The Economic World

1
The Economic World

• Revision Notes

2
Primary, Secondary and Tertiary activities in
MEDCs and LEDCs

• Primary activities involve taking raw materials
  directly from the ground, they remain unaltered.
  Activities include farming, fishing, mining and
  logging.
• Secondary industries (also called manufacturing
  industries) involve processing the raw materials
  into other products. For example, latex can be
  made into rubber which can be used for tyres.
• Tertiary industries are service industries, such
  as teachers, nurses and shop assistants.
• Quaternary industries are modern high tech
  service industries involving research activities
  and computing.

3
Primary, Secondary and Tertiary activities in
MEDCs and LEDCs

• MEDCs (such as the UK) tend to have very little
  primary industry, some secondary industry and the
  majority of people working in tertiary or service
  industries.
• LEDCs (e.g. Mali) tend to have most people
  working in primary industries and very few
  workers in the secondary and tertiary industries.

4
The change PST over time for in LEDCs and MEDCs

• All countries undergo changes in their economic
  systems. The percentage of people working in
  primary, secondary and tertiary industries can
  change over time as a country develops. A
  decrease in primary sector jobs is caused by
• Improvements in technology allowing machines
  (mechanisation) to do the jobs of people. This
  has been particularly important in agriculture.
• Raw materials such as coal run out or become too
  expensive to mine.
• Workers prefer well paid less dirty tertiary
  jobs to primary jobs.
• Increased Tertiary employment has resulted from
  improvements in technology allowing micro
  electronics, research and biotechnology to grow.
• Secondary industries decline in MEDCs because of
  competition from Newly Industrialising Countries
  (NICs like Taiwan) that have cheaper labour
  costs.
• Changes are also occurring in LEDCs.

5
Characteristics of farm systems

• Organic farming is farming that takes place
  without the use of chemicals.
• Intensive farming is one that has high inputs of
  capital and/or labour. The idea is to maximise
  the amount of produce gained from a unit area of
  land.
• Extensive farming has low levels of input of
  labour or money and produces a low yield per unit
  area of land (e.g. Grain farming in the Prairies)
• Commercial farming is when a farmer produces food
  for sale.
• Subsistence farming is where most of the food
  produced is to be eaten by the farmers and little
  is left over for sale.
• Arable farms produce crops.
• Pastoral farms rear animals.

6
The physical and human factors affecting a
farmers choices
Farmers face many decision when deciding what to
grow or rear on their farm. The table opposite
contains the factors the farmer need to consider.
Physical factors Human factors
Soils the fertility will affect the type of farming and whether or not the farmer uses fertilisers. On a loam soil arable farming usually takes place. Market The farm needs to be close to its market or to routes of communication that allow the farmer to sell his goods. Also, is there demand for the product?
Relief flat land is perfect for arable farming while steep land tends to be used for grazing animals. Over 20 it is difficult to use the machinery needed for arable farming. Cost of land if the land is expensive then farmers must farm intensively to make a profit.
Climate the key physical factor, both rainfall and temperature are important. Tradition farmers may have farmed in a certain way and may be reluctant to make changes .
E.G. Wheat needs temps of at least 15C for 3 months and less than 750mm of rain to grow. Oats can grow at less than 15 C and require over 1000mm of rain. Government through grants, tax barriers and subsidies governments like the EU and British government can have a major influence on farming.
7
Intensive wet rice farming from SE Asia (LEDC)

• Intensive wet rice farming has traditionally
  involved many people working on small plots of
  land maximising the amount of rice and other
  fruit and vegetable produce they can get out of
  that plot of land. Most of the produce is eaten
  by the farmers and only a small amount goes to
  market for sale, so this is subsistence farming.
• The inputs to a traditional wet rice farm include
  seeds, manure from oxen and other animals, lots
  of water from the wet climate and labour. The
  climate is hot and wet, soils are fertile, all
  ideal for wet rice farming.
• The processes include terracing hillsides,
  building retaining walls to keep rainwater,
  ploughing with the Oxen, sowing the seeds and
  harvesting.
• Outputs include rice, rice, rice and more rice.
  Some fruit and vegetables are produced.
• Recent pressures and changes are occurring in
  this type of farming. Genetically modified rice
  has been introduced that produces more crop, and
  farmers are under pressure to use pesticides and
  insecticides from big businesses and government.
• Our case study was the Da Meize Village in South
  Eastern China.

8
European Union Farming Common Agricultural
Policy (CAP)

• CAP was a government policy funded by the EU to
  help farmers. CAP use to spend 70 of the
  European Unions total budget through the
  following ways
• Subsidies this was money given to farmers per
  head of livestock to help towards the cost of
  rearing them.
• Setaside This was money given to farmers when
  they did not grow food on an area of their farm
  (200 per hectare)
• Guaranteed prices Farmers were guaranteed that
  if their crops did not get a certain price at
  market the EU would make up the differences.
• Quotas a set amount of produce that a farmer
  can produce. If the more is produced the farmer
  is fined. This was introduced after the
  overproduction of milk.
• Grants this is money given to farmers who do
  activities that are environmentally friendly such
  as planting hedges.
• Can you think of the positives and negatives of
  this system? (for EU and non EU farmers)

9
Case study Home farm near Birmingham

• For many years British farmers had the price of
  their food subsidised by government. This
  support is being withdrawn leaving farmers with a
  shortfall in their income.
• Home farm in Birmingham has been affected. The
  owner, Mr Redfearn, has over 200 hectares and
  fertile sandy soils. The land is relatively
  flat, rain fall is 700mm and summer temperatures
  of 16C. He is therefore not limited by physical
  factors and has a mixed farm where livestock
  (cows, sheep and bulls) are raised and crops
  grown.
• Mr Redfearn is more affected by human factors,
  Banbury and Uttoxeter are his local markets. His
  crops are sold to merchants who visit the farm.

