Textbook: Changing Global Economy and Sustainability | AP Human Geography - Grade 9 PDF Download

 Page 1


495 CHAPTER 20: CHANGING GLOBAL ECONOMY AND SUSTAINABILITY 
Changing Global Economy 
and Sustainability 
Topics 7.7–7.8
Topic 7.7 Changes as a Result of the World Economy
Learning Objective: Explain the causes and geographic consequences of recent 
economic changes such as the increase in international trade, deindustrializa-
tion and growing interdependence in the world economy. (PSO-7.A)
Topic 7.8 Sustainable Development
Learning Objective: Explain how sustainable principles relate to and impact 
industrialization and spatial development. (IMP-7.A)
Anyone who believes in indefinite growth of anything physical on 
a physically finite planet is either a madman or an economist.
—Kenneth Boulding, economist, 1953
Source: Wikimedia Commons
Women complete the labor-intensive manufacturing of clothing in a maquiladora in Mexico. (See 
Topic 7.7 for maquiladoras and other changes in the global economy.)
CHAPTER 20
Page 2


495 CHAPTER 20: CHANGING GLOBAL ECONOMY AND SUSTAINABILITY 
Changing Global Economy 
and Sustainability 
Topics 7.7–7.8
Topic 7.7 Changes as a Result of the World Economy
Learning Objective: Explain the causes and geographic consequences of recent 
economic changes such as the increase in international trade, deindustrializa-
tion and growing interdependence in the world economy. (PSO-7.A)
Topic 7.8 Sustainable Development
Learning Objective: Explain how sustainable principles relate to and impact 
industrialization and spatial development. (IMP-7.A)
Anyone who believes in indefinite growth of anything physical on 
a physically finite planet is either a madman or an economist.
—Kenneth Boulding, economist, 1953
Source: Wikimedia Commons
Women complete the labor-intensive manufacturing of clothing in a maquiladora in Mexico. (See 
Topic 7.7 for maquiladoras and other changes in the global economy.)
CHAPTER 20
496 HUMAN GEOGRAPHY: AP
®
 EDITION
7.7
Changes as a Result of the  
World Economy
Essential Question: What are the causes and geographic consequences 
of recent economic changes such as the increase in international trade, 
deindustrialization, and growing interdependence in the world economy?
Globalization is firmly entrenched as part of daily life, largely due to vast 
improvements in transportation and communication technologies. People no 
longer depend solely upon products made close to home or decisions made 
by local, or even national, politicians. The world is so interconnected that a 
any decision can have significant implications for people across the globe. In 
addition to the growing interdependency of countries and their economies, the 
types of jobs, in core, periphery, and semiperiphery countries has changed. The 
economic landscape has transformed from local to global scales.
The Changing Global Economy
To take advantage of improved transportation and communication, and in 
search of lower labor costs, companies have changed spatial distribution of 
manufacturing and business services. At the global scale, many companies have 
moved manufacturing plants from highly developed core countries, such as the 
United States, to less-developed periphery and semiperiphery countries, such 
as the Malaysia and Brazil. At the regional scale, factories in the United States 
have moved from the Northeast and Midwest to the Southeast and Southwest. 
Outsourcing and Offshoring
To reduce costs, many companies use outsourcing, contracting work to 
noncompany employees or other companies. The contracted company might 
be less expensive because it specializes in the work and does it more efficiently. 
Or, it might pay workers lower wages or provide fewer benefits. Companies 
often outsource manufacturing work and administrative functions such as 
handling payroll and paying taxes.
As with multinational manufacturing companies, some tertiary and 
quaternary sector companies move their back offices to other countries, a 
process known as offshoring. Companies will locate services or manufacturing 
in other countries if the costs of doing business are lower and worth the risk 
of moving some operations overseas. Many software and manufacturing 
companies in the United States and Europe locate facilities in India and China 
to take advantage of the highly skilled but lower-cost labor. 
