9.4.4
Economic Problems for Superpowers
Economic Problems for Superpowers - Deindustrialisation
Economic Problems for Superpowers - Deindustrialisation
In the developed world, deindustrialisation has caused social and environmental problems as manufacturing industries have declined.
Global shift
Global shift
- Economic restructuring refers to the changing importance of different economic sectors.
- In the US and the UK, economic restructuring has taken place as deindustrialization has reduced the importance of the secondary sector and there has been huge growth in the tertiary and quaternary sector.
- This is because of the global shift which has meant that manufacturing has moved abroad to benefit from cheaper labour costs, for example, in China.
Structural unemployment
Structural unemployment
- Unemployment was a key problem for the UK during the 1980s where 240,000 people worked in the UK's coal mines. By the 1990s however, the closure of many mines (as a result of cheaper imports) meant that only 13,000 people worked in mining.
- These people are unable to easily get jobs in other sectors because of their lack of skill.
- We say that these people are 'structurally unemployed'.
Detroit, USA
Detroit, USA
- Detroit was the 4th largest city in the USA during its peak as a car producing city, with Ford and General Motors operating there.
- With globalisation, car production moved to Japan where costs were cheaper.
- As a result, the spiral of decline set in and in 2013, the city was declared bankrupt.
- In 2017, Detroit was still losing 0.5% of its population each year.
Economic Problems for Superpowers - Debt
Economic Problems for Superpowers - Debt
Large government and household debt is a major problem facing existing superpowers.
Private or household debt
Private or household debt
- The global financial crash of 2007-2008 was the result of actions by US and European bank lending to homeowners.
- People were given loans by the banks that they couldn’t really afford and would struggle to repay.
- This led to the banks having debt that they couldn’t repay and that became worthless when the property bubble burst.
Private or household debt cont.
Private or household debt cont.
- Because of globalization and the interdependence between different companies and countries, the collapse of the global banking system affected every global bank.
- Generally, large recessions and financial crises are preceded by a growth in debt.
Government debt
Government debt
- In the UK, some banks (e.g. Lloyds) had to be bailed out by the government. In other words, the government had to give them money to stay in business. The Royal Bank of Scotland was nationalized so it was taken into government control.
- The global economic crash also meant that many countries have debt that makes up a significant part of their total GDP and will do so for a long time.
Government debt cont.
Government debt cont.
- As well as bailing out the banks, governments had to spend more money on unemployment benefits during the recession.
- It is estimated that in 2017, the UK Government recorded a government debt of 85.30% of GDP.
- However, many other European countries have much higher debt levels. Italy has an estimated 132.6% of GDP debt.
Social effects
Social effects
- In recessions and economic downturns, there are fewer jobs available.
- Suicide, depression and crime are all correlated with hard economic times. This means that they tend to rise when times are hard.
- For example, many towns in Northern England saw significant rises in mental health issues linked to the closure of the mines which employed the majority of the population.
Economic Problems for Superpowers - Military Cost
Economic Problems for Superpowers - Military Cost
Maintaining a blue water navy and staying a global military power is expensive.
Costs of military
Costs of military
- With countries facing high levels of debt and austerity to try and bring down this debt level in 2018, some super powers are starting to question whether they need to spend so much on defence.
- In 2016-2017, the UK's had the world's fifth largest defence budget (US$56 billion) but this only accounted for 10% of the US military budget.
- This money is used for naval, nuclear, air power and intelligence services.
Costs of intelligence
Costs of intelligence
- Arguably, intelligence services are becoming more important as government budgets are increasingly directed towards anti-terrorism work.
- But, this is labour-intensive and expensive.
Costs of being a nuclear power
Costs of being a nuclear power
- Spending on nuclear power is one of the most debated. The UK currently pays to keep nuclear weapons that may never be used.
- Some people question whether it is worth it. Others argue that it is necessary as a deterrent for future conflict.
- In 2016, the UK Parliament voted to replace the UK’s Trident nuclear deterrent at an estimated cost of over $20 billion.
Costs of space exploration
Costs of space exploration
- The UK's space budget is small compared with that of France, Germany, and Italy.
- Generally, European countries join together for EU wide space exploration.
- The European Space Agency’s budget in 2018 was 5.6 billion Euros.
- As with maintaining a global military, people question whether or not it is worth it. The immediate payback (or return) on space exploration is not clear.
- In early 2018, President Trump announced that the US would cut funding to the International Space Station by 2025. But he also announced plans to set up a 'space force' to be battle-ready in space.
