tend to have a ring of urban decay surrounding the city centre due to
decentralization and the outward movement of the middle class.
 E.g. Detroit; Following globalization, many car makers moved their factories to cheaper maquiladoras
in Mexico, resulting in large numbers of abandoned structures such as the Packard Motor Car plant,
whose ruins have been a symbol of Detroit’s urban decay.

2.3.2 STATE PLANNING (E.G. PLANNED CITIES)

 Planned City: A community that has been carefully planned from its inception, typically constructed in a
previously undeveloped area.
 The state often wields massive power in determining the functional zones within a city
 Intervention occurs frequently in urban regeneration (Private-Public Partnerships, etc)
 Models of Urban Planning
 Grid Planning – Organization of functional zones based on streets that are perpendicular to each other
 Current urban planning usually involves the functional zoning of urban districts around a central
residential area or CBD district
 Establishment of secondary urban nuclei around the main CBD area

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 Case Study: Singapore


 Highly centralized planning (Government, specifically URA and SLA) with relatively consistent policies
in terms of directions and aims
 Concept Plan 1971
 Aims
 Increased accessibility to public transport
 Ease congestion in the central area through relocation and construction of self-contained
estates
 Simultaneous decentralization and urban re-imaging vital to the success of the redevelopment
program
 Agencies
 HDB – Made possible the decentralization of the population, provided quality accommodation
 URA – Rejuvenate the old core of the city by making better economic use of the land through
redevelopment
 Acts
 Compulsory Land Acquisition Act – Allowed the government to take charge of land for large-
scale redevelopment
 Concept Plan 2011
 Aim: Ensure that there is sufficient land to meet long-term population and economic growth while
providing a good quality living environment; meet global standards and be attractive to investors
 Challenge: Management of different land use (water catchment, military, residential, etc) in a land
scarce area
 Master Plan 2013
 Western areas such as Tuas, Pioneer and Jurong West will be maintained as industrial estates
 Opening up of new residential areas in Punggol with accompanying parks, transportation,
educational institutions and mix land uses (both commercial and residential) to accommodate
increase in population
 Development of eco-corridors along major green areas
 Usage of functional water bodies such as reservoirs, canals and drains for recreation
 Expansion of the transport network such that 80% of all homes are within 10mins walk to an MRT
(Subway) Station
 Case Study: Britain
 Greenbelt Policy
 Restrictions on urban development beyond a certain distance from the centre city area
 New Town Policy (Refer to regional management of housing issues)
 Established new urban cores around a central city area
 Case Study: Canberra
 Canberra was selected to be the capital of Australia following discussions by the 6 Australian States
 Canberra is a fully planned city, being built on farming land, indigenous settlements and forest
 Designed by Walter Burley Griffin, Canberra is centred on a wheel-and-spoke pattern with most inner
cities laid out geometrically. The entire city layout was designed to be aesthetically appealing, with
areas enclosed by three key avenues known as the Parliamentary Triangle
 Urban districts are organized around town centres where commercial and social activity is focused
 Example: Navi Mumbai (World’s largest planned city)

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2.3.3 DECENTRALISATION (E.G. COMMUTING, TELECOMMUTING AND THE RISE OF


SUBURBAN OFFICE)

In recent years, the attractiveness of the suburbs and the physical dereliction of inner city areas coupled with
the high cost of living in city centres has accelerated the decentralization of residential, commercial and
industrial sectors to the suburban areas.

 Main factors driving suburbanization (of all sectors)


 Increased car ownership
 Reduces the impact of long transportation times from the suburban areas to the city centre, making
the suburban areas ripe for residential development
 Telecommuting – Development of high-tech communications network that allows people to work from
home, thus increase flexibility
 Increases the accessibility of suburban areas as networking between businesses can also be done
through the internet apart from physical contact.
 Overpopulation in prime urban areas
 LDCs face massive problems in controlling rural-urban migration and need to redirect urban growth
to other urban areas to better distribute the nation’s resources and avoid urban problems in major
cities.
 Reduce pressure caused by centralizing forces on overpopulated urban regions
 Results of decentralization on urban morphology
 DCs
 Development of green belts in UK– areas of open and low density land use surrounding existing
settlements where further urban extension is strictly controlled
 New Towns – E.g. Milton Keynes in Buckinghamshire; Singapore’s regional centres
 Extension of nearby cities – Incheon (near Seoul, South Korea), Yokohama (near Tokyo)
 LDCs
 Development of new capitals to redirect growth from overpopulated urban areas, as well as
providing alternate growth poles to balance economic development throughout the country – E.g.
Gaborone in Botswana; Brasilia in Brazil; Naypyidaw in Myanmmar
 Case Study: Singapore
 Details
 Singapore ONE – National high-speed broadband network to reach all parts of Singapore, linked to
an overseas network
 IT2000 plan – Examine how IT can give Singapore a competitive advantage and enhance the quality
of life in SG.
 Decentralization of businesses to the North Coast Innovation Corridor and Woodlands Regional
Centre
 Development of peripheral industrial estates such as Jalan Bahar and Seletar West
 Effects
 Eased traffic congestion, sped up decentralizing forces
 Work at home seen as an increasingly realistic and able choice
 Case Study: North American Cities
 Most cities in the United States are built around the concept of the automobile, with major freeways
and large amounts of spaces dedicated to cars, such as drive-ins and large suburban shopping malls.
 E.g. Los Angeles
 Suburban Metropolis where 14.5 million people stayed over 88000km 2 of suburbs
 1500 km of road networks threading through the suburbs
 Many drive-in establishments with wide streets

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 Plenty of shopping centres


 E.g. Detroit, the city which was founded on the rise of the automobile, contains extensive suburbs,
freeways and functional zones with low-intensity land uses.

