7.7 Changes as a Result of the World Economy

7.7: Changes as a result of the world economy

Essential Question: What are the causes and geographic consequences of recent economic changes such as the increase in international trade, deindustrialization, and growing interdependence in the world economy.

​The World Systems Theory demonstrates how every state is dependent on each other for something.

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Interdependence

Primary & secondary sector jobs are leaving the core for periphery & semi-periphery states.

Impacts

• Good: companies can produce things for cheaper, and sell them at lower prioces. More jobs become available in poorer places.

• Bad: jobs are leaving the core. Workers in poorer places are exploited by companies from the core.

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Interdependence

Comparative advantage: the ability to produce goods at a lower cost than others.

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Workers are paid less in the periphery & semi-periphery, so they have the comparative advantage over the core.

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​Why does this happen?

Governments around the world have focused heavily on creating neo-liberal free trade policies that reduce government regulations & taxes/tariffs on companies. This allows businesses to function more freely and at lower costs, even if that means workers are exploited.

Government & trade

• Outsourcing: contracting work out to non-company employees to save money

• Offshoring: moving operations overseas to save money

  • Mostly in Asia

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When the secondary sector leaves a place.

• Once these jobs leave, many people become unemployed

• Massive economic downturn happens

Result = deindustrialization

Large section of the USA where manufacturing used to take place.

• After heavy industry left, the area became poor

• Companies offshored to save money

• "Rust Belt" comes from the many factories abandoned to rust & fall apart after

​Deindustrialization: the rust belt

Multiple Choice

Which of the following has contributed most to the deindustrialization of regions like the English Midlands and the North American Manufacturing Belt?

• The increased percentage of women in the labor force

• Competition from foreign imports

• Environmental legislation

• The formation of free trade associations

• The decline of labor unions

Multiple Choice

Which of the following processes explains the change in coal miners employed in the United States from 1950 to 2000?

• Technological diffusion

• Just-in-time production

• Industrial revolution

• Devolution

• Deindustrialization

Multiple Choice

Which of the following is the primary geographic effect of the globalization of the economy?

• Countries have greater control over economic activity within their borders.

• More Local ownership makes industries less likely to move.

• Production is increasingly concentrated in the Manufacturing Belt of the United States

• Production is increasingly concentrated in the Rhine-Ruhr Valley of Europe.

• Production is shifted to low-cost locations in developing countries.