Industrial Growth in the LEDW and Multinationals

1
Industrial Growth in the LEDW and Multinationals

• Learning Objective
• 1. To understand how the manufacturing industry
  has developed in some LEDCs.
• 2. To understand the importance of
  multinationals.

2
What you need to know

• You need to
• Be aware of the reasons for industrial growth in
  LEDCs.
• Recognise the importance of multinationals to
  this growth.
• Be aware of the role of multinationals in LEDCs.
• Be aware of the possible economic, social,
  political and environmental consequences of
  industrial growth in LEDCs.
• Know how and why some LEDCs experience more
  industrialisation than others.
• Understand the term interdependence
• Be aware of the consequences of interdependence
  for LEDCs and MEDCs

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Industrial Growth in the LEDW

• Industrial growth has occurred in many countries
  in the LEDW.
• It is estimated that about 40 of the working
  population is in the formal sector, employed by
  the state or by multinationals (transnational)
  corporations.
• The remainder is in the informal sector.
• Large-scale, capital-intensive manufacturing
  industry is seen as important by governments, and
  incentives are provided to attract it.

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Variable industrial growth

• The greatest industrialisation has occurred in
  the NICs that have passed the take off stage
  and are approaching high mass consumption. The
  reasons for this include
• A well-educated, flexible and cheap labour force.
• Clear government support for industry.
• Free movement of imports and exports.
• Good accessibility and communication links.
• Ease of capital formation.
• Lack of restrictions on multinationals.
• At the other extreme, some LEDCs (particularly in
  Africa) have experienced very little
  industrialisation. Reasons include
• War, drought and famine (all of which destroy the
  agricultural base).
• Lack of natural resources.
• Political instability.
• Corruption.
• Poor infrastructure.
• Dependency on the former colonial power.

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Questions

• Look at pages 250/1 of the AS textbook.
• Display the information in figure 1 on a graph.
• Describe what figure 1 shows about manufacturing
  industry in the LEDW.
• Explain why some LEDCs have industrialized more
  than others.

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Newly Industrialised Countries

• The term NIC is generally applied to nations that
  have undergone rapid and successful
  industrialisation since the 1960s.
• These countries have experienced rapid growth in
  their manufacturing output and exports over
  recent decades.
• Examples include Brazil, Taiwan, Singapore and
  South Korea.

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Case Studies

• China
• Malaysia

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Questions

• Examine the reasons for economic growth in a NIC
  you have studied.
• Examine the impact of industrial growth on a
  country in the LEDW you have studied.

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Multinational (transnational) Companies

• Companies with business interest in many
  different countries, such as BP, Nestle and Ford.
• This makes them global companies operating in
  both MEDCs and LEDCs, although the majority of
  the headquarters of these companies are in the
  USA, Europe and Japan.
• Multinational are believed to employ over 30
  million people worldwide.
• The largest 100 multinationals, led by oil
  companies and car manufacturers, controlled
  nearly half of the worlds manufacturing in 1990.

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Multinational (transnational) Companies

• Multinationals, with their capital and
  technology, have the power to choose what they
  consider to be the ideal locations for their
  factories.
• The benefits of a move to the LEDW are
• Cheaper labour, particularly in developing
  countries.
• Circumventing trade barriers.
• Tapping market potential in other world regions
• Avoidance of strict domestic environmental
  regulations.
• Exchange rate advantages.

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Case Study

• The Car Industry

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Past Exam Questions

• Why are multinational companies described as
  global companies?
• The map shows the country of origin of the
  worlds 500 largest companies
• Describe what the map shows about the
  distribution of the headquarters of the worlds
  500 largest companies.

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The impact of the changes

• There have been important economic, social,
  political and environmental impacts resulting
  from industrial growth involving multinationals
  in LEDCs.

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Past Exam Question

• Identify and comment on the economic and
  environmental impacts of multinationals on a
  Newly Industrialised Country (NIC) you have
  studied.

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• Globalization - The increasingly international
  manner in which both manufacturing and service
  companies are operating.
• Interdependence Describes the relationship
  between MEDCs and LEDCs through trade, foreign
  investment, aid and migration. The relationship
  tends to favour the MEDCs, placing the LEDCs in a
  position of dependency.

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Questions

• Look at page 254 of your AS textbook.
• 1. What is meant by i) globalization ii)
  interdependence?
• 2. How does globalization i) help and ii) hinder
  the economic development of LEDCs?