SAJC Cluster 1.2 Lecture 10 Notes (The Geography of the Global Economy)

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture10_2025/pg 1 Lecture 10 The Geography of the Global Economy KEY QUESTION FOR 1.2: How does the global economy impact places? With the completion of this lecture, attached readings and tutorial, you should be able to discuss: - the sectors of the economy: agriculture, manufacturing, services - the interconnectedness within the global economy illustrated by global patterns of flows of trade, capital and labour - the shifts in the global patterns of production in manufacturing, services and agriculture since the 1950s and their impact on a country’s economy Lecture Outline 10.1 Introduction: Geography and the Economy 10.2 Sectors of the Economy 10.2.1 Agriculture 10.2.2 Manufacturing 10.2.3 Services (a) Tertiary (b) Quaternary 10.3 Changes in the Structure of the Economy as Development Occurs 10.3.1 The Decline of the Agriculture with Development 10.3.2 The Decline of the Manufacturing with Development 10.3.3 The Growth of Services with Development 10.4 The Interconnectedness Within the Global Economy Illustrated by Global Patterns of Flows of Trade, Capital and Labour 10.4.1 Global Patters of Flows of Trade 10.5.1.1 Global Patterns of Flows of Merchandise Trade 10.5.1.2 Global Patterns of Flows of Trade in Services 10.4.2 Global Patterns of Flows of Capital 10.4.3 Global Patterns of Flows of Labour 10.5 Concluding Remarks

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture10_2025/pg 2 In the 18 th century, “economy” would have referred to the management of a house hold. At that time, production and use of goods/services were of very small scale, limited to the family or household. But the Industrial Revolution brought about large -scale production with factory -based manufacturing. With production on a much grander scale and increasingly levels of work specialisation, Adam Smith observed that the “economy” is something larger than the management of a household. Since then, the word “economy” is used to represent an integrated whole with many individual parts that worked together to create wealth for all. His work was so important that it is enshrined in the £20 note in the UK (see above image)! 10.1 Geography and the Economy [Not examinable, but useful for background] • The economy is a set of human activities and institutions linked together in the production, distribution, exchange and consumption of goods and services. o ‘Economies’ or ‘economy’ are preceded by various adjectives such as: global, local, market, command (or redistributive), capitalist, informal, subsistence, mixed, Internet, information, new or space economy. There are many different kinds of ‘economy’ depending on the perspective of analysis. • Economic geographers are interested in the space economy; the way in which the behavior, values, and actions of actors (such as individuals, firms, institutions) that together make up the economy are reflected in the organisation of geographical space. • The challenge for the economic geographer is how to analyse and explain the geographical patterns of economic activity at different scales, how they change over time and the relationships between them. • The global economy is an integrated whole in which individuals, firms, countries and institutions participate as ‘economic actors’. As such, our study of it will involve looking at the economy at other scales (e.g. Lect 12 national scale and Lect 14 supranational scale) as well as the work of certain ‘actors’ (see Lect 11 TNCs, and Lect 13 Labour). • In our syllabus, we are concerned with how the global economy has changed since the 1950s. o The 1950s is a watershed moment as several changes began to emerge as the world emerged from the shadows of World War 2. Some of the changes are listed below.

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture10_2025/pg 3 Before 1950s After 1950s Concentration of manufacturing in colonial countries Spread of manufacturing to ex-colonies Concentration of agriculture in colonies Reduction in contribution of agriculture to economies of ex-colonies Lower levels of international flows of trade, capital and services (global economy was less interconnected and less interdependent) Higher levels of international flows of trade, capital and services (global economy is more interconnected and interdependent) Higher levels of income in colonial countries Higher levels of income in colonial countries Lower levels of income in colonies Lower levels of income in colonies o As we can surmise from the changes above, the world has become more globalized. In Topic 1.2, we will begin by examining what the global economy is like today. Even though a comparison to the days before 1950s is not necessary, keeping what the global economy was like in the 1950s helps us to better understand some of the features of the global economy that Topic 1.2 focuses on. Thereafter, Topic 1.2 will examine different actors in turn, to understand how they have contributed to the changes in the global economy since the 1950s. Fig 1. Global Economy as a system of interconnected actors across different scales

St. Andrew’s Junior College H2 Cluster 1: Development, Economy and Environment H2_DEE_lecture10_2025/pg 4 10.2 Sectors of the Economy • So far we have considered the economy in more or less abstract terms, although we have made reference to various ‘actors’ such as individual, households, companies, government departments, national governments, and so on. • In order to help economic geographers to measure and interpret the processes and interactions that help to shape spatial patterns of economic activity, it is necessary to simplify the complexities of real economies into manageable categories and groupings. • One of the most common approaches to organising the structure of economies is to divide them into three broad economic sectors. 10.2.1 Agriculture Agriculture is part of the primary sector, which is the part of the economy concerned with the collection and use of natural resources. 10.3.2 Manufacturing This is the part of the economy that processes or transforms resources into goods that people want. • Whether the transformation takes place near the source of the primary commodity , or after transfer to a location some distance away, it requires manufacturing. • This sector is still expanding in some less developed economies and the emerging economies but contracting ( in terms of employment and GDP shar e) in most developed countries. Manufacturing is mostly located in developing countries, especially in Southeast and South Asia. • The outputs from the manufacturing sector may be immediately suitable for final use by consumers, or they may be components for incorporation in other final products. 10.3.3 Services Unlike the primary and secondary sectors, services do not involve tangible materials. The share of the service sector in the global economy has expanded steadily for at least a hundred years and they now account for four out of five jobs in countries such as the USA, Canada, Britain, Hong Kong or Australia. In more developed countries, a higher percentage of workers is employed in providing services as compared to less developed countries. The service sector is a very broad sector and is commonly sub-categorised further into the tertiary and quaternary sectors. Note that the terms tertiary and quaternary are not required by the syllabus. An appreciation that some services have higher value-add compared to other services is sufficient. (a) Tertiary • The outputs of the secondary sector require distribution to the places and markets where they can be assembled , traded, consumed,