Classification of Industry All jobs can be placed into one of the broad economic sectors: primary, secondary, tertiary, quarternary and quinary.
Often the quarternary industry and quinary industry are considered to be part of the tertiary sector. Formal and informal sector Formal employment: refers to employment where the employee has a formal contract, fixed work conditions and responsibilities, a fixed salary, set hours of work and legal protection. Formal employment is covered by a social security for health and life risks and is capital incentive. Informal employment: refers to jobs without a contract, with unregulated hours and pay-exploitation, no social security system, no qualifications. Informal employment is labour incentive and includes some illegal businesses. Employment structure in the industries As a country develops from an LEDC to an MEDC, employment in the primary sector decreases, employment in the tertiary sector increases and employment in the secondary sector increases (before falling back to almost the initial value). Inputs, processes, outputs Industries have inputs, processes and outputs.
Factors that affect industrial location Raw materials – industries with bulky raw materials – such as iron ore or coal – are usually located near the source of the input, as this reduces transport costs. eg. Coal industries are usually near coal mines (or alternatively close to ports that import coal). Energy and water supply – Manufacturing industries that rely on large amouts of power or high quantities of water are often located in areas that provide cheap access. Labour supply – factories are likely to locate where there are enough people seeking employment. Depending on the industry this may be a pool of unskilled labour, a large specialised workforce or a small highly skilled workforce. Market – Companies that produce bulky materials prefer a site near their market, as this reduces the cost of transport. Transport – Locations near major transport routes are often favoured by manufacturing and processing industries as these allow the import of raw materials and the export of finished goods. eg. Sugar beet refining. The raw materials (sugar beet) will influence the location of the sugar beet refineries to a great extent, as most sugar beet refineries are located near near sugar beet farms. This is because large amounts of sugar beet are required for production and transport costs can be saved by locating near sugar beet farms. Also, sugar beets are more bulky than refined sugar, as weight is lost in processing. Sugar beet refineries are not usually near a market, as the refined sugar is sold worldwide. Manufacturing industries Possible reasons for the decrease in employment in (manufacturing) industries
Effects of decrease in manufacturing industries
Footloose and High tech industries Footloose industries: do not depend on a particular location, as they are not reliant on raw materials, energy/water supply, transport etc. Most footloose industries:
High technology industries: refers to industries that produce the most advanced and most recent technology available Most high technology industries:
High technology industries are usually regarded as footloose industries, as they can transport their components easily and thus do not rely on locations near raw materials or markets. Multinational Corporations (MNC’s) Multinational corporations or transnational corporations (TNC’s) are companies that produce or sell products or are located in more than one country. Multinational corporations usually have factories in poorer countries because these provide a cheaper source of labour and lower production costs. The headquaters of MNC’s are commonly in richer countries, as there are more people in with administrative skills due to higher levels of education. Advantages of MNC’s:
Disadvantages of MNC’s:
Linkage and Agglomeration Linkage is when one industry depends on the output of another. For example, the milk industry and leather production rely on cattle herding. Agglomeration is a concentrartion of liked industries in one area. Development indicatorsSeveral indicators can be used to assess the level of development of a country or region, including GNP per capita, literacy rate, life expectancy, and composite indices like the Human Development Index. GNP per capita Gross national product (GNP) per capita is the estimated total worth of economic activities of a country or region per person per year. GNP per capita includes net income from abroad, such as dividends, interest and profits from off-shore production. The higher the GNP per capita, the more developed a country or region is said to be. Literacy rate The literacy rate is defined as the percentage of the population of a given age group that can read and write. Adult literacy rate (the percentage of the population above 15 years of age) is often used as a development indicator, as it shows the quality of schooling in a country. The most developed countries report literacy rates close to 100%, e.g. Finland, Norway, the Netherlands, whereas less developed countries, especially in sub-Saharan Africa can have literacy rates as low as 35%. For example, the literacy rate is Guinea-Bissau is around 30%, while South Sudan (34.5%) and Mali (35.5%) fair only marginally better. Life expectancy The life expectancy is a measure of the average number of years a person is expected to live. Life expectancy is an important metric for assessing overall population health. It is based on estimates of mortality throughout an entire lifetime. Countries that are more economically developed usually have higher life expectancy, because:
Human Development Index (HDI) The Human Development Index is a composite index. It takes into account multiple factors to assess the level of development of an area. The HDI is based on 4 indicators: life expectancy at birth, mean years of schooling, expected years of schooling and GNI per capita. This means that the HDI assesses not only the economic development of a country, but also takes into account health and education. HDI is measured on a scale from 0 (not developed at all) to 1 (most developed). In 2019, the countries with the highest HDI values were Norway, Ireland and Switzerland with HDI values of 0.95. The countries with the lowest HDI value (0.39) were Niger, the Central African Republic at Chad. Globalisation Globalisation is a process by which the world is becoming more and more interconnected. As the world became more globalised, cross-border transactions of goods, service, money flows increased, along with the rates of international migration, and the diffusion of culture. Innovation in transport, including container shipping and freight flights, along with new communication technologies like smart phones and the internet have massively accelerated globalisation. Transnational corporations (TNCs) also accelerate globalisation in the following ways:
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