Economic Activity, Development and Globalisation
What this domain tests
Economic activity and globalisation questions examine how sectors change with development, how TNCs and trade shape places, and how development is measured beyond income. You must interpret graphs, maps and development indicators and explain both benefits and costs.
Core rules and concepts
- Employment structure shifts from primary to secondary to tertiary and quaternary as economies develop, though resource-rich countries can be exceptions.
- GDP measures output within a country; GNI measures income earned by residents; PPP adjusts for purchasing power. HDI combines income, life expectancy and schooling.
- The multiplier effect: an injection of spending creates further local income as workers and firms spend locally.
- TNCs create linkages, jobs and technology transfer, but profits may leak abroad and wages or environmental standards may be low.
Worked example
A new factory creates 300 direct jobs. If 60% of each worker's income is spent locally, the total jobs supported = 300 ÷ (1 − 0.6) = 300 ÷ 0.4 = 750. Reasoning: the first round is 300; the second is 180; the third is 108, and so on, summing to 750. This is a simplified multiplier because not all spending stays local and some jobs may be displaced.
Traps that cost marks
Do not use GDP per capita as a complete measure of development. Do not assume all multiplier spending stays in the area; leakages matter. Do not describe globalisation as only positive or only negative. Do not confuse fair trade with free trade.