Economic Systems

(a) Briefly outline the consequences of urban manufacturing decline.

The consequences of urban manufacturing decline apply within most post-industrial countries. With this decline in manufacturing comes also a decline in job opportunities. This is shown with the huge unemployment met after the closure of coal mines around the country in the early 1990’s. There was huge economic decline at this time, directly linked with the unemployment.

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With the closure of many industries, there is a growth in derelict land. This has the initial impact of environmental damage, as it is polluting and unsupervised and can cause dangers to the near vicinity.

(b) Examine the causes of the decline in manufacturing employment in most MEDCs in recent years.

Manufacturing in MEDCs such as England, U.S and France, has declined hugely in the past half century. There has been a major move toward the tertiary industry in the UK and other MEDCs. Other countries that are recently developed, such as China and Taiwan, are becoming the major forces in manufacturing.

Most MEDCs are now post industrial economies, this means that the majority of employment in the country is now within the tertiary or quaternary industries. This is showed with the decline of secondary industries in the UK from nearly 40% in 1951 to a significantly smaller 27% in 1997. This is due to the advances in technology and the need for skilled workers. As machinery became more complicated, labour needed to become more skilled and many went on in education to further things than industry. As a major part of manufacturing is selling the goods, many were employed within marketing, advertising and retailing. As it was a more specialized branch within the industry, the pay was better and so many pushed to get these jobs and so moved into the tertiary industry.

Manufacturing now happens within LEDCs and so this has caused a huge rise in competition to the industries within MEDCs. Labour is far cheaper in LEDCs than it is in MEDCs. This is shown in the comparison of salaries between the UK’s GNP in 1995 of over $18,000 and India’s GNP of $340. This is a huge difference and has clear benefits for the employer. Education around the world is improving hugely and this shows in the LEDCs and there use of this in the manufacturing industry. Due to globalisation, it has become a lot easier to have factories within one part of the world and the management in another part. This has meant it is a lot easier for multinational companies like Nike to set up business in LEDCs such as Indonesia where wages are lower and labour is more intensive.

It was also easier for these businesses to set up here as employment and environmental legislation is a lot weaker. The economies of scale meant that for countries like the UK it was better to buy in products than to carry on manufacturing them. Also with globalisation, the world market can be reached a lot easier than used to be. So a factory in Indonesia will save money on wages and still have the same market size. As a country develops, it becomes richer and has the ability to spend on automated industries that have no need for pure human labour. This is de-skilling the industry and has forced many employees to leave the industry.

The attitude of workers has changed hugely within these MEDCs and this has caused a movement from manufacturing to tertiary. For example, workers in MEDCs demand higher wages and this causes a strain on the company. Standards within the factory and around it have had to improve due to worries in the environment. Social life and general standard of living has improved immensely and has had an impact on working hours and effort. More employees expect to have a certain amount of the week off for leisure and social events.

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