1Tectonic Processes & Hazards
1.1Tectonic Processes & Hazards
1.2Natural Disasters
1.3Natural Disaster Case Studies
1.4Trends & Patterns
2Option 2A: Glaciated Landscapes & Change
2.1Glaciated Landscapes Over Time
2.2Periglacial Landscapes
2.3Glacial Processes
2.4Glacial Landforms
3Option 2B: Coastal Landscapes & Change
3.1Coastal Landscapes
3.2Coastal Erosion & Deposition
3.3Coastal Risks
4Globalisation
4.1Globalisation
4.2Negatives of Globalisation
4.3Global Shift
4.5Culture
4.6Measuring Development
5Option 4A: Regenerating Places
5.1Types of Economies
5.2Function of Places
5.3Regeneration
5.4Regeneration Case Studies
6Option 4B: Diverse Places
6.1Population Structure
6.2Past & Present Connections
6.3Urban & Rural Spaces
6.4Diversity
6.5Urban & Rural Case Studies
6.6Case Study - Tower Hamlets
6.7Case Study - Sturton-le-Steeple
7The Water Cycle & Water Insecurity (A2 only)
7.1Hydrological Processes Global to Local
7.2Influences on the Water Cycle
7.3Water Insecurity
8The Carbon Cycle & Energy Security (A2 only)
8.1The Carbon Cycle
8.2Energy Consumption
8.3Alternative Energy
8.4Growing Demand for Resources
9Superpowers (A2 only)
9.1Superpowers
9.2Hard & Soft Power
9.2.1Hard & Soft Power
9.2.2Emerging Powers - China Rivalry
9.2.3Emerging Powers - Chinese Sources of Power
9.2.4Emerging Powers - Brazil
9.2.5Emerging Powers - Russia
9.2.6Emerging Powers - India
9.2.7Theories of Development
9.2.8Power Case Studies: Chinese One Belt One Road
9.2.9Power Case Studies: Pakistan Nuclear Arms
9.2.10Power Case Studies: OPEC
9.3IGOs, TNCs & Alliances
10Option 8A: Health & Human Rights (A2 only)
10.1Human Development
10.2Role of Governments & IGOs
10.3Human Rights
10.4Interventions
11Option 8B: Migration & Identity (A2 only)
11.1Globalisation & Migration
11.2Consequences of Migration
11.3Nation States
11.4Responses to Global Migration
Jump to other topics
1Tectonic Processes & Hazards
1.1Tectonic Processes & Hazards
1.2Natural Disasters
1.3Natural Disaster Case Studies
1.4Trends & Patterns
2Option 2A: Glaciated Landscapes & Change
2.1Glaciated Landscapes Over Time
2.2Periglacial Landscapes
2.3Glacial Processes
2.4Glacial Landforms
3Option 2B: Coastal Landscapes & Change
3.1Coastal Landscapes
3.2Coastal Erosion & Deposition
3.3Coastal Risks
4Globalisation
4.1Globalisation
4.2Negatives of Globalisation
4.3Global Shift
4.5Culture
4.6Measuring Development
5Option 4A: Regenerating Places
5.1Types of Economies
5.2Function of Places
5.3Regeneration
5.4Regeneration Case Studies
6Option 4B: Diverse Places
6.1Population Structure
6.2Past & Present Connections
6.3Urban & Rural Spaces
6.4Diversity
6.5Urban & Rural Case Studies
6.6Case Study - Tower Hamlets
6.7Case Study - Sturton-le-Steeple
7The Water Cycle & Water Insecurity (A2 only)
7.1Hydrological Processes Global to Local
7.2Influences on the Water Cycle
7.3Water Insecurity
8The Carbon Cycle & Energy Security (A2 only)
8.1The Carbon Cycle
8.2Energy Consumption
8.3Alternative Energy
8.4Growing Demand for Resources
9Superpowers (A2 only)
9.1Superpowers
9.2Hard & Soft Power
9.2.1Hard & Soft Power
9.2.2Emerging Powers - China Rivalry
9.2.3Emerging Powers - Chinese Sources of Power
9.2.4Emerging Powers - Brazil
9.2.5Emerging Powers - Russia
9.2.6Emerging Powers - India
9.2.7Theories of Development
9.2.8Power Case Studies: Chinese One Belt One Road
9.2.9Power Case Studies: Pakistan Nuclear Arms
9.2.10Power Case Studies: OPEC
9.3IGOs, TNCs & Alliances
10Option 8A: Health & Human Rights (A2 only)
10.1Human Development
10.2Role of Governments & IGOs
10.3Human Rights
10.4Interventions
11Option 8B: Migration & Identity (A2 only)
11.1Globalisation & Migration
11.2Consequences of Migration
11.3Nation States
11.4Responses to Global Migration
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