Comparing economic structures by country and time

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Comparing economic structures by country and time
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Lets see what you found from the homework

• This has all the countries filled in could you
  see a pattern between the LICs and the graph? The
  HICs and the graph?

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Lets see what you found from the homework
Any patterns?
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Lets look at these 3

• The primary sector what kind of activities are
  in this group? What pattern do you notice?
• The secondary sector what kind of activities are
  in this group? What pattern do you notice?
• The tertiary sector what kind of activities are
  in this group? What pattern do you notice?

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Lets look at these 3

• 1. The primary sector farming, forestry,
  fishing and mining - decreases as a country gets
  a higher GDP
• 2. The tertiary sector shops, government
  sector, transport, entertainment increases with
  the GDP
• 3. Something a bit odd happens with secondary
  sector - - it starts off low and then increases
  but then starts to get smaller again in the HICs.
• Our task in this section is to look at why this
  should happen.

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Why are so many people employed in primary
industries in LICs?

• LICs have a low income per person. This is mainly
  to do with the things that they sell have low
  value.
• These are mostly primary products raw materials
  which have not been processed.
• The richer countries and the traders have always
  paid as little as they can for raw materials.
• This means that these countries cannot afford the
  machines to do the work but depend on poorly paid
  labour to do most of it instead.
• This also explains why such a large of the
  population is involved in growing/collecting and
  harvesting these raw materials.

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Why do MICs have fewer people working in primary
industries?

• However, once a country begins to develop, it
  will not sell raw materials for low values, but
  will begin to process them themselves and so
  become richer.
• As they become more industrialised, they will
  have more money to invest in machinery, which
  means that few people are involved in the
  production of raw materials.
• It becomes increasingly pressing that more people
  are released from primary production as more and
  more people are needed in the secondary
  manufacturing industries.
• So as industrialisation increases, then the
  number of people employed in primary production
  decreases. This does not mean that the amount of
  primary production decreases, just the number
  people needed to carry it out.

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Why does the number of people in tertiary
industry increase with development?

• As a country becomes richer, an educated work
  force becomes more important, so there is more
  invested in education (tertiary).
• As fewer people are producing their own food,
  then services to provide food to the industrial
  workers also increases (secondary food
  processing and tertiary distribution network
  shops and transport).
• Industries are most economical in urban areas so
  you need roads, water, police (all tertiary). So
  the general trend is that as a country becomes
  more industrialised, the greater the tertiary
  activity is.
• When a country becomes richer still, then
  services likes banks, insurance, widespread
  healthcare and many others employ more and more
  people.

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What about the odd pattern of secondary
employment?

• But what about that trough-peak- trough pattern
  of secondary economic activity?
• As we saw there is little large-scale secondary
  activity in LICs because they do not have the
  money to invest nor the skilled worked force to
  operate and maintain the machinery.
• But as they begin to develop, then more
  processing of primary products takes place there.
  
• Once an industrial base exists, with lower costs
  that in HICs, the TransNational Corporations
  (TNCs) see this as a new market but also a good
  place to put new factories.
• The governments of these countries are all in
  favour of bringing in more industry and so do
  their best to make the environment positive for
  any TNCs wishing to come.
• So manufacturing employment decreases as a
  country more expensive than the growing MICs.

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For example, Malaysia take a look at their
exports (case study 1)
What do you notice

• Primary
• 1970 43 5 25 73 (other will be some
  primary as well)
• 2000 7 3 10 other
• Secondary
• 1970 15 some
• 2000 61 4 3 68 some

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Why did they make that change

• Besides the usual ones of seeing it as the only
  way to develop, they had another reason.
• There was one ethnic group, the native Malays,
  were very poor and this was causing civil unrest.
  
• They could see that in order to make more money
  for everyone, industrialisation was the way
  forward.

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What did they do?

• In 1970 it introduced its New Economic Policy
  (NEP). They decided to
• provided financial incentives for foreign
  trans-national companies (TNCs) to invest in
  Malaysia.
• train their workforce in the necessary skills.
• use money from traditional exports to help fund
  this development.
• They attracted inward investment with the
  inducement of low taxes and cheap land
• They invested heavily in getting an educated
  workforce.
• The government has also built an infrastructure
  of roads, railways, airports and ports, which
  benefit the population but also encourage the
  TNCs to invest
• They kept the wages low
• The strict labour laws minimised disruptions and
  union membership was not encouraged
• The working day was long.

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How did they get the population to accept these
conditions?

• The government achieved good social welfare
  results
• The reductions in child and maternal mortality
  have been exceptional and rates are now similar
  to those of many developed countries.
• These improvements are attributable to a well
  developed primary health care system, including
  substantial investments in the reproductive
  health service, and to access to quality water,
  sanitation and nutrition.
• The Malaysian government subsidies for petrol,
  food and other essential goods allows the people
  to have sufficient, even if their income is low.
• Over time, they built up their own design
  facility Proton Cars and microelectronics
  component industries.

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But what about the secondary employment blip?
(HIC over time case-study)

• Lets look at the UK over time
• What happened to the primary industry? The
  tertiary?
• But now take a close look at the secondary
  industry what do you notice?

