Globalization, Multiplier Effect & A Changing World [AP Human Geography Unit 7 Topic 7]

Summary

In this engaging lesson by Mr. Sinn, the effects of globalization on the world economy and labor division are discussed. Key topics include the movement of production from core to semi-peripheral and peripheral countries to exploit cheaper labor and fewer regulations, the concepts of offshoring and outsourcing, and achieving economies of scale. The video also covers the international division of labor, economic restructuring impacts as seen in Detroit, and the development of special economic zones. Furthermore, it delves into the multiplier effect, changes from Fordism to post-Fordism, and the economic benefits of agglomeration and growth poles.

Highlights

• Core countries are losing secondary and some tertiary sector jobs to semi-peripheral and peripheral countries. 📉🌎
• Offshoring involves relocating services to foreign lands, while outsourcing hires external providers for services. 🌐🔄
• Economies of scale allow large companies to produce goods more cheaply by leveraging better technology and resources. 📊🏭
• The international division of labor supports countries focusing on their strengths, creating both efficiencies and economic disruptions. ⚖️🌏
• Cities like Detroit showcase the negative consequences of economic restructuring and de-industrialization. 📉🏙️
• Special economic zones and free trade zones are crafted to invite multinational corporate investment. 🏢🌍
• The multiplier effect shows how initial economic investments can ripple through local communities. 💰💥
• Transitioning from Fordism to post-Fordism allows for more adaptable and customized production methods. 🔄🛠️
• Agglomeration and growth poles exemplify strategic clustering of industries to maximize economic benefits. 🏗️💼

Key Takeaways

• Globalization leads to major shifts in the world economy as companies move productions to take advantage of cheaper labor and fewer regulations. 🌍💼
• Offshoring and outsourcing are strategies used by companies to cut costs and increase efficiency. 💸🔥
• The international division of labor helps countries specialize, but also brings challenges such as de-industrialization in cities like Detroit. ⛓️🏭
• Special economic zones and export processing zones are designed to attract foreign investment and stimulate local economies. 📈🌐
• The multiplier effect demonstrates how initial investments can lead to widespread economic activity. 💥💡
• From Fordism to post-Fordism, production has become more flexible, adapting to market changes with methods like just-in-time delivery. 🚚🕒
• Agglomeration effects and growth poles highlight how businesses cluster to benefit from shared resources and infrastructure. 🏙️🤝

Overview

Globalization has drastically restructured the world's economic landscape, as companies in core countries move production to semi-peripheral and peripheral nations for cheaper labor and fewer regulations. This shift, while economically beneficial for businesses, contributes to job losses in more developed regions, particularly in the secondary and tertiary sectors.

The concepts of offshoring and outsourcing are explored as key strategies for businesses to reduce costs and improve operational efficiency. Economies of scale further allow large corporations to produce more effectively at a lower cost, becoming integral in both the agricultural and entertainment industries, with examples like Disney illustrating these principles.

In adapting to new global market dynamics, nations specialize economically through the international division of labor, fostering both opportunities and challenges. While this allows countries to capitalize on their production strengths, it can also lead to urban decline, as illustrated by Detroit. Economic strategies such as special economic zones and export processing zones are implemented to bolster economic growth, attracting investments and stimulating local development.

