Why has manufacturing shifted from older industrial regions to newly industrialising economies, and what does it leave behind?
Explain the global shift of manufacturing and the resulting deindustrialisation and industrialisation, and assess their consequences
A focused answer to the H2 Geography outcome on global shift. The relocation of manufacturing to newly industrialising economies, the deindustrialisation of older cores, and the economic and social consequences for both.
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What this dot point is asking
SEAB wants you to explain the global shift of manufacturing from older industrial regions to newly industrialising economies, and to assess the resulting deindustrialisation in the old cores and industrialisation in the new ones. The central insight is that one process, the relocation of production in search of lower costs, produces opposite effects in different places: growth and upheaval in the rising economies, decline and adjustment in the old ones.
The answer
What the global shift is
The global shift is the relocation of manufacturing (and increasingly services) away from the older industrial cores of the developed world toward newly industrialising economies (NIEs), especially in Asia. It has remade the world's economic geography over recent decades.
Causes of the global shift
- Lower production costs: cheaper labour, land and inputs in NIEs.
- Enabling technology: cheap transport (containerisation) and instant communication make dispersed production viable.
- Corporate strategy: TNCs relocate labour-intensive production to cut costs and reach markets.
- Host policies: export-processing zones, infrastructure, incentives and open trade policies that attract investment.
- Pull factors: growing local markets and an increasingly skilled but still cheaper workforce.
Consequences for newly industrialising economies (industrialisation)
- Economic: rapid growth, rising incomes, employment, foreign exchange, technology transfer and the multiplier effect; some economies move up the value chain over time.
- Social: rising living standards but also rapid urbanisation, rural-urban migration, crowded cities and inequality.
- Environmental: pollution and resource pressure from rapid industrialisation.
Consequences for older industrial regions (deindustrialisation)
- Economic: job losses, falling incomes, decline of local supplier firms (a negative multiplier), and a shrinking tax base.
- Social: structural unemployment (skills mismatched to new jobs), out-migration, dereliction and deprivation.
- Regeneration: some regions have reinvented themselves through services, high-tech industry and culture-led renewal, showing decline is not inevitable.
Examples in context
Example 1. Singapore's industrial upgrading. Singapore first attracted labour-intensive manufacturing in the 1960s and 1970s, then deliberately moved up the value chain into electronics, petrochemicals, pharmaceuticals and high-value services as wages rose. It exemplifies a newly industrialising economy that captured the global shift and then upgraded, avoiding being stuck in low-cost assembly, the key to lasting success.
Example 2. Deindustrialisation in older Western industrial cities. Cities in the old manufacturing belts of the United States and Europe, such as Detroit or parts of northern England, lost heavy industry as production shifted abroad, suffering job losses, dereliction and structural unemployment. Some, such as Manchester, regenerated through services, culture and new industries, illustrating both the costs of deindustrialisation and the possibility of transition.
Try this
Q1. Explain two causes of the global shift in manufacturing. [2 marks]
- Cue. Lower production costs (cheaper labour and inputs) in newly industrialising economies, and enabling technology (containerised transport and instant communication) that makes globally dispersed production viable.
Q2. Explain what is meant by structural unemployment in a deindustrialised region. [2 marks]
- Cue. Unemployment arising because the skills of former industrial workers no longer match the jobs available in the new economy, so workers remain jobless even when other vacancies exist.
Q3. Explain why moving up the value chain is important for a newly industrialising economy. [3 marks]
- Cue. Low-cost assembly can be undercut by cheaper locations, so upgrading to higher-value activities (design, advanced manufacturing, services) raises incomes, reduces dependence on footloose investment and secures longer-term growth.
Exam-style practice questions
Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Original12 marksExplain the causes of the global shift in manufacturing and assess its consequences for newly industrialising economies.Show worked answer →
Argument: manufacturing has shifted toward lower-cost economies because firms seek cheaper production and new markets, and for the newly industrialising economies the consequences are substantial economic gains alongside social and environmental costs.
Causes to explain: transnational corporations relocate labour-intensive production to countries with lower wages, weaker regulation and incentives; cheap transport and communication make dispersed production viable; host governments attract investment through export-processing zones, infrastructure and open policies; and growing local markets and skilled-but-cheaper labour pull industry in.
Consequences for newly industrialising economies: economic, rapid growth, rising incomes and foreign exchange, employment, technology transfer and the multiplier effect, with some moving up the value chain over time. Social, urbanisation, rising living standards but also rural-urban migration, crowded cities and inequality. Environmental, pollution and resource pressure from rapid industrialisation.
Evaluation: a strong answer judges that the gains have been transformative (the Asian economies) but uneven and accompanied by social and environmental costs, and that long-term success depends on upgrading from low-cost assembly to higher-value activity. Markers reward the cost-and-policy causes and a balanced, scaled assessment of consequences.
Original10 marksAssess the consequences of deindustrialisation for older industrial regions in higher-income countries.Show worked answer →
Argument: deindustrialisation has imposed serious economic and social costs on older industrial regions, though some have regenerated by shifting to services and new industries.
Process: as manufacturing relocated to lower-cost economies, older industrial regions lost factories and jobs, a process of deindustrialisation.
Consequences to set out: economic, job losses, falling incomes, decline of local supplier firms and the negative multiplier, and a shrinking tax base. Social, structural unemployment (skills mismatched to new jobs), out-migration, dereliction and deprivation, and social problems in former industrial communities. Some regions, however, have regenerated through services, high-tech industry, culture-led renewal and reskilling.
Evaluation: a strong answer judges that the costs were severe and persistent where reskilling and reinvestment lagged, but that successful transition to services and new sectors shows decline is not inevitable, citing former industrial cities that reinvented themselves. Markers reward the negative multiplier, structural unemployment and dereliction, and a note on regeneration.
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