3.2 What changes have taken place in the FLOW of GOODS and CAPITAL? 3.2b- TNCs control a substantial part of the global economy and have created a GLOBAL SHIFT. Lesson 6- Today we study one TNC in the SECONDARY SECTOR to show how it operates in different parts of the world.

 The global shift in manufacturing refers to the movement of manufacturing away from DEVELOPED COUNTRIES like the USA to emerging economies  This began in the 1960s and 1970s with the emergence of the Asian economies (Four Tigers) Hong Kong, Singapore, South Korea and Taiwan.  Hong Kong and Singapore have become world-leading international financial centres, whereas South Korea and Taiwan are world leaders in manufacturing information technology. But it didn't start there. At first Taiwan was famous for low cost-low quality manufactured items and its economy has matured to high-end manufacturing.  Today other Asian economies are emerging as manufacturing sectors, E.G. Vietnam, Cambodia and China.  The strongest and most developing economies today can be referred to as the BRICS economies. These are Brazil, Russia, India and China.  The global shift in manufacturing from developed economies to emerging economies can be explained by the following factors: THE GLOBAL SHIFT IN MANUFACTURING

Shift away from developed economies  A mature consumer market with slow growth  Lower quality raw materials  Raw materials more difficult and costly to access  High labour costs  Powerful trade unions  Costly working environment, benefits and holiday pay  Government policy away from low-value manufacturing to high value manufacturing, tertiary and quaternary industry. Shift to emerging economies  A young and rapidly growing consumer market  Higher quality raw materials  Low cost raw materials  Low cost labour  Flexible labour market with limited trade unions  Educated workforce with skills  Low cost working environment, fewer benefits and less holiday pay  Government policy encouraging low-value manufacturing THE GLOBAL SHIFT IN MANUFACTURING FROM DEVELOPED ECONOMIES TO EMERGING ECONOMIES CAN BE EXPLAINED BY THE FOLLOWING FACTORS:

A secondary TNC map.php?cat=map

Malaysia U. S. A Mexico Japan China Thailand Vietnam Indonesia Taiwan Head office located here By 1992 most factories had moved from here to Asia Workers were attacked by riot police after protesting when workers were sacked for asking for higher wages in this South American country which has 20 factories In the 1980’s factories were opened here because of cheap labour, some were even opened in its capital city: Bangkok Employees work for 65 hours a week for US$10 in this Communist country Cheap labour is the main reason why Nike set up factories in this country, which is to the south of North Korea A DEVELOPED COUNTRY where in the 1960’s; training shoes were made here as labour was cheap. Now finances operations in Taiwan and Korea. An Asian country with the worlds largest population it also has the largest number of Nike factories (218 in total) Poverty dominates workers lives (earn US$2 a day) in this country where Jakarta is the capital city Workers forced to work overtime in this Asian country which borders with Indonesia and Thailand Cheap labour is the main reason why Nike set up factories in this country which is an island off China. South Korea Task- Match the country to the statement On a map, locate these countries, use a key Ensure that the statements are linked to the map

Malaysia U. S. A Mexico Japan China Thailand Vietnam Indonesia Taiwan Head office located here By 1992 most factories had moved from here to Asia Workers were attacked by riot police after protesting when workers were sacked for asking for higher wages in this South American country which has 20 factories In the 1980’s factories were opened here because of cheap labour, some were even opened in its capital city: Bangkok Employees work for 65 hours a week for US$10 in this Communist country Cheap labour is the main reason why Nike set up factories in this country, which is to the south of North Korea An DEVELOPED COUNTRY where in the 1960’s; training shoes were made here as labour was cheap. Now finances operations in Taiwan and Korea. Poverty dominates workers lives (earn US$2 a day) in this country where Jakarta is the capital city Workers forced to work overtime in this Asian country which borders with Indonesia and Thailand Cheap labour is the main reason why Nike set up factories in this country which is an island off China. South Korea An Asian country with the worlds largest population it also has the largest number of Nike factories (218 in total)

Bangladesh (5) Egypt (3) Cambodia (5) Canada (5) Dominican Rep. (1) Ecuador (1) El Salvador (3) Guatemala (6) Netherlands (4) Argentina (26) Australia (5) Brazil (56) China (218) India (23) Indonesia (41) Mexico (27) Taiwan (16) Bosnia (1) Bulgaria (1) Israel (1) Italy (10) Japan (26) South Korea Malaysia (1) Pakistan (4) Philippines (1) South Africa (1) USA (1) Honduras (7) Hong Kong (3) Malaysia (20) Macau (1) Moldova (4) Nicaragua (2) Pakistan (4) Paraguay (1) Peru (3) Philippines (2) Poland (1) Portugal (1) South Africa (4) Spain (2) Sri Lanka (20) Turkey (8) UK (1) Thailand (38) USA (67) Vietnam (71) Turkey (3) UK (1) Number of factories in () Add these nations to your map, use a key to indicate what that country does

Describe the differences between Nike revenues in 2008 and 2011 (2)

WHY HAS NIKE SHIFTED ITS MANUFACTURING? ( GLOBAL SHIFT )  Why does Nike manufacture most of its products in Eastern Europe or South East Asia?

WHY HAS NIKE SHIFTED ITS MANUFACTURING? ( GLOBAL SHIFT )  Why does Nike manufacture most of its products in Eastern Europe or South East Asia?  Increases its profits as workers in South East Asian countries like Vietnam, are paid less than workers in the USA or UK would be.  Land to build factories is cheaper in countries like China, as they have subsidies (pay part of the cost) to encourage Nike to locate there and bring jobs.  Countries like China and India are becoming increasingly wealthy and thus as a result a large market to sell Nike products to is opening up, manufacturing and selling in same location reduces transport costs.

DEVELOPING COUNTRIES  Countries can become reliant on large TNCs like Nike, who leave and take jobs with them to other less developed nations- leaving derelict factories and high unemployment  Some money is leaked back (LEAKAGE)to the country where the HQ is (Nike= USA), if the TNC was based in the DEVELOPING COUNTRY more money would remain in that country  Sweatshops and child labour may occur as Nike does not manage factories itself. DEVELOPED COUNTRIES  Job losses and negative multiplier effect may result as manufacturing is SHIFTED to DEVELOPING COUNTRIES.  The DEVELOPING COUNTRIES use the information learned in TNC factories to establish rival companies (e.g. Indian car manufacturer TATA, these become more successful and cause original companies to decline  Cities become derelict e.g. DETROIT ‘MOTOR’ CITY decline ARE THERE NEGATIVES TO THIS GLOBAL SHIFT?

Manufacturing moves to DEVELOPING COUNTRIES People left unemployed New jobs cannot be found, people get depressed, may turn to drugs/ alcohol Families break up, people move, Area declines NEGATIVE MULTIPLIER EFFECT IN DEVELOPED COUNTRIES

Make notes on the decline of Detroit, using these sources-  VIDEOS   ARTICLES  michigan-economy-recession-unemployment michigan-economy-recession-unemployment DETROIT’S DECLINE

 How are your products made?  What negatives does this highlight of The GLOBAL SHIFT? SWEATSHOPS

 Bangladesh factory collapse DANGEROUS WORKING CONDITIONS

 The darker side of chocolate in Ghana, West Africa CHILD LABOUR

Give reasons for the changes shown in the graph (3)

INSERT QU FROM TOPIC 8 OF PEOPLE AND PLANET EXAM JUNE 2013