Chapters

• 00:00 - 00:30: Introduction to Globalization and Economic Restructuring The chapter discusses changes in the global economy due to globalization, focusing on economic restructuring. It highlights the movement of businesses from core to semi-peripheral and peripheral countries to capitalize on the global market, resulting in job losses in core countries, notably in the secondary and tertiary sectors.
• 00:30 - 01:00: Offshoring and Outsourcing The chapter discusses offshoring and outsourcing, focusing on companies seeking cheaper labor markets and areas with less regulation. Offshoring involves relocating business services or processes to foreign countries to benefit from lower labor costs, tax incentives, and favorable economic conditions. Outsourcing is another production change concept addressed in the chapter.
• 01:00 - 02:00: Economies of Scale This chapter discusses the concept of economies of scale, comparing it to offshore outsourcing. Economies of scale are achieved when a company increases its production to reduce costs, similar to outsourcing, where a business contracts out services to external providers for cost efficiency. The chapter recalls a previous discussion from an agriculture unit about this concept.
• 02:00 - 02:30: International Division of Labor and Comparative Advantage The chapter discusses the spatial organization of agriculture and how companies achieve economies of scale, leading to a reduction in cost per unit of production. Larger companies benefit from better machines, systems, and access to capital, enabling them to scale faster and produce more products at lower costs. Advanced machinery in large agribusinesses lowers the average cost of food production, posing challenges for family-run farms.
• 02:30 - 03:30: Case Study: Detroit's De-industrialization The chapter 'Case Study: Detroit's De-industrialization' discusses the economic concept of economies of scale through the examples of corporate farms and the Walt Disney Company. Farms can achieve economies of scale by being able to compete in the market with larger corporate entities. Similarly, Disney exemplifies economies of scale by owning and integrating a variety of companies to share resources and talents, enabling the production of high-value content at lower costs. Disney's ability to produce multiple films back-to-back, such as 'Avengers: Infinity War' and 'Avengers: Endgame,' demonstrates their cost-saving strategies by reusing resources.
• 03:30 - 04:30: Economic Zones and Globalization The chapter discusses how Disney employs strategies to reduce production costs and increase profits, highlighting the use of sets, costumes, and props. It delves into the concept of the international division of labor, which illustrates how countries use their comparative advantage to specialize in various economic activities and resources. Furthermore, the chapter reviews the global trade and production network, acknowledging both its positive and negative aspects.
• 04:30 - 05:30: The Multiplier Effect The chapter titled 'The Multiplier Effect' discusses the international division of labor and its implications. It explains how countries focus on their comparative advantages to produce goods more efficiently and trade for others. However, it also highlights the negative consequences, such as economic restructuring, exemplified by the decline of Detroit, once a thriving industrial city.
• 05:30 - 06:30: Transition from Fordism to Post-Fordism The chapter delves into the transition from Fordism to Post-Fordism, focusing on the economic impact of this shift. It particularly examines Detroit's experience of de-industrialization as auto companies moved production to less economically developed countries in order to lower costs. This economic restructuring led to the loss of a key economic driver for the city, causing job loss and a mass exodus of people, which in turn increased the number of vacant buildings in the area.
• 06:30 - 07:30: Agglomeration and Growth Poles The chapter discusses the trend of urban blight, where urban areas experience decay and devaluation. As countries increasingly engage in the global economy, they face economic restructuring, with the secondary sector often relocating to the developing world. This is part of a shift from manufacturing to a service-based economy, impacting job distribution.
• 07:30 - 08:30: Conclusion and Future Outlook The chapter discusses the expansion of the tertiary sector in semi-periphery and periphery countries, which are working to attract economic investments from multinational corporations and core countries. This is being done by establishing special economic zones, free trade zones, and export processing zones. These strategies are designed to enhance globalization and lead to economic restructuring across both core and non-core countries. Special economic zones, in particular, offer various incentives like tax breaks to attract businesses.
• 08:30 - 09:30: Call to Action and Additional Resources The chapter addresses 'Call to Action and Additional Resources,' focusing on the role of special economic zones in attracting foreign investment and promoting economic growth. These zones offer preferential treatment to multinational corporations, exempting them from certain national laws and regulations to encourage their presence. It highlights two forms of special economic zones: free trade zones and export processing zones, each with a distinct emphasis.

Globalization, Multiplier Effect & A Changing World [AP Human Geography Unit 7 Topic 7] Transcription

