Global shift: the shifting flows of resources, money and investment

Global shift is a consequence of globalisation and the increase of foreign direct investment by transnational corporation (or multinationals) in newly industrialising countries (NICs – these include the Asian Tigers – South Korea, Taiwan, Singapore and Hong Kong, which started industrialising in the 1960s – and China and India) and recently industrialising countries (RICs – these include the Philippines, Indonesia and Cambodia; countries which began industrialising in the 1980s).

Global shift means an increase in proportion of global manufacturing carried out in NICs and RICs in the last 30 years. The majority of this is happening in Asia.

Global shift has led to deindustrialisation in key industrial areas in the UK (South Wales, for example) and has had a profound effect on the demographic, cultural and socio-economic character of these areas.

Some of the negative effects of global shift on areas experiencing deindustrialisation include:

• Structural unemployment among industrial workers
• Widening socio-economic inequality between skilled and unskilled workers – particularly when retraining is unsuccessful
• Out-migration of younger, skilled workers to find jobs elsewhere
• Negative multiplier effect in regions affected (a negative ‘snowballing’ of economic activity) with the closure of retail and leisure opportunities

Some of the positive effects of global shift on areas experiencing deindustrialisation include:

• Cheaper imports of manufactured goods which can keep the cost of living down
• Retraining opportunities for workers in higher wage industries
• More efficient industries which remain, which could lead to economic growth and job creation

These shifting flows of resources, money and investment can also be seen in London Docklands and the North East, particularly around the River Tyne.

In London Docklands, economic restructuring has seen a shift towards a commercial and financial function since the 1980s. The demographic and cultural characteristics of the area have changed completely (from dock workers and their families to city workers and ‘gated communities’). This has resulted in widening social inequalities between ‘old’ residents and ‘new’ residents.

In the North East, the collapse of the shipbuilding industry in the 1980s resulted in a sharp rise in structural unemployment and social deprivation.

However, inward investment from the EU, the British government and multinationals, such as Nissan which opened a car factory in Sunderland in 1984, has reduced social inequality in the region.