Page 3


495 CHAPTER 20: CHANGING GLOBAL ECONOMY AND SUSTAINABILITY 
Changing Global Economy 
and Sustainability 
Topics 7.7–7.8
Topic 7.7 Changes as a Result of the World Economy
Learning Objective: Explain the causes and geographic consequences of recent 
economic changes such as the increase in international trade, deindustrializa-
tion and growing interdependence in the world economy. (PSO-7.A)
Topic 7.8 Sustainable Development
Learning Objective: Explain how sustainable principles relate to and impact 
industrialization and spatial development. (IMP-7.A)
Anyone who believes in indefinite growth of anything physical on 
a physically finite planet is either a madman or an economist.
—Kenneth Boulding, economist, 1953
Source: Wikimedia Commons
Women complete the labor-intensive manufacturing of clothing in a maquiladora in Mexico. (See 
Topic 7.7 for maquiladoras and other changes in the global economy.)
CHAPTER 20
496 HUMAN GEOGRAPHY: AP
®
 EDITION
7.7
Changes as a Result of the  
World Economy
Essential Question: What are the causes and geographic consequences 
of recent economic changes such as the increase in international trade, 
deindustrialization, and growing interdependence in the world economy?
Globalization is firmly entrenched as part of daily life, largely due to vast 
improvements in transportation and communication technologies. People no 
longer depend solely upon products made close to home or decisions made 
by local, or even national, politicians. The world is so interconnected that a 
any decision can have significant implications for people across the globe. In 
addition to the growing interdependency of countries and their economies, the 
types of jobs, in core, periphery, and semiperiphery countries has changed. The 
economic landscape has transformed from local to global scales.
The Changing Global Economy
To take advantage of improved transportation and communication, and in 
search of lower labor costs, companies have changed spatial distribution of 
manufacturing and business services. At the global scale, many companies have 
moved manufacturing plants from highly developed core countries, such as the 
United States, to less-developed periphery and semiperiphery countries, such 
as the Malaysia and Brazil. At the regional scale, factories in the United States 
have moved from the Northeast and Midwest to the Southeast and Southwest. 
Outsourcing and Offshoring
To reduce costs, many companies use outsourcing, contracting work to 
noncompany employees or other companies. The contracted company might 
be less expensive because it specializes in the work and does it more efficiently. 
Or, it might pay workers lower wages or provide fewer benefits. Companies 
often outsource manufacturing work and administrative functions such as 
handling payroll and paying taxes.
As with multinational manufacturing companies, some tertiary and 
quaternary sector companies move their back offices to other countries, a 
process known as offshoring. Companies will locate services or manufacturing 
in other countries if the costs of doing business are lower and worth the risk 
of moving some operations overseas. Many software and manufacturing 
companies in the United States and Europe locate facilities in India and China 
to take advantage of the highly skilled but lower-cost labor. 
497 7.7: CHANGES AS A RESULT OF THE WORLD ECONOMY 
Labor unions and government officials have pressured some companies 
into reshoring, returning jobs to the business's home country. Because of the 
multiplier effect (see Topic 7.2), this benefits others in the country as well.
Sometimes companies will both offshore and outsource, as Boeing did with  
the 787 Dreamliner airplane. Boeing designed the planes in Seattle, the nose 
section was outsourced to a company in Kansas, wing tips were made in South 
Korea by Korean Air, wings were assembled by Boeing in Canada, and final 
assembly was done by Boeing outside of Seattle. The final product demonstrated 
outsourcing, offshoring, globalization, and the international division of labor.
Economic Restructuring
Globalization has increased competition among companies based around 
the world. In response, many have adopted new technology that needs fewer 
employees to operate. They also have shifted jobs from core countries to the 
periphery and semiperiphery ones with lower wages. As a result of these 
changes, many workers in core countries have lost jobs or had their wages cut.
While workers have suffered, consumers have benefitted. Lower production 
costs have resulted in lower prices for retail goods.
MANUFACTURING COSTS, 2012 (for selected countries)
$0
$10
$20
$30
$40
$50
$60
$70
Wages and Benefit Costs
per Hour in U.S. Dollars
Norway
Australia
United States
Singapore
Mexico
China
Germany
Based on the graph, how much more expensive are wages and benefits in Norway than in China? Wages 
and benefits are much cheaper in Mexico and China than in the United States. With the costs much less in 
China, why have so many U.S. companies chosen to locate in Mexico?
Globalization has created a new international division of labor, a changed 
system of employment in the various economic sectors throughout the world:
• In core countries, people design and develop products for the global market. 