2.3.4 GLOBAL ECONOMY (E.G. MULTIMEDIA CORRIDOR, MEGA DEVELOPMENTS,


MEGALOPOLIS)

 Global Economy: Concepts of NIDL, Role of State in Economic Development


 Transition from concentric and sector models to planned cities with major commercial and residential
zones
 Competition between cities for FDI
 DCs: Deindustrialization has accelerated the dereliction of the inner city regions and aggravated the
need for cities to develop new areas to catalyse urban growth and regeneration.
 Emergence of urban areas dedicated to specialized functions located in suburbs to speed up
national development in areas such as scientific research and finance – Tsukubu Science City in
Japan/M14 corridor of growth
 LDCs: Cities worldwide have begun building major economic zones near cities and started developing
secondary developments alongside cities. Other cities have begun investing in mega developments to
attract FDI and build up industries such as tourism.
 Case Study: Malaysia Multimedia Super Corridor
 Joint development by corporations and state
 Unrestricted employment of local and foreign talents
 Exemption from local ownership requirements
 Initiated in 1996, used as experimental centre for information society and economy with direct high
capacity links to Japan, USA and Europe
 2 new intelligent cities – Putrajaya (federal admin centre) and Cyberjaya (technopole)
 Case Study: China’s Megalopolis
 Development of major industrial zones centred around multiple nuclei; Bohai Economic Rim, Pearl River
Delta; Yangtze River Delta designed to boost Chinese competitiveness and provide important
comparative advantages such as industrial agglomeration and lower costs.
 Guangzhou Megapolis
 Development of Guang Zhou Megapolis (fusion of 9 major cities in southeast China) to facilitate
industrial development and trade between cities.
 Addition of 29 railway lines to connect the 9 cities
 Unity of various special economic zones
 Yangtze River Delta
 Merger of major urban areas in the area, with urban cores Shanghai, Hangzhou and Nanjing
 Leading area of Chinese economic development
 Related Examples
 Dubai, United Arab Emirates: Focus on mega urban projects that concentrate multiple functions into a
single building, such as the Burj Khalifa which contains residences and corporate suites. Other major
projects include the Palm Islands, artificial islands meant to promote tourism and improve the standing
of the city in the world.
 Paris, France: Building of La Défense, the new CBD of Paris which comprises of a network of modern
skyscrapers and office buildings
 Incheon, Seoul, South Korea: Building of Songdo International Business District, a new smart city with
computers built into the house, streets and offices. Largest private development in history. Building of
universities catalyse economic development in the area.

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2.3.5 THE FUTURE FORM OF CITIES AND THEIR SURROUNDINGS

 Concepts for future development (Key: Emphasis on Sustainable Development of Urban Communities)
 Cities as solutions to overpopulation and environmental problems
 Cities may appear to be large pollution factories, until the alternative is considered – spreading the
pollution; from an ecological standpoint, it will be disastrous to advocate a back-to-land ethic
 The only way forward is to increase urbanization with efficient urban planning
 Per capita, urban dwellers consume much less space and resources than rural dwellers, especially
in highly dense and concentrated cities in LDCs
 Increased urban density
 Reductions on all transport forms, including cars and public transport; promoting walking as a
viable form of transport between different functional zones
 Details the need to set up large numbers of secondary cores within cities such that distance
between an individual’s residence and workplace is effectively reduced
 This also frees up large amounts of spaces that are currently dedicated to car-related functions
such as carparks and drive-ins
 Denser cities have been shown to have lower emissions because people simply do not drive as
much as facilities are mostly within walking distance
 Increasing density of urban functional zones through
 Infill development (developing of land within urban areas)
 Urban Retrofitting (upgrading of urban infrastructure/changing the way certain space is used)
 Multi-function urban zones
 The use of urban space itself as a kind of service (renting out spaces)
 Utility of a single urban space for multiple functions such as residential and commercial usage.
 24hr usage of space to ensure that even on the temporal scale, space usage is maximized
 Allocation of certain areas to green spaces
 Green spaces (parks) not only help to build communities by providing a space for recreation, but
also improve a city’s aesthetic appeal. They can also be used for recreational activities and allow
residents to get in touch with nature.
 Public space itself can be used to transform the way people experience the city
 Integration of transport systems
 Future cities will need transport systems that are integrated together so that time required for
transfers can be minimized; ideally relying on one or at most two different forms of transport
 Allocation of certain areas to cultural and ethnic highlights
 Cities are ultimately settlements of people and require certain ethnic landmarks and cultural
buildings to preserve the uniqueness of the city and generate sentimental value for inhabitants
 Case Study: Tianjin Eco City
 Emphasis on green transport by encouraging trips on public transport & the use of bicycles and walking
 Green network comprising of a green lung at the core of the Eco-city and green-relief corridors
emanating from the lung to other parts of the Eco-City
 Case Study: Curitiba
 Planned transport system with major roads dedicated for public transport. Buses stop at designated
elevated tubes with disabled access. Integrated transport network with a fixed fare for any trip
 Curitiba Master Plan: Strict controls on urban sprawl; reduction in traffic; integration of public transport;
preservation of Curitiba’s historic sector
 Trinary Road system which gave priority to express buses and discouraged driving
 E.g. Manhatten old railway line being converted into a skypark