10
Case study Home farm near Birmingham

• Mr Redfearn has sold all of his cows because he
  was getting a very poor return on the milk they
  produced, only 8p a litre (for a product that
  sells for 45p a litre in the shops).
• The withdrawal of subsidies has meant that Mr
  Redfearns income from his cereal crops dropped
  by 40,000 between 1998 and 1999.
• These losses have meant that Mr Redfearn has had
  to do the following to diversify (find non
  farming activities to make money from his farm)
  and earn more income
• He stores up to 26 caravans on his farm for which
  he needed planning permission for 250 a year.
• He will convert the old unused cow sheds into a
  bed and breakfast for businessmen who go to the
  nearby NEC in Birmingham.
• Another possibility is for him to offer car
  parking at 3 per day.
• Ponies are also kept on the farm at 100 a pony.
• Other farmers have tried paintball, adventure
  sports, growing wood and turf to make money.

11
The physical, economic and human factors
affecting the location of secondary industries in
MEDCS

• There are several factors that influence the
  location of an industry including
• Energy often needed in manufacture of goods
• Labour the skill level and cost of workers is
  important.
• Capital businesses need money in order to get
  started.
• Land for secondary industry large areas fo flat
  cheap land are often needed.
• Raw materials if these are heavy (e.g. coal,
  limestone ad iron ore) then the factory needs to
  be close to raw materials.
• Transport roads, rivers and rail offer ways for
  businesses to move inputs and finished products.
• Government policy the British government used
  to give money to companies (e.g. Nissan) to
  locate in depressed areas (Sunderland!).
• Markets fragile goods need to be produced colse
  to their market, bulky goods must also be close
  because of the cost of transport.

What factors would affect a steel industries
location? Which factors are most important and
why?
12
Identifying Industrial Location Factors from maps
and photos
The A 19 offers a major north-south transport
route for the shipping in of components needed to
build the cars and the export of the finished
product to a European market.
This is the Nissan plant, attracted to the NE by
government grants and a strong tradition of
engineering in the region.
Additional land is available for expansion.
The site is close to the major cities of
Newcastle an Sunderland, a handy and skilled
workforce.
13
Identifying Industrial Location Factors from maps
and photos
The Nissan site was built on a greenfield site,
close to farming areas
The Nissan plant occupies a site of over 2miles2
The river Wear offers another transport option
This major transport axis is good for workers and
the movement of finished products and components.
The room for expansion is clear here
A test track fancy a drive?
14
Factors affecting the location of Hi-Tech
Industry in MEDCs

• Hi-Tech industries are those that use research
  and technology to create products of high value
  e.g. medicines and electronics.
• Hi-tech industries are said to be footloose, not
  tied to a location (like the steel industry).
• Bracknell in the Thames valley has a high number
  of such firms, but why are they there?
• Communications- Bracknell is located next to the
  M3 motorway and is within reach of London by
  train. The UKs 2 major airports are no more
  than 60miles away.
• The local labour force is skilled Royal
  Holloway and Brunel Universities are close by
  offering computing degrees.
• There are good leisure facilities in the region
  including dry ski slope, cinema etc.
• Panasonic, ICL and Dell all have plants in
  Bracknell

15
LEDC industry formal and informal industries

• LEDCs have different economies to MEDCs.
• Most people in MEDCs have formal jobs in which
  they have regular hours, a weekly set wage, pay
  taxes and reasonable working conditions.
• In LEDCs, while many people do have formal jobs
  many workers have Informal jobs. These jobs do
  not involve the payment of taxes, are often
  unskilled and labour intensive, require little
  money to set up and offer no protection to the
  worker if they are sick or fall upon hard times.
• Examples of informal jobs include shoe shining,
  beach vendors and small shanty town businesses,
  all rob governments of valuable tax money.

16
TNCs

• Trans National Companies are companies that
  operate globally. They tend to have their
  headquarters and management in their parent
  country and other factories around the globe.
  e.g. Nike is from the USA, but has branch
  factories in South East Asia.
• Fiat is an Italian car manufacturer with an
  annual turnover of 48 billion euros which
  operates in 64 different countries.
• Fiat opened a plant in Betem in Belo Horizonte in
  1976 and this plant now produces 650 000 cars a
  year and employs 12,000 people.

17
Factors attracting a TNC to an LEDC - Fiat

• Why did Fiat open a plant in Brazil?
• The Brazilian government started a motor industry
  in Brazil for long term employment, this created
  a market for cars.
• The state of Mina Gerais offered loans, grants
  and cheap land to Fiat, cutting their costs.
• Fiat could sell its cars to all of South America.
• There was a large pool of workers earning half of
  a British motor industry worker.
• Strikes are rare in Brazil.
• Fiat has since opened another factory in Brazil,
  with a 100million sweetener from the Brazilian
  government softening production costs.
• In your opinion, are TNCs good for a LEDC?