Beruflich Dokumente
Kultur Dokumente
H2 Geography 9730
PART II - Human Geography
STUDY NOTES
LOH ZHENG YI 12S74
CONTENTS
Uneven Development in the Global Economy +
Transnational Corporations + Role of the State &
Supranational Bodies
A. THE GLOBALIZATION
OF ECONOMIC ACTIVITY
LEARNING OBJECTIVES
A1. Uneven Development in the Global Economy
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
10. Discuss the growth and locational shifts in various economic activities
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
16. Discuss the spatial organisation, linkages with and the social and economic impact of TNCs
on a specific host economy
19. Discuss the role of supranational bodies and evaluate their impact on national and regional
economies
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
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. 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
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.
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. 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
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
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.
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
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
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.
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
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
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.
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
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
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.
NIDL: The fragmentation and geographical relocation of production processes on a global scale that goes
beyond national boundaries
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
DCs still dominate in financial trade and many still receive a trade surplus
Note: The concept that underpins the whole of NIDL is the need for Rationalization to save costs and improve
productivity and profits.
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
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.
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
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
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
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
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.
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
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
Note: NOT independent from NIDL, in fact many of these impacts are also partly driven by NIDL
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
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
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
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
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.
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
Buildings built include: Site Gallery; National Centre for Popular Music; Red Tape Studios;
Sheffield Haliam University media school
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
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
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
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%
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
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.
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
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 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
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
Industrial Agglomeration
Prestige
2.3 COMMAND AND CONTROL RELATIONSHIP BETWEEN TNCS AND THE COUNTRIES
THEY OPERATE IN
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
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
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
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
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
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.
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
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
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
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.
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.
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
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
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
*Note, economic policies are usually carried out simultaneously with social development policies such as
*These policies are usually carried out simultaneously rather than separate
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]
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
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
*Note – South Korea significantly reduced state control over the economy after the Asian Financial Crisis by
liberalizing the financial sector.
Future challenges
Reducing the inefficiencies of the chaebol and distancing their relationship with the government
Nurturing SMEs
Future challenges
Restore Zimbabwe’s economy integrity by developing low-skilled manufacturing
Reduce corruption and government inefficiency
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
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
Residential and recreational areas including swimming pool, tennis and basketball courts
£425 million in government investment
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
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
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
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
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
CONTENTS
Population Dynamics + Implications of Population Change
B. POPULATION
ISSUES AND
CHALLENGES
LEARNING OBJECTIVES
B1. Population Dynamics
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
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
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
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
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)
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
1.2 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]
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
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
SOCIOECONOMIC CHANGES
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.
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]
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
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)
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
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
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.
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
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.
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
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.
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
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
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
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
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)
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
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.
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
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
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.
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)
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.
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)
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.
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.
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
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)
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
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)
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
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
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
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
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
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
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.
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
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.
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
Resources: A word that encompasses labour, entrepreneurial skills, investment funds, fixed capital assets,
technology, knowledge, social stability, cultural and physical attributes
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
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
CONTENTS
Urbanization + Urban Dynamics + Urban Management
C. URBAN ISSUES
& 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
C1. URBANISATION
1.1 CONCEPT OF URBANISATION AND ITS RELATIONSHIP TO URBAN GROWTH
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)
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
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.
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
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
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
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
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
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
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
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
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
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.
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.
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
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.
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
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.
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
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
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
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
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
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
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.
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
hostel beds
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
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
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)
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
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.
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
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.
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
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
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
No welfare aid is often provided, resulting in another shanty town formed at the new area
Removes the current housing of the locals
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
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.
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.
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.
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.
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
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
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
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
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.
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
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.
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.