T ertiary , quaternary , and quinary jobs have increased in the core. 
• In semiperiphery countries, people often manufacture goods that are 
marketed in core countries. Consequently, employment in the secondary 
sector has increased. Employment in the primary sector has declined.
• Periphery countries, such as Bangladesh, Angola, and Papua New Guinea, 
have large primary sectors and export minerals and resources to core and 
semiperiphery countries for further processing and consumption.
Page 4


495 CHAPTER 20: CHANGING GLOBAL ECONOMY AND SUSTAINABILITY 
Changing Global Economy 
and Sustainability 
Topics 7.7–7.8
Topic 7.7 Changes as a Result of the World Economy
Learning Objective: Explain the causes and geographic consequences of recent 
economic changes such as the increase in international trade, deindustrializa-
tion and growing interdependence in the world economy. (PSO-7.A)
Topic 7.8 Sustainable Development
Learning Objective: Explain how sustainable principles relate to and impact 
industrialization and spatial development. (IMP-7.A)
Anyone who believes in indefinite growth of anything physical on 
a physically finite planet is either a madman or an economist.
—Kenneth Boulding, economist, 1953
Source: Wikimedia Commons
Women complete the labor-intensive manufacturing of clothing in a maquiladora in Mexico. (See 
Topic 7.7 for maquiladoras and other changes in the global economy.)
CHAPTER 20
496 HUMAN GEOGRAPHY: AP
®
 EDITION
7.7
Changes as a Result of the  
World Economy
Essential Question: What are the causes and geographic consequences 
of recent economic changes such as the increase in international trade, 
deindustrialization, and growing interdependence in the world economy?
Globalization is firmly entrenched as part of daily life, largely due to vast 
improvements in transportation and communication technologies. People no 
longer depend solely upon products made close to home or decisions made 
by local, or even national, politicians. The world is so interconnected that a 
any decision can have significant implications for people across the globe. In 
addition to the growing interdependency of countries and their economies, the 
types of jobs, in core, periphery, and semiperiphery countries has changed. The 
economic landscape has transformed from local to global scales.
The Changing Global Economy
To take advantage of improved transportation and communication, and in 
search of lower labor costs, companies have changed spatial distribution of 
manufacturing and business services. At the global scale, many companies have 
moved manufacturing plants from highly developed core countries, such as the 
United States, to less-developed periphery and semiperiphery countries, such 
as the Malaysia and Brazil. At the regional scale, factories in the United States 
have moved from the Northeast and Midwest to the Southeast and Southwest. 
Outsourcing and Offshoring
To reduce costs, many companies use outsourcing, contracting work to 
noncompany employees or other companies. The contracted company might 
be less expensive because it specializes in the work and does it more efficiently. 
Or, it might pay workers lower wages or provide fewer benefits. Companies 
often outsource manufacturing work and administrative functions such as 
handling payroll and paying taxes.
As with multinational manufacturing companies, some tertiary and 
quaternary sector companies move their back offices to other countries, a 
process known as offshoring. Companies will locate services or manufacturing 
in other countries if the costs of doing business are lower and worth the risk 
of moving some operations overseas. Many software and manufacturing 
companies in the United States and Europe locate facilities in India and China 
to take advantage of the highly skilled but lower-cost labor. 
497 7.7: CHANGES AS A RESULT OF THE WORLD ECONOMY 
Labor unions and government officials have pressured some companies 
into reshoring, returning jobs to the business's home country. Because of the 
multiplier effect (see Topic 7.2), this benefits others in the country as well.
Sometimes companies will both offshore and outsource, as Boeing did with  
the 787 Dreamliner airplane. Boeing designed the planes in Seattle, the nose 
section was outsourced to a company in Kansas, wing tips were made in South 
Korea by Korean Air, wings were assembled by Boeing in Canada, and final 
assembly was done by Boeing outside of Seattle. The final product demonstrated 
outsourcing, offshoring, globalization, and the international division of labor.
Economic Restructuring
Globalization has increased competition among companies based around 
the world. In response, many have adopted new technology that needs fewer 
employees to operate. They also have shifted jobs from core countries to the 
periphery and semiperiphery ones with lower wages. As a result of these 
changes, many workers in core countries have lost jobs or had their wages cut.