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C3. MANAGING URBAN ENVIRONMENTS


3.1 HOUSING PROBLEMS

3.1.1 HOUSING AS A L IMITED RESOURCE

 Housing
 A spatially uneven resource of variable cost & quality; A form of shelter, refuge, welfare service
 Availability depends on
 Need: Housing provision as an element of social policy
 Ability to Pay/Access: Housing policy geared towards market principles (i.e. supply & demand)
 Social Discrimination: Effected by individuals, institutionalized within public housing allocation
systems
 Availability reflects upon
 Social Inequality – Expensive housing means that several low income individuals will be rendered
homelessness
 Homelessness
 Social Exclusion – People without permanent homes, often due to long term unemployment/social
discrimination
 In DCs
 Direct consequence of inner-city decay (1.3.6)
 Indirect consequence of
 Dismantling of the welfare-state in times of recession
 Collapse of government-supported affordable housing programmes
 Massive economic restructuring due to deindustrialization
 Driving up of housing prices/cost of living as a result of rapid development and high costs of
living, exacerbated by rich investors and housing speculators
 In LDCs
 Direct consequence of rapid urbanization, coupled with high rural-urban migration
 Rural migrants are often unable to find jobs or proper shelter
 Formation of shanty towns and squatter settlements, with more than 40% living in squatter
settlements
 Indirect consequence of
 Weak urban planning policies that did not take into account high rural-urban migration due
to the bright-lights effect
 Weak job market which does not provide sufficient jobs for unskilled rural migrants
 Types of homelessness settlements
 Squatter settlements/shanty towns – Illegal settlements, areas of apparent chaos and squalor where
people settle on lands in which they have no rights to
 Locations
 Often found adjacent to the city centre, or on the edge of the city
 At highly undesirable zones in land of poor quality, vacant land or areas near buildings due to
be demolished
 At zones traditionally considered to be squatter areas
 Functions
 Provide accessible and affordable housing to the lowest classes of society
 Highly self-contained areas consisting of their own markets & shops

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 Network of social support for new migrants


 Source of votes and support for politicians in democratic countries
 Slums – Legal settlements within the inner city, derelict & overcrowded, can be gentrified
 Found in the inner city area
 Provide temporary refuge to unemployed individuals/poor people who cannot afford proper
housing in a city with high costs of living

3.1.2 LOCAL MANAGEMENT OF HOUSING ISSUES

 Goals of slum management


1. Support the livelihood of the urban poor by ensuring easy access to jobs
2. Supply sufficient and affordable serviced land for the gradual development of economically appropriate
low-income housing
 Trend
1. Governments are increasingly recognizing the slum as a place that cannot be simply be erased off
2. More governments are advocating positive policies rather than negative ones to garner votes
1. Relocation Housing
 Details
 Rehousing of slum residents to low-cost public housing
 E.g. Inner city in Caracas, Venezuela
 97 blocks were built to rehouse 180 000 slum dwellers
 E.g. Hong Kong Public Housing Policy
 On Christmas Day 1953, a fire occurred in one of the squatter settlements and made 53,000
homeless. Subsequently, the government carried out an ambitious resettlement policy that
relocated 1 million people into government housing by 1965. Today, nearly ½ of the population
lives in government-subsidized housing.
 E.g. BLISS housing scheme in Manila, Philippines
 Advantages
 Improved sanitation, clearing up of land for better use
 Improved social facilities and basic amenities
 Limitations
 Inability of squatters to find work caused them to sublet rooms to rural migrants, encouraging
rural-urban migration
 No maintenance work carried out, numerous design faults in hastily built buildings threatened to
turn the area into a slum
 Rampant crime and prevalence of illegal squatters in empty flats
 Cost of new flats unaffordable to slum dwellers
2. Self-Help housing programmes
 Overview
 Relies on the principle of co-investment by recognizing that the opportunity for self-improvement
exists within the slums itself. Rural migrants are granted legal status of their land in the early stages
and encouraged to work to improve their own dwellings and community.
 Types
 Upgrading Infrastructure
 Basic form of self-help where slums are upgraded by the government
 E.g. Bangkok City, where the Thai government has invested in the provision of walkways, land
drainage and water supply to slums.
 Site & Services