• 00:00 - 00:30 geographers I hope you're ready because today on the Mr sin Channel we're going to be reviewing the different changes that have occurred due to globalization and the world economy countries around the world have started to see economic restructuring occur as businesses seek to take advantage of the new Global Market today we can see many businesses in core countries move production out of core countries and into semi-perfree and periphery countries core countries continue to lose jobs that are part of the secondary sector and have started to lose jobs that are in the tertiary
• 00:30 - 01:00 sector as well this is mainly because companies are looking to utilize cheaper labor markets and Geographic areas with less regulation this process of relocating a business's services or processes to a foreign country is known as offshore companies who offshore their production are looking to take advantage of lower labor costs tax incentives and other favorable economic conditions that exist in a foreign country now another concept you might hear when looking at changes in production is out source
• 01:00 - 01:30 which is similar to Offshore Outsourcing is when a business contracts out a service or job to an external provider in order to reduce their costs and increase their efficiency essentially it is when a company hires another company to do a job or provide a service for them instead of doing it themselves in addition to Outsourcing and offshoring some companies will also adjust their production based on their size and the economies of scale that they can achieve we last talked about this concept in our agriculture unit where we looked at the
• 01:30 - 02:00 spatial organization of Agriculture companies that are able to achieve economies of scale see a decrease in their cost per unit of production as companies get larger they can purchase better machines systems and have more access to Capital which allows them to scale up faster producing more of a product at a cheaper Rate large aggro businesses have achieved economies of scale due to Advanced Machinery that can quickly produce lots of food which lowers the average cost of each unit produced making it difficult for Family
• 02:00 - 02:30 Farms to compete in the market with the larger corporate Farm you can also look at the Walt Disney Company as another company who has achieved economies of scale Disney owns a variety of different companies that all share their ideas talents and resources with one another in order to produce high value content at a lower individual cost it also has the resources to produce multiple films back to back such as the case with Avengers Infinity war and Avengers end game which helps save costs by reusing
• 02:30 - 03:00 sets costumes and props all of which helps Disney reduce their individual costs and increase their overall profit now since we're on the topic of production and minimizing costs we also have to talk about the international division of labor which is a concept that seeks to illustrate how different countries utilize their comparative advantage to specialize in different economic activities resources and highlight the country's capability today we can see that this Global Network of trade and production has both positives and negative aspects to it when
• 03:00 - 03:30 countries use the international division of labor and focus on their comparative advantage it allows them to become more efficient at producing specific goods and to trade with other countries to obtain the other goods and services that they are not efficient at producing all of which sounds great but we can also see that there can be some real consequences to this new Global Market for example we can see the negative impact of economic restructuring when looking at the city of Detroit Detroit used to be a thriving industrial city that was known for being one of the
• 03:30 - 04:00 world's top auto manufacturing cities in the world however as companies sought to reduce the cost of production they started to move out of the United States and into less economically developed countries causing Detroit to experience de-industrialization as economic restructuring devastated the city's economy the loss of the Auto industry resulted in the loss of the city's main economic driver as Jobs left the city so did many of the people all of which increased the amount of vacant buildings on the market over time we started to
• 04:00 - 04:30 see increased rates of urban blight as homes and buildings were stripped of all value vandalized and left for Decay now as countries continue to participate more and more in the global economy they will continue to see economic restructuring occur four countries will continue to see more of their secondary sector relocate out of the country and into the developing world as their economy shifts away from manufacturing and continues to transition into more of a service-based economy but the majority of the jobs being located in the
• 04:30 - 05:00 tertiary sector today we can see semi-perfury and periphery countries seeking to increase economic investment from multinational corporations and core countries by creating special economic zones free trade zones and Export processing zones all of which lead to more globalization and economic restructuring both for core countries and semi-perfree and periphery countries special economic zones are areas that seek to provide different incentives and benefits to businesses who operate in the air this could include tax breaks
• 05:00 - 05:30 less regulations or access to different services and infrastructure the goal here is to attract foreign investment from multinational corporations and core countries to help promote economic development in the area companies that locate in special economic zones are given preferential treatment and do not have to follow the same laws and regulations as the rest of the country now both free trade zones and Export processing zones are a form of a special economic zone however they each focus on a specific goal free trade zones are
• 05:30 - 06:00 areas within a country that also seek to promote global trade these areas allow for companies to Import and Export different products without having to pay tariffs or custom duties these zones are often centered around a port or infrastructure that allows for the movement of goods in and out of an area lastly export processing zones are areas that have the goal of prioritizing the exportation of different Goods out of the area these have the primary focus on manufacturing Goods in the area and then exporting those goods to a different country example of an export processing
• 06:00 - 06:30 Zone would be maquiladora which are manufacturing plants that are located in Mexico along the United States Mexico border this export processing Zone was created by the Mexican Government with the hopes of attracting foreign investment from the United States to produce products in Mexico this increased local jobs in the area and also the amount of exports from Mexico to the United States companies that produce products in a maquiladora are able to utilize the cheaper labor force in Mexico which allows companies to reduce their overall cost of production