While workers have suffered, consumers have benefitted. Lower production 
costs have resulted in lower prices for retail goods.
MANUFACTURING COSTS, 2012 (for selected countries)
$0
$10
$20
$30
$40
$50
$60
$70
Wages and Benefit Costs
per Hour in U.S. Dollars
Norway
Australia
United States
Singapore
Mexico
China
Germany
Based on the graph, how much more expensive are wages and benefits in Norway than in China? Wages 
and benefits are much cheaper in Mexico and China than in the United States. With the costs much less in 
China, why have so many U.S. companies chosen to locate in Mexico?
Globalization has created a new international division of labor, a changed 
system of employment in the various economic sectors throughout the world:
• In core countries, people design and develop products for the global market. 
T ertiary , quaternary , and quinary jobs have increased in the core. 
• In semiperiphery countries, people often manufacture goods that are 
marketed in core countries. Consequently, employment in the secondary 
sector has increased. Employment in the primary sector has declined.
• Periphery countries, such as Bangladesh, Angola, and Papua New Guinea, 
have large primary sectors and export minerals and resources to core and 
semiperiphery countries for further processing and consumption.
498 HUMAN GEOGRAPHY: AP
®
 EDITION
STRUCTURE OF THE U.S. LABOR FORCE, 1940 AND 2020
Primary Tertiary Secondary
1940 2020
The percentage of employees in all three sectors of the labor force has changed tremendously since 1940. 
Why has the percentage of workers involved in the primary sector dropped so drastically?
Basic and Non-basic Activities
Actions that creates new wealth for a region are considered a basic economic 
activity. Most manufactured goods and commercial farm products are 
examples of basic activities. These products are usually sold beyond the area 
where the factory or commercial farm is located, so money from outside the 
area is used to purchase the products. This outside money is considered new 
money which makes the areas where the goods were produced wealthier and 
leads to additional growth through the multiplier effect. For this reason, basic 
activities are sometimes referred to as city-forming activities. 
A grocery store is an example of a non-basic economic activity because it 
does not generate new money for the area. Instead, it allows for recirculation of 
the existing money in the area. Most people buy groceries near where they live, 
so the money spent is not new to the region. Non-basic activities are important 
since they provide services or goods such as food and clothing. However, they 
do not play a significant role in bringing money into the local economy, so non-
basic activities are also referred to as city-serving activities. There is a limited 
multiplier effect for non-basic activities. 
Community leaders in core countries are concerned about the loss of 
manufacturing jobs since they are often basic activities and generate new wealth. 
If a company relocates offshore, often the displaced workers find replacement 
jobs in the tertiary sector, which contains primarily non-basic jobs, and the 
community will lose out on much-needed new money. 
Quaternary sector jobs are more desirable since they have higher salaries 
and are more likely to be basic activities with a greater multiplier effect. Consider 
a software developer or a research scientist. The products or information these 
workers produce will generate income from far beyond their own community, 
and thus, generate new money which leads to economic growth.
Page 5


495 CHAPTER 20: CHANGING GLOBAL ECONOMY AND SUSTAINABILITY 
Changing Global Economy 
and Sustainability 
Topics 7.7–7.8
Topic 7.7 Changes as a Result of the World Economy
Learning Objective: Explain the causes and geographic consequences of recent 
economic changes such as the increase in international trade, deindustrializa-
tion and growing interdependence in the world economy. (PSO-7.A)
Topic 7.8 Sustainable Development
Learning Objective: Explain how sustainable principles relate to and impact 
industrialization and spatial development. (IMP-7.A)
Anyone who believes in indefinite growth of anything physical on 
a physically finite planet is either a madman or an economist.
—Kenneth Boulding, economist, 1953
Source: Wikimedia Commons
Women complete the labor-intensive manufacturing of clothing in a maquiladora in Mexico. (See 
Topic 7.7 for maquiladoras and other changes in the global economy.)
CHAPTER 20
496 HUMAN GEOGRAPHY: AP
®
 EDITION
7.7
Changes as a Result of the  
World Economy
Essential Question: What are the causes and geographic consequences 
of recent economic changes such as the increase in international trade, 
deindustrialization, and growing interdependence in the world economy?