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 Authorities first plan out plots of land and install basic amenities such as water and sanitation
facilities. The slum dwellers are then expected to build their own houses on these plot of lands
 Provides basic public services for self-help building
 E.g. Mexico City
 Squatter areas Sector Popular, Santo Domingo and Isidro Fabela benefited from the
program
 Squatters found time & capital to build their own community
 Owners of the new houses are now subletting rooms to rural migrants and making a small
profit
 Core-housing scheme
 Provision of a basic house to the slum residents, who are expected to build the rest of the
house themselves
 E.g. Dandora Nairobi, Large-scale core-housing scheme involving about 100 000 residents
 Advantages
 Most realistic alternative policy as the government does not need to provide copious amounts of
aid.
 Cheaper alternative as it involves the work of rural migrants while the government provides basic
infrastructure, amenities, economic opportunities and social services
 Adds responsibility and meaning into the place migrants live
 Allows the poor to participate in the decision-making process
 Limitations
 Provides an excuse for authorities to contribute limited resources to helping the urban poor while
waiting for them to construct their own housing.
 Assumes that migrants are resourceful and would improve their own houses through the self-help
scheme
 Core-housing scheme buildings might be unattainable to the poor if certain standards need to be
met
 Schemes can encourage further rural-urban migration, resulting in more squatters
 Site & Services schemes may be held up by red tape. Furthermore, the poorest are often
discriminated against and not given sufficient help. Standardization is also an issue as every family
can build their own different house.
3. Forced Resettlement
 Details
 Forced eviction of slum dwellers by government demolition teams
 E.g. Forced Resettlement in Phnom Penh
 In 1990, 310 families who had been living on temple land for 10 years were loaded into trucks
at short notice and relocated
 E.g. Forced Eviction in Lagos, Nigeria
 The Lagos municipal government hired thugs and demolition teams to demolish large slums
such as Ojota and Badia East, instantly making up to 10,000 homeless with nothing to survive
on. Although regional governments have insisted that almost nobody lived in the slums,
international aid organizations have estimated that up to 2/3 of the city’s population lived in
these slums and squatters.
 Advantages
 Clears land quickly for development
 Clears settlers off hazardous and dangerous lands where new infrastructure cannot be installed
 Limitations
 Surrounding area of relocation is often poorly chosen with no amenities and employment

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 No welfare aid is often provided, resulting in another shanty town formed at the new area
 Removes the current housing of the locals

3.1.2 REGIONAL MANAGEMENT OF HOUSING ISSUES

1. Policies that encourage decentralization (new towns, development of rural areas)


 New Towns (Urban areas built from scratch with the express purpose of providing an overspill area for
large cities such as London)
 Case Studies
 E.g. New Towns in Britain
 Response to many socioeconomic problems faced by Britain during that time such as the
post-war baby boom and the urban degradation caused by WWII and haphazard industrial
development.
 Phase 1 development (1940s-50s): 8 new towns were created in southern England around
Central London at Basildon, Bracknell, Crawley, Harlow, Hatfield, Hemel Hempstead,
Stevenage and Welvyn)
 Phase 2 development (1960s-): 9 more new towns were built in peripheral areas, with the
primary purpose of helping to even out regional disparity and create new jobs. There were
private developments and home ownerships along with greater variety in architecture
and creativity
 2 million people were housed in 500,000 homes and 1300 foreign companies were
attracted to cheaper suburban greenfield sites, creating 1 million jobs. New towns also
had outstanding environmental amenities and recycling schemes
 Catered only to a small and exclusive group of White middle income earners. Poor
accessibility between homes and social amenities. High costs of maintenance.
 E.g. Singapore
 Aims to tackle severe housing shortage in the central area while coping with the rapid
population growth.
 Building of new towns such as Queenstown, Mountbatten, Ang Mo Kio, Camenti, Bedok
 Emphasis on quality housing with recreational facilities and unique architecture to cater
to the needs of middle and upper middle income earners.
 Up to 80% of Singaporeans now live in these government created new towns that have
superseded international standards.
 Not economically sufficient, residents still need to commute to the CBD area for work.
 Advantages
 Rehoused many individuals into housing estates with good social amenities
 New jobs are created along the way, helping to even out regional disparities
 Limitations
 Not economically independent, still requires external support
 New Capitals/Regional Cities
 E.g. Building of Brazil’s new capital, Brasilia in the Amazon area to encourage development.
 Advantages
 Aids in the development of economic backwaters
 Draws rural migrants away from richer but more populated cities
 Limitations
 Requires large amounts of capital and foreign investment to be successful
2. Policies that slow down centralizing forces (restricting rural-urban migration, creating jobs in rural
communities, etc)
3. Policies that reduce the cost of housing in the city

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3.2 TRANSPORT PROBLEMS

3.2.1 TRANSPORT PROBLEMS IN DCS AND LDCS

 Traffic Congestion: Massive traffic jams in inner city and CBD areas
 Beijing: Average number of cars now 4.7 million, up from 2.6 million in 2005, resulting in massive
gridlocks in key central areas that increase commuting times by up to 1hr.
 Jakarta: Road networks expand at a much slower pace (0.01%) as compared to the number of new cars
(9.5%). Massive traffic jams cost the government up to $4.1 billion yearly.
 Urban Pollution
 Pollution of air due to the emission of traffic fumes
 Beijing: 2/3 of all cities fail to meet air standards due to excessive PM2.5 emission by cars; Air
Quality Index has been hitting record highs of up to 425, showing that air pollution is hazardous
enough to cause health problems; > 100 flights cancelled due to bad weather
 Noise pollution due to heavy traffic