• 06:30 - 07:00 all of these policies reshape the global international market of Labor as they allow for countries to take advantage of their comparative advantage specialize more and trade more easily with countries around the world before we delve deeper into the production of different products I want to also talk about the multiplier effect the multiplier effect looks at how an original investment into an economy can create a ripple effect and end up creating a larger impact than the original amount spent essentially when a person organized Nation or government
• 07:00 - 07:30 spends money it creates a chain reaction of additional spending think of it this way let's say apple decided to Offshore some of their call centers and they open a new call center up into India the center will have to be built so Apple will have to pay for a construction company to build the facility and pay for all the different resources needed for the building Apple will then have to staff the building where they will pay people every day to answer calls and provide support for the company in this example the original investment made by Apple is the building of the call center
• 07:30 - 08:00 and the workers they are paying to run the center but where the multiplier effect occurs is after the original investment all of these workers that have been paid by Apple now have more money to either save or more money to purchase other products and items if the workers from the call center go and spend the money they earn from Apple they end up supporting other businesses which increases the amount of economic activity and employment in the area as those other businesses get more Revenue it allows them to hire more workers produce more products and support the economy the people who work at these
• 08:00 - 08:30 other businesses then have more access to money and will most likely go out and spend which ends up supporting other businesses and people so we can see how this original investment from Apple created a chain reaction of additional spending which ends up increasing the economic activity in the area now today it is not just globalization that is changing how and where companies produce their product we can also see how the Contemporary economic landscape is changing as countries continue to shift from Fortis methods of production to
• 08:30 - 09:00 post-fortis methods of production emphasizes mass production of standard Goods in a large Factory that uses assembly lines for production this production method has a set division of labor with each worker performing specific tasks decisions and production under fordism are centralized or the greater Focus being put on standardization post-fortism on the other hand emphasizes more flexible production methods which are able to adjust to the Daily changes of the market this production method also has workers which trained in multiple tasks
• 09:00 - 09:30 and roles to allow for a more adaptable Workforce there's often less of a focus on standard goods and more of a focus on custom Goods that meet the specific customer needs and wants post-fortism also tends to use local decisions when it comes to production with production often being decentralized meaning that production here no longer happens all in one location instead goods are often produced in a variety of stages and locations one way this is done is by utilizing a concept known as just in time delivery this is when materials
• 09:30 - 10:00 parts or products are delivered to a manufacturing facility precisely when they are needed this helps reduce costs and waste by only having products arrive at the production facility when they are needed and only sending the exact parts that are actually going to be used for production just in time delivery helps reduce the cost of caring inventory and increases the productivity but it also has some big risks associated with any delays in the supply chains or disruptions can delay the entire production process also Justin time delivery requires a high degree of
• 10:00 - 10:30 coordination between the different suppliers and manufacturers if there's any miscommunication between the two it could stall production and result in a loss of Revenue as time goes on we continue to see less companies and countries utilize fordism when it comes to production and more companies start to take advantage of post-fortis methods all this is due to the changing Market demands technological innovations and increased globalization now since we're talking about how production is now occurring in multiple stages and locations we also need to look at the
• 10:30 - 11:00 economic benefits of agglomeration and growth pull agglomeration is the clustering of different economic activities and industries in a specific geographic area this happens because businesses want to reduce their overall cost by taking advantage of a larger labor form benefiting from existing infrastructure in an area or by utilizing different services and knowledge bases in an area for example we can see that many distribution centers will locate near major interstates airports Railway yards and
• 11:00 - 11:30 pork this allows them to use the pre-existing infrastructure in the area instead of building it for themselves which reduces the overall cost of their production traditionally agglomeration occurs naturally since it's in the company's best interest to locate in the area in order to help decrease their overall costs and increase their profit growth polls on the other hand are areas or cities that are centers of economic growth they're often created by either targeted public or private investors we can see that targeted investment can be done in a variety of different ways such
• 11:30 - 12:00 as by creating specific infrastructure that meets the needs of the businesses in the area for example creating more Transportation routes or energy for companies in the city we can also see governments create specific policies and investments in an area which create a pro-business environment for economic growth for example Silicon Valley in California has become a growth Poll for technology and Innovation hear different technology Industries have flourished which has created a Pro-Tech environment which in turn has led to more Tech
• 12:00 - 12:30 focused companies to Cluster in the area in order to get the benefits from the talent and infrastructure that already exists in the area another example of a growth poll would be Dubai which has experienced rapid growth and development thanks to investment from the government today the city has become an international hub for business and tourism with many multinational corporations located in the area as time goes on we'll continue to see more international trade and cooperation which will only further increase the interconnectedness of states and
• 12:30 - 13:00 economies around the world Global Supply chains and an ever-changing international division of labor will continue to lead to de-industrialization in core countries as countries continue to move production to lower cost countries all of which leads to people to wonder just how sustainable is this new globalized world and will we be able to continue to sustain our current production practices but that is a question that we'll answer in our next video now comes the time to practice what we've learned as always if you found value in the video consider subscribing and if you need more help
• 13:00 - 13:30 with your AP human geography class don't forget to check out my ultimate review packet the packet has exclusive videos and resources that can help you get an A in your class and a five on that National exam as always I'm Mr sin thank you so much for watching and I'll see you next time online