Globalization is firmly entrenched as part of daily life, largely due to vast 
improvements in transportation and communication technologies. People no 
longer depend solely upon products made close to home or decisions made 
by local, or even national, politicians. The world is so interconnected that a 
any decision can have significant implications for people across the globe. In 
addition to the growing interdependency of countries and their economies, the 
types of jobs, in core, periphery, and semiperiphery countries has changed. The 
economic landscape has transformed from local to global scales.
The Changing Global Economy
To take advantage of improved transportation and communication, and in 
search of lower labor costs, companies have changed spatial distribution of 
manufacturing and business services. At the global scale, many companies have 
moved manufacturing plants from highly developed core countries, such as the 
United States, to less-developed periphery and semiperiphery countries, such 
as the Malaysia and Brazil. At the regional scale, factories in the United States 
have moved from the Northeast and Midwest to the Southeast and Southwest. 
Outsourcing and Offshoring
To reduce costs, many companies use outsourcing, contracting work to 
noncompany employees or other companies. The contracted company might 
be less expensive because it specializes in the work and does it more efficiently. 
Or, it might pay workers lower wages or provide fewer benefits. Companies 
often outsource manufacturing work and administrative functions such as 
handling payroll and paying taxes.
As with multinational manufacturing companies, some tertiary and 
quaternary sector companies move their back offices to other countries, a 
process known as offshoring. Companies will locate services or manufacturing 
in other countries if the costs of doing business are lower and worth the risk 
of moving some operations overseas. Many software and manufacturing 
companies in the United States and Europe locate facilities in India and China 
to take advantage of the highly skilled but lower-cost labor. 
497 7.7: CHANGES AS A RESULT OF THE WORLD ECONOMY 
Labor unions and government officials have pressured some companies 
into reshoring, returning jobs to the business's home country. Because of the 
multiplier effect (see Topic 7.2), this benefits others in the country as well.
Sometimes companies will both offshore and outsource, as Boeing did with  
the 787 Dreamliner airplane. Boeing designed the planes in Seattle, the nose 
section was outsourced to a company in Kansas, wing tips were made in South 
Korea by Korean Air, wings were assembled by Boeing in Canada, and final 
assembly was done by Boeing outside of Seattle. The final product demonstrated 
outsourcing, offshoring, globalization, and the international division of labor.
Economic Restructuring
Globalization has increased competition among companies based around 
the world. In response, many have adopted new technology that needs fewer 
employees to operate. They also have shifted jobs from core countries to the 
periphery and semiperiphery ones with lower wages. As a result of these 
changes, many workers in core countries have lost jobs or had their wages cut.
While workers have suffered, consumers have benefitted. Lower production 
costs have resulted in lower prices for retail goods.
MANUFACTURING COSTS, 2012 (for selected countries)
$0
$10
$20
$30
$40
$50
$60
$70
Wages and Benefit Costs
per Hour in U.S. Dollars
Norway
Australia
United States
Singapore
Mexico
China
Germany
Based on the graph, how much more expensive are wages and benefits in Norway than in China? Wages 
and benefits are much cheaper in Mexico and China than in the United States. With the costs much less in 
China, why have so many U.S. companies chosen to locate in Mexico?
Globalization has created a new international division of labor, a changed 
system of employment in the various economic sectors throughout the world:
• In core countries, people design and develop products for the global market. 
T ertiary , quaternary , and quinary jobs have increased in the core. 
• In semiperiphery countries, people often manufacture goods that are 
marketed in core countries. Consequently, employment in the secondary 
sector has increased. Employment in the primary sector has declined.
• Periphery countries, such as Bangladesh, Angola, and Papua New Guinea, 
have large primary sectors and export minerals and resources to core and 
semiperiphery countries for further processing and consumption.
498 HUMAN GEOGRAPHY: AP
®
 EDITION
STRUCTURE OF THE U.S. LABOR FORCE, 1940 AND 2020
Primary Tertiary Secondary
1940 2020
The percentage of employees in all three sectors of the labor force has changed tremendously since 1940. 
Why has the percentage of workers involved in the primary sector dropped so drastically?
