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GCSE/Geography/Edexcel

T5.2Globalisation and the UK economy: TNCs, foreign investment, deindustrialisation, the rise of the service and knowledge economy

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Globalisation and the UK Economy

Globalisation defined

Globalisation is the increasing interconnection of economies, cultures and societies — driven by transport (containerisation), telecommunications (internet), trade liberalisation (WTO) and capital flows. The UK has been a global trading economy since the 19th century but globalisation since the 1970s has reshaped its industrial structure.

Trans-national corporations (TNCs) in the UK

TNCs operate across borders. The UK is both a host (foreign TNCs operating here — Toyota, Nissan, Tata, Microsoft) and a source (UK-based TNCs operating abroad — BP, GSK, HSBC, Unilever).

Inward investment example: Nissan Sunderland (1986–today). Built UK's largest car plant; produces ~330,000 vehicles/year (Qashqai, Juke); employs 6,000 directly + ~30,000 in supply chain. Shows how FDI created a new industrial cluster in a deindustrialising region.

Foreign Direct Investment (FDI): the UK is a major recipient — historically attractive due to language, legal system, access to EU (pre-Brexit), and skilled workforce. London has been a top global FDI city for two decades.

Deindustrialisation

Globalisation drove deindustrialisation in the UK from the 1970s:

  • Manufacturing share of UK economy fell from ~25% (1970) to ~9% (2023).
  • Cheap labour in China, India, SE Asia outcompeted UK heavy industry.
  • Coal: 250 deep mines (1980) → 0 (2015 — Kellingley closure).
  • Steel: 200,000 jobs (1970) → 32,000 (2023).
  • Textiles: Lancashire/Yorkshire mills mostly closed by 1990.

The service and knowledge economy

The UK now generates ~80% of GDP from services:

  • Finance: the City of London handles 40% of global FX trading; ~7% of GDP.
  • Knowledge economy: Cambridge biotech (AstraZeneca-Oxford COVID vaccine), Manchester graphene, London fintech (Revolut, Wise).
  • Creative industries: ~£125 bn/year (BBC, advertising, video games, music).
  • Education: universities are major exporters (£26 bn/year from international students).

Pros and cons

Pros: higher overall GDP, consumer choice, integration with global supply chains, knowledge transfer. Cons: deindustrialisation hollowed out industrial communities; jobs offshored (call centres to India, manufacturing to China); growing inequality; vulnerability to global shocks (2008 banking crisis, COVID, Russian gas).

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Practice questions

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  1. Question 14 marks

    Define and exemplify TNCs (4 marks)

    Define a trans-national corporation (TNC) and give two examples of how TNCs influence the UK economy. [4 marks]

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  2. Question 28 marks

    Examine globalisation and UK manufacturing (8 marks)

    Examine the impacts of globalisation on UK manufacturing industry. [8 marks]

    Level mark scheme:

    LevelMarksDescriptor
    L11–3Simple statements about industry decline; weak/no data; no balance positive/negative.
    L24–6Discussion of impacts with some named industries/regions; partial balance.
    L37–8Detailed examination of negative AND positive impacts; named industries and data; clear linkage to globalisation drivers; evaluative conclusion.

    Indicative content (negative):

    • Manufacturing share fell from 25% GDP (1970) to ~9% (2023); jobs collapsed.
    • Coal: 250 deep mines (1980) → 0 (2015). Steel: 200,000 → 32,000 jobs.
    • Cheaper labour in China, India outcompeted UK on cost.
    • Communities devastated (South Wales valleys, NE pit villages).

    Indicative content (positive):

    • New manufacturing FDI: Nissan Sunderland (~330,000 cars/yr), Tata Jaguar Land Rover, Toyota Burnaston.
    • Higher-value advanced manufacturing thriving (Rolls-Royce aerospace, Sheffield Forgemasters, Airbus Wales).
    • Productivity per worker has risen even as headcount fell.

    Conclusion: globalisation drove painful deindustrialisation in low-skill heavy industries, but the UK has held on to (and grown) advanced manufacturing and FDI-led plants. Net job losses in manufacturing, but those that remain are higher-skilled and better-paid. Strongest answers note the regional unevenness — globalisation's costs concentrated geographically while its benefits dispersed.

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  3. Question 312 marks

    Evaluate the UK in the global economy (12 marks)

    Evaluate the extent to which globalisation has been beneficial for the UK economy. [12 marks]

    Level mark scheme:

    LevelMarksDescriptor
    L11–4Simple description; no balance; no examples.
    L25–8Discussion of benefits AND drawbacks with examples; partial evaluation.
    L39–12Detailed evaluation; multiple sectors and regions discussed; weighted judgement on net benefit; justified conclusion.

    Indicative content (benefits):

    • GDP growth: globalisation contributed to UK's rise as world's 6th largest economy.
    • Service sector boom: finance (City), tech (London fintech), creative industries (£125 bn/year).
    • Cheap consumer goods: Chinese imports lowered cost of living for households.
    • FDI inflows: Nissan, Toyota, Tata Steel-investment.
    • Knowledge transfer and global supply chains.

    Indicative content (drawbacks):

    • Deindustrialisation devastated specific regions (S. Wales, NE England).
    • Vulnerability to global shocks: 2008 banking crisis, COVID supply chain breakdowns, 2022 gas crisis.
    • Widening inequality: London/SE benefits concentrated; northern towns left behind.
    • Loss of strategic industries (steel imports for HS2 from China prompted security debate).
    • Brexit (2016) reflects political backlash against unbalanced globalisation gains.

    Conclusion: in aggregate, globalisation has been beneficial — UK is wealthier and more diversified than it would otherwise be. But benefits have been very unevenly distributed: London's financial centre and the SE thrived while industrial regions hollowed out. The strongest answer recognises that globalisation's "winners and losers" pattern produced both the UK's post-1980 prosperity and the political tensions that followed.

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Flashcards

T5.2 — Globalisation and the UK economy: TNCs, FDI, deindustrialisation, services

7-card SR deck for Edexcel Geography (leaves batch 1) topic T5.2

7 cards · spaced repetition (SM-2)

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