3.2.2 CAUSES OF TRANSPORTATION PROBLEMS

 Proximate Cause: Increasing Affluence & Car Ownership


 DCs
 Increasing volumes of private cars, public transport and commercial traffic have caused
congestions in many urban roads, especially older city centres where street patterns have not
changed since the 19th century.
 LDCs
 Many roads in the inner city areas of Southeast Asia are composed of a mesh of narrow streets
accessible by only using motorbikes and bicycles. Rapid development and the rise of the middle
class has led to a proliferation of western vehicles and cars that are unsuitable for such streets.
 Many vehicles in LDCs still involve carts that are driven by animals such as cows. Such vehicles tend
to travel slowly, clogging up the roads.
 LDCs often tend to have lax regulation of traffic laws, resulting in excessive flouting of rules which
may cause accidents and contribute to slow traffic flow.
 Proximate Cause: Inadequate Public Transport Network
 Overpopulation in large urban cities tend to overload the public transport system such that trips are
long and uncomfortable.
 Rising private car ownership places stress on public transport companies by discouraging people from
taking public transport. In response, public transport companies may raise fares and decrease
frequencies.
 This problem is often compounded in LDCs due to rapid urbanization and an influx of rural migrants
 Even if adequate during peak hours, public transport during off-peak hours may be extremely low in
frequency, encouraging car ownership which leads to traffic congestion.
 Ultimate Cause (LDCs): Conflicting Developmental Needs
 Applies mainly to LDCs where limited resources have to be spread across different parts of development
such as housing, transport and economic investment. As a result, transport needs are often neglected
due to the utilitarian approach in which government investment is made.
 Roads and traffic infrastructure are often poorly maintained and neglected, resulting in high levels of
congestion.
 Ultimate Cause (LDCs): Rapid Urbanization coupled with high Rural-Urban migration

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 Rapid rural-urban migration has led to the growth of many urban cities. Due to the low income of these
rural migrants, most are forced to use public transport, which causes the public transport system to
overload.
 The sprawling megacities in LDCs where many areas are underserved by public transport also forces
many residents to take private transport, resulting in increased ownership of cars.
 Ultimate Cause (LDCs): Poor emissions control
 Most LDCs have lax regulation on the emissions of the vehicles, resulting in excessive pollution
 Furthermore, most cars that operate in LDCs tend to be old used cars from DCs that have obsolete
emission control systems. As a result, even if there are less cars on the roads in LDCs, pollution problems
tend to be more acute than those in DCs due extremely pollutive cars.
 E.g. Jeepneys and buses in Manila are very old and pollutive.

3.2.3 IMPACT OF TRANSPORTATION PROBLEMS

 Economic Impact: Loss of time & productivity


 Traffic congestion can cause many people to idle on the roads, taking up to 3hrs away. Amplified on the
scale of time, this can lead to losses of up to millions of dollars a year due to late delivery of services.
 In addition, traffic problems can depreciate the value of housing near main roads.
 Monetary resources are often required to alleviate traffic problems and provide better infrastructure
 Furthermore, large numbers of parking lots need to be built to accommodate the increased car
ownership
 Effect is more severe in DCs due to the prevalence of the service economy and its emphasis on
punctuality in the delivery of services.
 Environmental Impact: Air & Noise Pollution
 Exhaust from traffic can cause respiratory illnesses such as asthma and bronchitis, along with the
petrochemical smog that envelopes cities such as Los Angeles and Beijing commonly.
 Noise pollution can negatively impact the mental health of humans and wildlife
 Problems are more acute in LDCs due to lax enforcement on environmental laws or lax pollution control
standards. Penalties for non-compliance are often not harsh enough to deter offenders
 Social Impact: Increased accidents
 A greater proportion of serious accidents occur in urban areas, with roads in built up zones displaying
an accident rate 3 times greater than roads in other categories. 95% of pedestrian accidents in Britain
are recorded in urban areas

3.2.4 LOCAL STRATEGIES TO ALLEVIATE TRANSPORT PROBLEMS

 Investment in additional road capacity


 Overview: Building of additional roads and expressways to divert traffic from frequently congested
roads.
 Examples
 Singapore: Building of Pan-Island Expressway, East coast Parkway, Central Expressway
 Beijing: Building of 3rd, 4th, 5th ring roads around city centre
 London: Building of M25 motorway
 USA: Synchronizing green lights in San Francisco to improve traffic flows
 Advantages
 Reduces congestion in inner city roads and CBD areas during peak hours
 Limitations
 Requires large amounts of labour and monetary resources – not easily afforded by LDCs
 Requires space that may not be present in many DCs which are already densely urbanized