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But what about the secondary employment blip?
(HIC over time case-study)

• Lets look at the UK over time another way
• Line graphs are good if you want to look at
  change over time.

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But what about the secondary employment blip?
(HIC over time case-study)

• Lets look at the patterns
• in 1800 there was little in the way of service
  industries or manufacturing back then most
  manufactured goods were made in small workshops
  by a few craftsmen.
• However, most primary production, farming in the
  main, was done by hand or simple technology.
• But as the industrial revolution took hold, more
  people were needed to work in factories and so
  fewer were employed in agriculture.

• This was facilitated by increased mechanisation
  the steam engine being an important element

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But what about the secondary employment blip?
(HIC over time case-study)

• Even with mechanisation, factories employed a lot
  of people in the early days.
• However, even as more mass production, of items
  like cars and washing machines, meant more
  factories, the increase in labour began to tail
  off, as the automation took over from
  mechanisation.
• Another issue was raw materials many of our
  early industries in the UK depended on locally
  available, bulk raw materials but as these began
  to run out, the advantage for the factory nearby
  was lost

• Add to this, as we have seen in Malaysia, as more
  countries becoming industrialised, then new
  factories tended to concentrate in those places
  where bigger profits could be made, due to lower
  wages and lower taxes. So as old factories became
  out dated in the HICs, new ones that replaced
  them were built in the developing countries, such
  as Malaysia.

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But what about the secondary employment blip?
(HIC over time case-study)

• So the number of people employed in secondary
  industry in HICs began to decline for both the
  above reasons.
• In the meanwhile, TNCs kept up their
  administrative and development arms in HICs,
  increasing the number of workers in tertiary and
  even quaternary occupations.

• In addition, finance and tourism and all the
  other service industries grew apace in HICs and
  their levels of healthcare, education and
  government services all grew too.

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Change it a bit, take away the bottom scale and
put in countries and .

• You can see that as countries develop they change
  their employment structure.
• What do you notice about their primary
  industries, secondary industries and tertiary
  industries.

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Comparison between the 2 case-studies
Looking at them separately first
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Comparison between the 2 case-studies

• The number of people working in primary industry
  the UK, that is farming, fishing, mining and
  forestry, at 1.4 in 2006, is unlikely to go any
  lower. However, the number in Malaysia 13 and
  will probably continue to fall as
  agriculture/mining etc becomes even more
  mechanised.
• The secondary industry peaked in the UK in 1900s
  before tailing off. This is due to increased
  mechanisation, raw materials such as coal and
  iron ore running out and competition for work, as
  the TNCs choose more profitable places to operate
  from, and in the meanwhile in Malaysia, those in
  secondary production is still increasing and
  already higher than that in the UK.

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Comparison between the 2 case-studies

• Both countries have increasing numbers involved
  in tertiary and quaternary production (although
  the figures for quaternary are not high enough to
  show up on the graphs just yet), as they are both
  concentrating on development and design rather
  than on straightforward production and the
  increasing standard of living of their respective
  populations can use more and more services

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What is informal employment and why does it
happen?

• The official definition The informal sector is
  largely made up of jobs over which there is
  little or no official control. It includes jobs
  such as child minding, domestic cleaning and bar
  tending.
• In HICs, this is the main area for the informal
  economy.
• Previously, in the UK for example, this also
  included something called the Black economy or
  the Lump.
• A lot of building workers were paid by the day in
  cash and did not pay tax nor did they show up as
  being employed in fact many claimed
  unemployment pay and worked illegally.
• Because of its illegal nature, pay rates were
  much lower than regular workers and so building
  contractors were only to happy to use them.
• Another group were illegal immigrants who worked
  in sweat shops for long hours, poor and often
  unsafe conditions and very low pay.

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What is informal employment and why does it
happen?

• But the minimum wage and the demand that building
  contractors withheld money, even from self
  employed people, to off-set tax has resolved many
  of these issues.
• Officially, someone cleaning houses for a few
  hours a week or doing a bit of baby sitting
  should be registered as an employee but small
  infrequent jobs of work are largely disregarded
  by officialdom. However, they do form part of the
  informal economy.
• In MICs and LICs the informal sector is far less
  controlled and involves a much greater variety of
  people and jobs.

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What is informal employment and why does it
happen?

• In LICs/MICs most street workers do not appear on
  any statistics - these include street vendors,
  shoeshine boys, car washers, litter pickers, as
  well as employees of back street workshops who
  work long hours in dangerous conditions.
• In some countries, children are sold by their
  parents to become apprentices and so are
  virtual slaves
  until they reach adulthood and as
  it is for most
  part illegal to employ young
  children, they do not appear in any
  statistics either.

Venezuela
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What is informal employment? Why does it happen?

• For example in India it has been estimated that
  the informal economy was responsible for 60 of
  net domestic product, 68 of income, 60 of
  savings, 31 of agricultural exports and even 41
  of manufactured exports! Some estimates say that
  as many as 80 of the population earn most of
  their money through informal means.

In another example, Nigeria, it is thought that
40-45 of the GDP comes from the informal
economy, even though Nigeria is a resource- rich
country.
India street market
Guatemala