Relocation Impact and Global Trade Dynamics
Impact of Industrial Relocation
The impact of relocation varies between countries. In developed economies, industrial relocation has had two main consequences:
- Loss of direct and indirect jobs, precariousness of working conditions, and closure of some plants.
- Companies have lowered the price of their manufactured products, making them more competitive.
Developing economies have received transplanted industries and activities, leading to:
- Positive effects: Job creation and increased income.
- Negative effects: Labor exploitation in some factories and excessive pollution due to permissive environmental legislation.
Industrial Powers
Global industrial production shows significant geographical imbalances. A few countries concentrate 85% of total production. Traditionally, industrial powers are joined by emerging countries, especially the BRICS (Brazil, Russia, India, China, and South Africa). Other countries that have industrialized in recent decades include South Korea, Vietnam, and Mexico. All these countries have benefited from industrial relocation or offshoring.
The Secondary Sector in Spain
Mining
In Spain, the mining industry occupies around 0.2% of the active population. Production centers on non-metallic minerals. Energy minerals are scarce. Only coal has had a prominent role. Spanish energy dependence exceeds 80%, a figure that is being reduced with the development of renewable energies, especially wind and solar.
Construction
The global economic crisis, beginning in 2007, has greatly impacted Spain, converging with a crisis caused by the property bubble. The building sector has significant importance in the Spanish economy, employing many workers, but its importance has decreased since the beginning of the crisis (6% of active population in 2013 and 5.2% of GDP).
Industry
In 2013, industry contributed 16.1% to GDP and 13.7% of the active population. The main industrial sectors are food, drinks, tobacco, automobile, and chemical industry. Most industrial activity is concentrated in Catalonia, Madrid, the Basque Country, and the Valencian Community.
The Tertiary Sector: Services
The tertiary sector doesn’t produce material goods but provides services such as healthcare, education, transport, tourism, trade, and culture. It is the fastest-growing economic sector, with its economic value and the number of workers it employs increasing in recent decades. This process, known as tertiarization, is more important in developed countries. More people work in the tertiary sector in developed countries than in less developed countries.
Trade and Types of Trade
Trade is the buying and selling of goods and services to satisfy the population’s needs. It is one of the most important economic activities by business volume and the jobs it generates. Its contribution to GDP is proportional to the country’s development and wealth. There are two types of trade:
- Domestic Trade: Occurs within a state’s borders. Two types of trade intermediaries are usually involved:
- Retailers: Sell directly to consumers in small quantities.
- Wholesalers: Traders or companies that buy large quantities from producers to sell to retailers.
- Foreign Trade: Involves exchanging products between different countries. Purchases of foreign products are imports, and products sold to other countries are exports. The difference between exports and imports is reflected in the trade balance.
Organization of International Trade
World trade is regulated by agreements between countries and the World Trade Organization (WTO), to which almost all the world’s states belong. Its objective is to achieve agreements that facilitate international trade, eliminating trade barriers (tariff reduction) and unfair practices. There are also trade blocs, which are associations of countries to promote trade. One example is the European Union, which is also the world’s largest trading power.