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 Roads built often get congested as well due to unchecked increases in car ownership
 Restricting Car Ownership
 Overview: Restricting car ownership by implementing quotas or by increasing car taxes.
 Examples
 Singapore: Requirement of every car owner to purchase a certificate of entitlement (expires in 10
years) through a bidding process. There are limited certificates.
 Shanghai: Issuing of 8500 license plates that each cost 42,500 CNY
 Advantages
 Stems the rapid increasing ownership of cars while discouraging ownership of cars through
increased prices
 Limitations
 Does not ultimately stop the ownership of cars
 Unless applied in unison with other solutions, such a strategy is likely to be unsuccessful as the
roads are still vulnerable to congestion and rural areas still inaccessible by public transport
 Lax regulation in LDCs stymie the effectiveness of such a strategy
 Road Pricing & Restriction of cars on alternate days
 Overview: Charging of car owners for the use of roads vulnerable to congestion; Preventing certain cars
from being driven on certain days by enforcing certain traffic laws
 Examples
 Singapore: Use of the Electronic Road Pricing (ERP) system to charge car owners for driving on
certain roads in the CBD or expressways during weekdays.
 London: Requirement of motorists to pay £8 for entering the CBD area
 Zurich: Addition of more traffic lights, blocking of underpasses for cars, traffic light system that is
biased to public trams; limitation of speed to a snail’s pace
 Mexico: “Don’t drive today” program forces certain motorists off the roads on certain days, thereby
reducing the total number of cars on the road at any one point in time.
 Beijing during Olympics: Odd numbered cars and even numbered cars could only be driven on
alternate days.
 Advantages
 Generates tax revenue for the government
 Discourages the public from driving cars; Reduces the total number of cars at any point of time,
decreasing the risk of congestion
 Limitations
 Channelling of traffic from congested roads to other roads might cause the other roads to be
blocked
 Road pricing is technologically advanced and may not be available for LDCs to follow
 Affluent families can buy more than 1 car to circumvent the law on restricting car owners from
driving on certain days
 Lax enforcement of laws might decrease the effectiveness of these measures
 Encouraging public transport
 Overview: Through the use of fare subsidies and the development of the public transport network by
widening its spatial and monetary accessibility, governments can encourage people to stop driving cars
and take public transport instead. Bus lanes are also drawn and expanded to give priority to buses
during peak hours.
 Examples
 Britain: Cities such as Sheffield, Manchester and Newcastle now have the Light Rapid Transit
systems. Tramways systems extend all the way from the city centre to its fringes. Cities such as
Leeds have high occupancy lanes in which only cars with more than 2 passengers can drive on.

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 Singapore: Implementation of the “distance-based” fare in which passengers do not get charged
for transferring between bus and train services. Recently, the government also announced plans
to subsidize train transport for those who take train into the CBD areas before peak hours.
 Advantages
 One of the few solutions that can actually lead to a decrease in car ownership
 Improves the accessibility of transport to the urban poor, thereby improving efficiency
 Limitations
 Excessive government subsidies for public transport can cause public transport companies to be
bloated and clogged with inefficiency.
 Rapid development and the introduction of more bus services can also clog up the roads.
 Requires large amounts of monetary subsidies from the government; unsustainable in LDCs
 Encouraging Cycling
 Overview: Implementation of pavements specially for cyclists to travel on; provision of stations for
renting bicycles citywide; Campaigns to encourage cycling
 Examples
 Singapore: Building of many pavements for cyclists to cycle on
 Paris: Velib Scheme – Users pay a subscription fee to access 1400 bike-rent stations throughout
Paris and rent bicycles; Short trips are encouraged as the rent becomes higher the longer users
hold on to the bikes.
 Advantages
 By encouraging the population to cycle rather than driving, noise and air pollution is effectively
reduced
 Bicycles occupy a much smaller space compared to cars and can be parked easily
 Limitations
 Unless special pavements reserved for cyclists are introduced, cyclists can be exposed to increased
risk of accidents with cars
 Bicycles cannot be used to access areas that are far away efficiently.

3.2.5 REGIONAL SOLUTIONS TO ALLEVIATE TRANSPORT PROBLEMS

 National Plans for Sustainable Urban Development in conjunction with public transport development
 Overview: Advocates a greater use of public transport and an integration of transport considerations
directly onto land-use planning, thus enabling individuals to sustain their mobility but with fewer trips.
Most of the time, this involves the integration of many local solutions with decentralizing initiatives
including those that revolve around housing
 Examples
 Stockholm
 The building of satellite communities linked to the urban core by a regional-rail system
 Targeted population growth into rail-served new towns
 Tokyo
 Linking of mass transit to new town development
 Simultaneous use of many local solutions such as encouraging public transport (USD 500
transport subsidy per month for employees) and restricting car ownership (purchase tax,
annual registration tax)
 Singapore
 1991 Revised Concept plan aims to reduce transport duration from outer fringes to CBD to less
than 60 mins.
 Development of high-density new towns that are equipped with transport facilities such as bus
interchanges and train systems.

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 Advantages
 Only way to achieve sustainable transport development through the integration of decentralization
policies with transport policies
 Ensures that the population is able to access efficient transport systems even in new towns, thus
encouraging decentralization without compromising mobility and accessibility.
 The building of new towns that are self-sustaining is the only conclusive way to reduce transport
issues. This is done through the relocation of commercial areas to those near residential areas
 Limitations
 Requires coordination between many government agencies on a large scale – only countries with
strong central governments will be able to pull off such a feat
 Requires massive sums of monetary resources that LDCs probably cannot afford

3.3 SOCIO-ECONOMIC POLARIZATION

 Socio-Economic Polarization (Social Inequality) – Increase in difference in the standard of living between
various groups in society, resulting in spatial segregation of the rich and the poor. [NOT focused on why
income inequality exists, but why people are spatially segregated]
 Concentration of poverty geographically into enclaves (ghettos) and inner city areas where deprived
groups live while affluent groups tend to live in high-end districts
 The rich tend to live in affluent suburban communities or gentrified inner city gated communities while
the poor tend to live in the inner city areas + zone of transition or at the fringes of the city
 Effects in LDCs is significantly higher than that of DCs
 Larger Magnitude of problems: LDCs tend to have primate cities that generate overwhelming amounts
of rural-urban migration
 Lack of resources in LDCs: LDCs tend to be poorer and are less able to deal with social inequality and
marginalization of minorities. In contrast, DCs have more resources and stronger governments that can
implement social safety nets to aid the poor.
 Segregation: Includes both the processes of social differentiation and the spatial patterns that result

