1. You Will Learn
Earth: Our Home 4
(Full Geography) • To explain the trend
of transference of
manufacturing
activities from
developed countries
to less developed
countries
Chapter 3: Plate Tectonics
How Has the Global Manufacturing How Has the Global Manufacturing
Industry Changed? Industry Changed?
• Development of large-scale manufacturing • Industrialisation due to large-scale manufacturing
– Characterised by the industrial revolution that began in the United – Some countries has become highly industrialised due to large-
Kingdom (UK) and spread throughout the world during the 18th scale manufacturing.
and 19th century. – This led to the improvement of their economies, and
• Machines driven by steam power were developed. consequently, their living conditions and infrastructures. These
• Steam-powered machines were first used in the manufacturing of countries are called developed countries (DCs).
textile goods. – Other countries continued to rely more on primary industries
• These machines were then gradually introduced to other industries, rather than secondary industries. As their economies did not
leading to large-scale manufacturing. improve as much as in DCs, they are called less developed
countries (LDCs).
2. Trend of Transference Trend of Transference
• A global shift in location of large-scale
manufacturing activities and a change in the
1960s 1970s 1980s 1990s Mid 1990s
types of industries from 1960s to mid-1990s are
known as the trend of transference. Large-scale Capital-intensive There was an Outsourcing trends
manufacturing industries began increase in began to develop.
activities started to replace high-technology
moving out of DCs labour-intensive Industries.
to LDCs. Industries.
Push Factors: Higher This is due to rapid growth With rapid industrialisation, Companies began to
labour costs as workers of international trade some LDCs became contract out parts of
in DCs demanded higher and investment, as well wealthier and their the production process
wages. as technological population more educated. to other companies,
advancements. which could be foreign
Pull Factors: Incentives For example, subsidiaries or external
from governments of electronics, suppliers.
LDCs and large markets pharmaceuticals
in LDCs. and biotechnology.
Why Do Industries Move Their Why Do Industries Move Their
Manufacturing Activities? Manufacturing Activities?
• Companies may relocate their manufacturing • Lower costs
activities, in order to maintain low costs in production - The standard and cost of living in LDCs are lower, compared
and maximise profits. to those in DCs. This leads to lower labour costs.
• By doing so, they achieve competitive advantage, - The cost of land is comparatively higher in DCs, hence
industries may find it difficult to expand factory space. They
which is a gain obtained from locating an industry in prefer to shift to LDCs, where the land is cheaper and more
a new location. readily available.
• This gain may be in the form of:
- lower costs
- attractive government incentives
- a large market.
3. Why Do Industries Move Their Why Do Industries Move Their
Manufacturing Activities? Manufacturing Activities?
• Attractive government incentives • Large markets
– Tax exemption: Projects involving heavy investments and use of
– Closer proximity to immensely large populations of
high technology may be completely exempted from income tax.
countries, such as China and India.
– Free Trade Zones (FTZs): An FTZ is an area in a country where
infrastructure is built, government requirements are lowered, and – With the growth of their economies, their middle class
incentives, such as tax exemption, are given to attract foreign markets are predicted to rise.
companies to set up their activities.
– Special Economic Zones (SEZs): SEZs include more specific
zone types such as FTZs. For example, in China, Shenzhen and
Zhuhai are designated as SEZs to attract manufacturers with China
benefits, such as tax incentives and relaxed labour laws
India
Space Shrinking Technology Space Shrinking Technology
• The development of advanced technology has • Transport technology
helped to reduce the time taken to travel, – Cargo ships – large ships that are more cost-effective than air
transport. They can transport large amounts of goods over long
transport raw materials and products, and distances.
communicate between countries. Such – Commercial jet aircrafts – travelling has been made much easier
technology is known as space shrinking and more convenient. They help make possible the
transportation of perishable goods.
technology.
4. Containerisation Communications Technology
• Use of containers • Communication is the transmission of information
– With the use of standard-sized containers to hold from one individual or group to another.
goods, the loading and unloading of goods has • Technology has made communication between
become faster and more efficient. people in different places faster and more
convenient, e.g. e-mail and video-conferencing.
Impacts of the Trend of Increase in Foreign Investments
Transference in LDCs
• Shift in manufacturing-related • More money flows into the country’s economy.
jobs from DCs to LDCs
– Fewer workers are employed in
• When manufacturers introduce a new industry to
manufacturing activities in DCs, a country, they bring along the technology
while more workers in LDCs become associated with it.
engaged in manufacturing activities.
– Manufacturing jobs in many LDCs
used to be mainly low-skilled and
labour-intensive. Since the 1990s,
there were more and more high-
technology manufacturing activities,
e.g. electronics, life sciences and
communications.
5. Increase in Export of Growth of Newly Industrialising
Manufactured Products in LDCs Economies
• Note that the trend of transference does not take
• Exports of manufactured place and benefit all LDCs equally. Countries such
as those in Africa have received very little
products in LDCs have also investment.
increased significantly as a • LDCs that have been significantly influenced by the
result of the trend of trend of transference have been able to enjoy rapid
transference. growth in their manufacturing industry, resulting in
industrialisation. They are known as Newly
Industrialising Economies (NIEs).
What Have You Learnt in
this Chapter?
! The trend of transference of
manufacturing activities from DCs to
LDCs
! The reasons for the shift of
manufacturing activities from DCs to
LDCs
! The impacts of the trend of
transference
