Global Shift

When we talk about the term global shift, we're not exactly talking about outer space and the actual movement of the earth. Although, that would be pretty cool. Astrology and geography could be next year's topic! The global shift is more related to the topic of globalisation, and our increasing connectedness within the world. It's all about the movement of the economic centre of the world. But what exactly does that mean? What has caused this global shift? Who has benefitted from it? Are there people who have lost out? Read on to find out more. 

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Table of contents

    Global shift definition

    Before we go ahead and define the global shift, let's quickly revise the idea of globalisation. Globalisation is the way the world is becoming more connected, through increased flows, interdependence, and relationships between nations. With the rise of Transnational Corporations, the role of governments and organisations, and the increase of technologies and transportation, the world is becoming globalised. Some say the world is shrinking or compressing because it is now so much easier and faster to move around the world, and stay connected to people across the planet.

    Make sure you read the explanations on Globalisation and the Effects of Globalisation before continuing with this one, it'll give you the necessary context to learn all about our shifting world.

    What is the global shift?

    As a result of globalisation, and the increase in Foreign Direct Investment from Transnational Corporations, a global shift has occurred. But how do we define this?

    The global shift is the movement of manufacturing and industry to countries that have been recently industrialising. It has involved the shift of activity from western regions (like the US or Europe) to Asia.

    The global shift is often described as the movement of the centre of gravity of economic activities to places like China and India. Manufacturing has shifted towards China, and service jobs have moved to India, for example.

    The global economic shift

    The global shift is all to do with the movement of the economic centres of the world, towards the Asian continent. Once upon a time, in countries like the UK, imports of materials from other countries were not favoured over UK-based products. This all changed during the Industrial Revolution when imports of raw materials from abroad became more favourable. During the 1950s, manufacturing industries started to move to countries like Japan. In the 1960s, the 'Asian Tigers' started to industrialise (South Korea, Taiwan, Singapore, and Hong Kong), as well as China and India. In the 1980s, more countries like the Philippines, Cambodia, Indonesia, and other countries in the South American region started to industrialise. Manufacturing industries, therefore, moved to these countries, as it was typically cheaper to source labour there. From the 1990s, the service industry followed too. At the same time, more developed countries began to deindustrialise. This means that there was a huge reduction in industrial and manufacturing industries in more developed countries, like the UK.

    Causes of global shift

    Now, we've just discussed how this global shift has occurred, with countries in the East industrialising and countries in the West deindustrialising. But what has actually caused this? Those responsible for the global shift are the Transnational or Multinational Corporations operating in countries all over the world, as well as the other drivers of globalisation.

    Transnational Corporations (TNCs)

    Most TNCs/MNCs are based in countries like the UK or the US and then invest in other countries to conduct manufacturing and production work. Investing in other countries means that TNCs can avoid trade barriers or expensive tariffs, pay workers a much smaller amount, avoid environmental regulations, and can move production whenever and wherever depending on profitability. TNCs operate through offshoring and outsourcing.

    Outsourcing is the use of other companies for products or services, for example, the increase of call centres in India. Offshoring is when production and manufacturing are moved to another country, for example, China.

    TNCs often try to find the cheapest labour possible. You may have heard the term sweatshops before. This is where people are paid very poor wages and are provided with awful working conditions.

    Global Shift Sweatshop StudySmarterFig. 1 - a sweatshop in Thailand

    Technologies and transport

    Other causes of the global shift include the shrinking of the world through improved technologies and transport. With the rise of large shipping and airfreight, raw materials and goods can be more easily shipped around the world, particularly larger or heavier goods. Technologies have increased communications around the world, and also reduced the need for highly skilled labour (technology makes it easier for untrained people to carry out tasks).

    Governments and organisations

    Other organisations and governments help to increase free trade, free market liberalisation, and the removal of trade barriers, improving trade and productivity. You can read more about this in the Globalisation and the Role of Government explanations!

    Impacts of global shift

    The global shift has produced both benefits and costs, for many people around the world. Let's take a look at the different positive and negative impacts that the global shift has created.

    BenefitsCosts
    Wages; people are provided with proper wages for work, which, even though they are still low, are a reliable source of income and are higher than the earnings from the agricultural subsistence economy. Land loss; infrastructure for factories or workers is needed, taking up the land that was previously used for agriculture. Pollution from factories can also cause damage to the land and water needed for agricultural production.
    Poverty reduction; the global shift has helped to reduce global poverty rates.Unplanned settlement; more people migrate from rural areas to urban areas (rural-urban migration), due to the increased job opportunities. With more people moving in, housing construction can't keep up, leading to an increase in informal settlements or slums.
    Education has improved; TNCs often provide investments in training for workers. Economic growth from the global shift has meant more investment has gone into education, and more people can afford to send their children to school. Environmental damage; pollution from industrial activity is a huge problem, alongside increased demand for resources for factories, raw materials, or construction.
    Infrastructural investment; to attract FDI from TNCs, investments in infrastructures are important first, such as sewers or roads, therefore improving infrastructures in the country.People; although workers are given more money, it's still a very small amount, and many have to work in sweatshops with poor working conditions and long hours. In some cases, workers may have to live in accommodations away from their families. With the global shift, culture also starts to deteriorate, and traditional foods and ways of living start to fade.