3.3.1 CAUSES OF SOCIO-ECONOMIC POLARIZATION

 Proximate Cause: Migration


 Filtering (More prominent in DCs)
 Def: Occupation of deteriorating housing by groups lower down in the socioeconomic hierarchy
after more affluent people have moved out
 Leads to changes in the social nature of residential areas
 The poor will tend to occupy slums and low quality housing in inner city areas, while the rich tend
to occupy higher-end housing in the suburbs
 Note: While gentrification is the opposite of filtering, it does not counter its effects as the poor are
still spatially separated from the rich, who live in gated communities
 E.g. Due to filtering, distinct social groups are now living separately in London, with the rich living
in Chelsea and the poor living in Islington
 Rural-Urban migration (More prominent in LDCs)
 Migrants who move from the rural areas into the urbanized areas tend to be at a disadvantage due
to their low financial status and their inability to communicate with city dwellers. They are usually
openly discriminated against, causing them to agglomerate in inner cities with cheaper housing.
 In addition, they may form large shanty towns at the fringes of the city as the government is unable
to provide sufficient subsidized housing for the migrants

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 Most immigrants faced racial discrimination from the white community and found it hard to obtain
jobs, resulting in many being trapped in the cycle of poverty. As a result, areas traditionally settled
by immigrants remained high in poverty.
 Proximate Cause: Gentrification
 Gentrification causes the price of living of the local area to rise to unaffordable levels, which spreads
 Proximate Cause: Inner City Decay
 More prominent in DCs when TNCs move their manufacturing centres out to NIEs, causing unskilled
labourers to lose their jobs and livelihood. This can breed discontent among the working class towards
their employers (upper-middle class)
 Ultimate Cause: Education level & Employment opportunities
 Educated professionals tend to land high income jobs in the service sector and become part of the
urban elite, while those that are uneducated tend to work low paying jobs or become involved in the
informal economy. This results in dualism which reinforces socio-economic polarization.
 Dualism/Dual Economy: A distinct division between the rich and the poor due to the presence of a
large informal economy coupled with unemployment and underemployment of the poor
 Informal Economy: Economic activities, transactions and assets (usually illegal) that is not recorded or
tracked by the authorities. (thus it is usually untaxed)
 Details
 Usually includes common goods and services such as day care, tutoring, black market
exchanges, street hawkers, etc.
 Generally easy to enter and uses local or recycled material inputs
 Involves poor, unskilled migrants or residents who have problems entering the formal
economy.
 Problem is more acute in LDCs due to large scale rural-urban migration
 Common in shanty towns and slums
 Advantages: Provides employment for the unskilled and uneducated; Provides services that would
otherwise not be provided
 Limitations: May result in exploitation of the poor, illegal activity; Affects the image of the city;
Deprives the government of tax revenue; Low wages stymie social mobility, reinforces socio-
economic polarization
 Unemployment & Underemployment
 Unemployment: Occurs when there are no jobs for those seeking to work
 Underemployment: occurs when people work below their optimal capability, such as in redundant jobs
or skilled workers working unskilled jobs. Involves part time unemployment, usually with low wages
 When people get unemployed or underemployed, they are usually denied opportunities to advance the
social ladder. This can cause them to earn low wages and force them to live in decrepit conditions,
leading to socio-economic polarization if the government does not aid them.
 Unemployed individuals also do not have the ability to choose where they want to live, unlike those
with jobs and the monetary resources.
 Problem is acute in LDCs due to high rural-urban migration and insufficient jobs in the formal sector
 Even in DCs, such a problem is beginning to become a serious issue due to the increasing prevalence of
the knowledge economy and the inability of the education system to provide sufficient people who
have the academic knowledge to participate in this economy. People who cannot be employed in either
the knowledge or service economy tend to be unemployed (manufacturing economy in DCs is almost
very small)
 E.g. In Brazil, companies used to hire an “ascensorista”, whose sole job is to stay in lifts and help people
press the lift buttons. Even so, such underemployed individuals enjoy higher social status than those
that work in the informal economy or are unemployed

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 Ultimate Cause: Age


 The elderly tend to be cast aside when companies are hiring due to poor health and their inability to
work most jobs which require knowledge on modern technology.
 Problem is more acute in LDCs, where welfare is non-existence, forcing the elderly to work in the
informal sector
 Ultimate Cause: Ethnicity
 Ethnic minorities that came over to DCs as migrant workers are often forced to live with discrimination.
Many also start their lives in the lowest rank on the social hierarchy. As a result, they tend to be spatially
displaced and have low incomes.
 E.g. Blacks in US who have been economically displaced since the abolishment of slavery and
deindustrialization of the South are largely caught in a vicious cycle of poverty, with many living in
ethnic enclaves (ghettoes) in inner city areas.