Basic and Non-basic Activities
Actions that creates new wealth for a region are considered a basic economic 
activity. Most manufactured goods and commercial farm products are 
examples of basic activities. These products are usually sold beyond the area 
where the factory or commercial farm is located, so money from outside the 
area is used to purchase the products. This outside money is considered new 
money which makes the areas where the goods were produced wealthier and 
leads to additional growth through the multiplier effect. For this reason, basic 
activities are sometimes referred to as city-forming activities. 
A grocery store is an example of a non-basic economic activity because it 
does not generate new money for the area. Instead, it allows for recirculation of 
the existing money in the area. Most people buy groceries near where they live, 
so the money spent is not new to the region. Non-basic activities are important 
since they provide services or goods such as food and clothing. However, they 
do not play a significant role in bringing money into the local economy, so non-
basic activities are also referred to as city-serving activities. There is a limited 
multiplier effect for non-basic activities. 
Community leaders in core countries are concerned about the loss of 
manufacturing jobs since they are often basic activities and generate new wealth. 
If a company relocates offshore, often the displaced workers find replacement 
jobs in the tertiary sector, which contains primarily non-basic jobs, and the 
community will lose out on much-needed new money. 
Quaternary sector jobs are more desirable since they have higher salaries 
and are more likely to be basic activities with a greater multiplier effect. Consider 
a software developer or a research scientist. The products or information these 
workers produce will generate income from far beyond their own community, 
and thus, generate new money which leads to economic growth.
499 7.7: CHANGES AS A RESULT OF THE WORLD ECONOMY 
Transnationals, Multinationals, and EPZs
Businesses that operate in multiple countries are known as transnational 
corporations (TNCs) and multinational corporations (MNCs). Because of 
the jobs and wealth these corporations can bring to a country, government 
compete with each other to entice them to their shore. Over 100 countries in 
the world have attracted TNCs and MNCs by using special manufacturing 
zones, commonly referred to as export-processing zones (EPZs). 
These EPZs offer foreign corporations major tax savings, inexpensive labor, 
fewer environmental regulations, well-serviced industrial sites, and proximity 
to good transportation networks that allow for easy delivery of raw material 
and shipping of finished products. EPZs are often near international airports, 
seaports, or land borders from where the products can be exported easily.
Tax Incentives One incentive that countries use in EPZs is tax breaks. 
Transnationals typically do not pay taxes on any item they import into an EPZ 
as long as these items are re-exported or used to make products for export. 
This regulation protects existing businesses that cater to the local market. For 
example, if a resident entrepreneur employs 20 people producing T-shirts to 
sell locally, a new T-shirt factory in the EPZ will not drive the resident owner 
out of business with cheaper products. The existing jobs in the locally owned 
factory will remain in addition to the jobs added by the foreign-owned factory. 
Functions Initially, most of these special zones were occupied by factories 
that manufactured goods. However, some also acted as transshipment points 
(transfer containers) and recently, as sites for tertiary and quaternary sector 
activities. For example, the largest share of businesses established by TNCs and 
MNCs in India offer professional, scientific, and technical services. 
EPZs first appeared in the 1960s, and by 2015, 130 countries were home 
to 4500 of these special zones and employed an estimated 68 million people 
worldwide. Special manufacturing zones are known by different names—
special economic zones (SEZs) in China, maquiladoras in Mexico, and 
free-trade zones (FTZs) in Singapore—but have similar functions.
In China, the original SEZs were situated in coastal cities near major 
ports, allowing easy access to international markets. First created in 1979, the 
Chinese government has increasingly used the incentives of SEZs to attract 
foreign trade and businesses. 
Changes in Maquiladoras There was a surge of American-owned 
maquiladoras factories after the North American Free Trade Agreement 
(NAFTA) was signed in 1994. Maquiladoras are now the second-largest source 
of income in Mexico after petroleum. The maquiladoras were originally all 
positioned in a single district in northern Mexico, near the United States-
Mexico border to minimize transportation costs into the United States. 
In recent years, the number of maquiladoras has decreased due to the 
increased competition for these international corporations as more countries 
adopt the creation of EPZs as a development strategy. Despite the decrease, 
there are still approximately 3,000 foreign-owned factories and over 1 million 
employees working in Mexican maquiladoras.