    You can read more about the impact that globalisation has had in the Effects of Globalisation explanation.

    Global shift examples

    Within globalisation, some countries have won from the effects of globalisation, whilst others have massively lost out. Let's take a look at some examples of areas of the world affected by the global shift.

    China

    Some countries have reaped the benefits of the global shift. During the 1970s, globalisation made its way to China. Foreign Direct Investment was funnelled into China in the 1990s, for the manufacturing of things like textiles. Moving into the 21st century, more high-tech manufacturing was carried out, like cars, for example. As a result, wage rates brought people out of poverty, and today, wages are much higher, with higher-skilled work. Literacy rates have risen, as a result of increased education opportunities, which has boosted the economy. Infrastructures have also improved massively; examples of these infrastructures include the Three Gorges Dam (providing hydroelectric power), the high-speed rail network, and a huge increase in the number of airports.

    In 1978, China adopted an Open Door Policy, which helped to accelerate globalisation, and bring in more Foreign Direct Investment. This policy, created by Deng Xiaoping, kickstarted the growth of China. China could even be on its way to becoming a global superpower. Check out the explanation on China Superpower for more on this!

    On the other hand, China has also experienced the negatives of the global shift. Industrialisation in China has caused a huge pollution problem; smog (smoke and fog) can often be seen in Chinese cities, as a result of burning coal stations. Roughly 70% of China's rivers are also polluted, making the water unsafe for drinking and agriculture, as well as damaging ecosystems. Pollution also causes the acidification of soil, degrading the land and affecting agriculture. Deforestation, overgrazing, and resource exploitation are also characteristics of this global shift.

    Global Shift Smog StudySmarterFig. 2 - smog over the city of Harbin, China

    The developed world

    Following the deindustrialisation in the 1970s and 1980s, the developed world has actually lost out with this global shift. This can be seen more predominantly in the north of the UK (particularly the northeast of England), where more industrial and manufacturing industries used to be located. Following deindustrialisation, the closure of industrial factories caused old buildings to become derelict and unsightly. Chemical pollution from these areas, from the dumping of old industrial material, also makes its way into waterways and soil, causing contamination. With factories closing down, this results in higher rates of unemployment. More people tend to leave these areas, to find opportunities elsewhere, resulting in depopulation. Housing becomes cheaper, attracting those on lower incomes. This increases the cycle of deprivation in areas like this, leaving these areas downtrodden, and in a constant state of poverty.

    Global Shift Derelict Building StudySmarterFig. 3 - how do you think a derelict industrial factory could have an impact on the local environment?

    Global Shift - Key takeaways

    • The global shift is the movement of the economic centre from western countries like the UK or the US, to Asia, like China or India.
    • The global shift has been a direct result of TNC growth (offshoring and outsourcing), as well as the other causes of globalisation, such as technology and transport growth, and the role of governments and other organisations.
    • The global shift has impacted countries in different ways. Some countries benefit from the shift, whilst others reap the costs.

    References

    1. Fig. 1: sweatshop (https://commons.wikimedia.org/wiki/File:Garment_Factory_Workers_in_Thailand.jpg), by Greg Walters (https://www.flickr.com/photos/gregwalters/), Licensed by CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/).
    2. Fig. 2: smog in China (https://commons.wikimedia.org/wiki/File:HarbinChinaSmog_121226.jpg), by Fredrik Rubensson (https://www.flickr.com/photos/froderik/), Licensed by CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0/).
    3. Fig. 3: derelict factory (https://commons.wikimedia.org/wiki/File:Derelict_factory_-_geograph.org.uk_-_2719819.jpg), by Chris Allen (https://www.geograph.org.uk/profile/4264), Licensed by CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0/).
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    Frequently Asked Questions about Global Shift

    What is the global shift?

    The global shift is the movement of manufacturing, or the economic centre of gravity, to recently industrialising countries. It’s the shift from western dominated activity to places like China and India.

    When did the global shift occur?

    The global shift began around the 1950s, with manufacturing moving towards Japan.

    What are the main causes of the global shift in manufacturing?

    The main causes of the global shift are the operations of Transnational Corporations (outsourcing and offshoring), as well as other drivers of globalisation, like technology and transport growth and the role of governments and organisations.

    How has the global shift benefitted China?

    The global shift has benefited China by reducing poverty, improving literacy rates, and creating new infrastructures.

    Why has the global shift in manufacturing and services made some people losers?

    The global shift in manufacturing and services has made some people losers for different reasons. The global shift has caused massive environmental damage in countries like China, and deindustrialisation in the west has caused poverty, deprivation, dereliction and depopulation.

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