C3 / Changing industrial location / P.

55

3.5 What is the impact of changes in industrial location

and modes of production?
Focus of this unit:
 Impact of industrial relocation and new modes  Measures of easing these problems and
of production to the areas where factories their effectiveness
move in and to the areas where factories move
out

A How do industrial relocation and new modes of production affect the

areas where factories move in? Textbook p. 90–1 HKDSE MCQ 2013 Q21; DBQ 2014 Q3cii
1 Figure 1 shows the economic benefits brought by industrial relocation to the areas where
factories move in.

Figure 1
a With reference to the figure, explain how industrial development brings benefits to the
areas where factories move in in paragraph form.

When industries are set up in an area, jobs are created and people’s
income will increase. With a higher income, more money can be spent in
local shops and on local goods and services .
 C3 / Changing industrial location / P.56

In this way, the local economy will grow. This will increase the tax
revenue of the local government. Then, the local government will have more money to
improve the social services and infrastructure . This will attract
more people to come and more new industries will set up in the area.

b What do we call such an positive effect brought by industrial development to an area?

Multiplier effect

2 a Industrial location will also result in the international flow of labour . For
example, when these US IT firms outsource their production operations to the LDCs,
managerial personnel and specialists from the USA are sent there.

b With such a flow, technological know-how is transferred to the LDCs.

3 Complete the flow chart below to show the common environmental problems often caused in
the areas where production operations move in and the environmental protection regulations
are lenient.

Type of pollution Source of pollutants

Air pollution, e.g. Emission of air pollutants, e.g. sulphur dioxide and nitrous
smog and acid rain oxides emitted by the burning of coal during steel production

Water pollution Discharge of industrial sewage (with toxic chemicals,

particularly) into rivers and the sea, e.g. mercury from the
production of circuit boards

Land pollution Disposal of industrial waste by landfill

Noise pollution Sound produced by machinery operations

‧ Damage to wildlife habitats

‧ Threat to eco systems

 C3 / Changing industrial location / P.57

B How do industrial relocation and new modes of production affect the

areas where factories move out? Textbook pp. 92–3

4 Complete the flow chart below to show how the relocation of industries causes the decline of
local economies in the areas where factories move out.

Relocation Factories closed Job losses

( Less / More ) New investment Workers either find jobs

money spent in ( grows / shrinks ) with ( lower / higher ) skill
providing social level or become unemployed
services and
improving
( Less / More )
infrastructure Lower or no income
money spent in local
shops and services

Less tax Social problems, e.g.

revenue for the local Local economy drug addiction, drunkenness
government declines and family abuse

5 With factories move out, the amount of pollutants in these areas will ( drop / increase ).

C What are the other effects of industrial relocation and new modes of
production? Textbook p. 94 HKDSE MCQ 2018 Q19; DBQ 2014 Q3ci
6 Complete the flow chart below to show how the relocation of industries from Hong Kong to
the ZDR triggered the change in the economy and employment structure of Hong Kong.

Moving factories to the ZDR

The ZDR ( Looser / Closer ) business ties between

specialised in Hong Kong and the ZDR as the firms kept
Economy mass production their headquarters in Hong Kong
of Hong operations
Kong Restructuring of economy, i.e. ( Smaller / Higher ) demand for
the ( primary / secondary / producer services in Hong Kong,
tertiary ) industry grew rapidly e.g. finance, banking and logistics

Employment structure of The tertiary industry became the largest

Hong Kong employer
 C3 / Changing industrial location / P.58

7 Most multinational manufacturing firms practise globalisation in production and sourcing

inputs . This ( reduces / increases ) world trade and the interdependecy of the
world economy.

D How can we ease the problems caused by industrial relocation and

new modes production? Textbook pp. 95–9 HKDSE MCQ 2012 Q20, 2018 Q21
8 In the areas where factories move out, the government and the manufacturing firms have
adopted different strategies to ease the problems caused by changes in industrial location and
production modes. Complete the table below to show these strategies.

Strategy Measure Example

Diversifying Develop alternative industries to Hong Kong has focused on

the ecomomy sustain economic development, such as developing the tertiary
banking and finance, tourism and R&D industry, e.g. banking and
financial services, tourism,
etc.

Attracting ‧ Improve infrastructure The US federal government

investment ‧ Provide tax/financial incentives has greatly reduced the
corporate income tax rate
‧ Impose high tariffs on
from 35% to 21%
imported industrial goods to raise
the competitivenss of the locally
produced goods

Improving ‧ Adopt new technology The Ansteel Group, which

production ‧ Train workers to use new production facilities were
efficiency technology outdated and inefficient, was
merged with Panzhihua Iron
‧ Improve firm management
and Steel Group in 2010.
‧ Close down the inefficient plants After the merger, the
or merge them with the enterprise was restructured to
efficient ones enhance production efficiency
 C3 / Changing industrial location / P.59

Strategy Measure Example

Upgrading ‧ Provide retraining ‧ Tertiary education was

workers’ skills and programmes to strengthen expanded in Hong Kong
competencies workers’ skills for re-employment in the 1990s. At present,

‧ Expand tertiary about 32% of the

education to equip people with population aged 15 or

adequate skills to adapt to above has received

economic restructuring post-secondary education

‧ Provide tax incentives to support ‧ The HKSAR government

employers and employees to has launched the

expand continuous professional Employee Retraining

training
Scheme to strengthen the
skills of the unemployed
workers

Providing a safety Improve the social security The HKSAR government

net for the needy system to help the unemployed provides social security to the
unemployed workers through
the Comprehensive Social
Security Assistance
Scheme

9 a What is the major problems caused by industrial relocation in the areas where factories
move in?
Environmental/Pollution problems
b How has the ZDR tackle the problem mentioned in Question a?

The local governments in the ZDR have taken measures to ease the problem, such as
(name TWO examples) closing down the polluting industries/using natural gas instead
of coal/building sewage treatment plants (any two)
 C3 / Changing industrial location / P.60

E Are these measures effective in easing the problems caused by

industrial relocation and new modes of production? Textbook p. 100

10 Complete the table below to show the effectiveness of the strategies mentioned in Question 8
in easing the problems caused by industrial relocation and new modes of production.

Strategy Advantage Disadvantage

Diversifying ‧ Create job opportunities ‧ Diversify the economy takes
the ecomomy ‧ Expand the economic base ( short / long ) time to achieve
and stablise the economy and may end up in failure
‧ Increase government tax ‧ Require ( small / large )
revenue financial imputs
‧ Difficult for a declining
economy to finance the
Attracting development of other sectors
investment ‧ Imposing high tariffs
may lead to sanctions from
other countries
Improving ‧ Reduce production costs in ‧ Manufacturing firms may not
production the ( short / long ) run have adequate capital
efficiency ‧ Enhance competitiveness and know-how to adopt the
‧ Reduce pollution new technologies
‧ Difficult to train all workers
to be able to use new
technologies
‧ Restructuring of the firm may
lead to lay-offs
Upgrading ‧ Help workers transfer to other ‧ Providing training is costly
workers’ skills and industries and adapt to ‧ Not easy for workers to learn
competencies economic restructuring new skills
‧ Enhance productivity and ‧ Inadequate job vacancies to
thus competitiveness absorb the retrained workers
Strategy Advantage Disadvantage
Providing a safety ‧ Ease the social ‧ Heavy financial burden on the
net for the needy problems caused by governments
unemployment ‧ Some may think it is unfair to
‧ Enhance social stability and have measures favouring the
security ‘needy’