3.3.2 SOCIAL PROBLEMS IN URBAN AREAS

 Increased Crime Rates


 Social conditions such as high unemployment rate, poverty and a lack of basic necessities may compel
and perpetuate people to participate in theft, smuggling or even organized crime. Many teenagers for
hooligan gangs and attack pedestrian
 Limited Access to Services
 People living in urban slums or shanty towns often lack access to basic services such as fresh water,
electricity and sanitary facilities. A lack of firefighting and police units nearby usually results in increased
risks of crime and fire breakouts.
 Social Segregation
 Minority groups are often segregated by ethnicity into ethnic enclaves. This is due to the ability of
minority groups to quickly establish social networks within these enclaves as compared to the rest of
the city.
 Enclaves also tend to be breeding grounds for subversive culture which would lead to further
marginalization and discrimination by the majority. For example, the marginalization and exclusion of
ethnic minorities in the UK culminated in the bombing of the London Subway
 Economic Deprivation
 Def: A condition in which the individual lives with a lack of housing availability, employment or services
 Underclass: Poor people being forced out of the labour market by the post-industrial society
 Involves a continuous process which transmits relative poverty from one generation to another, thus
limiting the social mobility of individuals. Due to a capitalistic economic system, households with low
incomes can only afford subpar education, food, housing which in turn leads to low education levels
and low income jobs. Poverty is reinforced and perpetuated through generations in the household. This
is often the case for many immigrants.
 At the same time, the neighbourhood becomes even more run-down due to the inability of deprived
households to pay their taxes. An adverse image is created and filtering results, inevitably leading to
socio-economic polarization.

CASE STUDY: NEW YORK, USA

 In New York, certain areas such as Nassau, Manhatten and Queens are generally better-off than areas such
as Brooklyn (Kings) and Bronx. These poorer areas are also located adjacent to many CBD sites.
 In 1930 over 90% of the blacks lived in their own isolated communities. Black adolescents are 9 times more
likely to be murdered than their white counterparts

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 In America, “White Flight” can occur when whites pull their houses out of the city in response to decreasing
property prices caused by an influx of blacks.
 Causes: Immigration (Rural-Urban), Gentrification and Inner City Decay
 During 1900-2000, immigrants from many countries flooded into New York. These immigrants tend to
settle in their own communities, with Brooklyn being home to large Indian, Chinese and Arab
communities. Hispanic Americans and African Americans (from the Great Migration) settled in droves
in Bronx. A lack of proficiency in the English language limited the ability of many immigrants to interact
with the American population, which in turn limited their employment opportunities.
 Areas that are poor are located adjacent to CBD areas, suggesting that these areas are probably less
well-off inner city districts based on the core-frame model.

CASE STUDY: BRADFORD, UK

 Economic Deprivation is especially common in inner city wards such as Manningham University Ward and
fringe wards such as Holmewood Estate
 Causes
 Inner City Decay due to Global Industrial Shifts: In 1961, 60% of the workforce was employed in
manufacturing. After the UK lost the manufacturing jobs to NIEs, unemployment began rising at a rapid
scale, up to 13% during 1993 due to a decline in the manufacturing industry. Extensive areas of 19 th
century housing that are associated with the industrial towns are also deteriorating due to neglect and
dereliction. Large stretches of vacant industrial land are present due to the closing of more than 60%
of the factories.
 Immigration: Large proportion of residents are ethnic minorities (Asians at 15%). Ethnic minorities are
more likely to experience socio-economic polarization due to the poverty cycle and their inability to
communicate well in fluent English (Even if they can, many are still discriminated against). A large
proportion of minority groups such as the Bangladeshi, Pakistani and African-Carribean minorities live
in areas of multiple stresses such as Little Horton, University and Tong.
 Effects
 High Crime Rates: Highest crime rates occur in inner city areas of multiple stress such as Little Horton,
University and Tong.
 High fertility rates perpetuating the poverty cycle: Average family size in the inner city areas is 5.1. A
large family size places stress on services, housing and limited monetary resources.
 Deprivation (all higher than average):
 24.4% of households have more than 1 person per room
 68.9% of households do not own a car
 51.0% of households have no heating appliances during winter
 47.5% of households are eligible for government support

GENERAL EXAMPLES OF SOCIO-ECONOMIC POLARIZATION

 France
 Paris: 15% of the population live in large peripheral social housing estates called grand ensembles,
housing 10,000 dwellings. These areas tend to concentrate ethnic minority groups and the unemployed.
The Sarcelles estate (a grand ensemble) was poorly liked to the city centre, with badly designed housing
and inadequate maintenance
 Lyon: A series of large-scale peripheral housing was developed to house the underclass in the city. North
African Youths from “Les Minguettes”, one of such estates, rioted and fought with the police during the
1980s.

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 Britain
 London: Northcote ward in London contains 90% of its population as ethnic minorities
 Lincoln: Monks road that lies within the zone in transition suffers from a range of socio-economic
problems, as well as decaying housing. ¼ of the area is under the government, with terraced housing in
various states of disrepair and council buildings requiring modernization and renewal. ½ of the
population have no cars. (Cause = Ageing population (14%); Decline in manufacturing sector (28% in
manual jobs))
 Brazil (Rio De Janerio)
 Cause: Rapid Rural-Urban migration increased the population from 800 000 in 1900 to 10 million in
1991.
 Urban Structure
 Rural-Urban Fringe: Contains large numbers of Favelas (shanty towns) that lack formal organization
and basic services. 17% of the population lives in these areas where Individuals do not own the
land. Rocinha is the largest Favela with 80 000 people.
 District Conjuntos habitacionais: Government-subsidized low cost housing for low paid workers.
Approximately 1 million live here in conditions similar to favelas due to the slow decay of such
housing and increased migration.
 Central area and high-end suburbs: Received the bulk of infrastructure investment. Coastal stretch
reserved for the spread of high class suburbs with beach access and pleasant environments. Gated
communities built near shanty towns and slums.

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