Comparing Urban Economies in Developing, Emerging and Developed Countries

Edexcel B GCSE Geography > Challenges of an Urbanising World > Comparing urban economies in developing, emerging and developed countries

Flashcards Quiz

There are two types of employment: formal and informal employment. In more developed countries, you will find that most workers are employed in formal employment, such as office workers, doctors and teachers. In developing countries, a large proportion of the workforce is employed in the informal economy, including street vendors. In emerging countries, a growing number of workers are moving into formal employment as industries become more regulated by the government, leading to an increase in the number of formal jobs.

Key features	Formal employment e.g traditional industries and service sectors: factory worker or accountant.	Informal employment e.g street vendor
Scale of activity	Large scale – usually a factory or office	Small scale – usually located on street corners
Level of skills	Some high-level of skill needed depending on type of business	Low level of skill needed
Ease of entry	Usually needs a lot of funding and equipment to get set up	Limited funding or equipment needed
Need for capital	Large capital investment needed to set up business. This is often financed by the government	Little capital needed to get set up
Number of workers	Could be 100s of workers depending on size of business	Just a few workers or self employed
Working conditions	Protection for workers, trade unions, set working hours, sick pay	No trade unions or protection for workers. Hours could be long for low pay.
Location	Factory / Office building. Will be located in a specific industrial or business area (CBD)	Street corners or working from home
Taxes	Taxes are paid to the government and help to support local services	No taxes paid

Comparing the informal and formal economies in different cities:

A developing city – Kampala	An emerging city – New Delhi	A developed city – New York
• Large informal economy with half of GDP of Uganda coming from informal work. • Over 80% of people work in the informal sector. • Worth US$33 billion a year. • Mostly poor women and young people. • Formal economy is a slow grower. • Only 5% of Uganda’s population work in manufacturing. • Service industry (tertiary) makes up most of Uganda’s formal employment, mostly in shops, stalls, banks, government offices and Ugandan companies such as Air Uganda.	• A wealthy city compared to much of India – ranked 39th wealthiest city in 2011. • 75% of workers found in informal economy. • Suggested it provides 50% of India’s GDP valued at US$3.6 trillion. • Similar to Kampala, food, cigarettes and clothing are common items sold on the streets. • Factories making clothing are considered to be part of the informal economy due to lack of regulations on minimum wages, benefits and working conditions. • Many people work in the service industry, contributing 78% of New Delhi’s GDP.	• A significant economic asset to the USA. • Thriving informal economy. Considered to contribute 7% of US GDP each year, valued at US$1 trillion. • Two main groups of informal workers: -Migrants, both legal and illegal. -self employed workers and those on zero hours contracts who may not declare their income to tax officials. • Informal jobs include construction and street vending. • Limited protections, long hours and no minimum wage. • Manufacturing is small – only around 10% of employment. Lots of migrants work in this area, making up 2/3rds of all jobs in this sector. • Knowledge economy is most valuable, with financial companies providing 10% of Jobs in New York.

The stages of economic development of a country:

The Clark Fisher model below illustrates how industries within a country evolve as economic development occurs. The main stages are:

Pre-industrial: A High number of these jobs are in farming, mining, and fishing.
Industrial: Manufacturing industries grow and towns become more urbanised. Tertiary industries begin to develop, providing jobs in services such as transport, water and electricity.
Post-industrial: Primary industries decline further, with the tertiary sector becoming the top employer. As the demand for services in towns and cities increases, more jobs become available.
Later-stage: with developments in research and new technology, the quaternary sector begins to increase, providing high-skilled jobs.

The Clark-Fisher Model

How do economies differ in developing, emerging and developed cities?

Cities develop at different rates due to a range of factors, but even developing countries are at the industrial stage of development. Let’s take a look at how they compare in the table below.

Developing e.g. Lagos / Kampala	Emerging e.g. Mexico City, Mumbai, New Delhi	Developed e.g. New York, London, Paris
Limited primary industry	Limited primary industry	Limited, if any, primary industry
Secondary industry focuses on processing primary products in factories, such as textiles and food processing.	Secondary industry focuses on processing primary products in factories, such as textiles and food processing, as well as more focus on heavy industries and engineering.	Secondary industries are more focused on high skilled manufacturing such as engineering and printing.
Tertiary industries are very large, with a focus on government, administration, finance and services such as tourism, transport and entertainment.	Tertiary industries are large, with a focus on government, administration, finance and services such as tourism, transport and entertainment.	Tertiary industries focus on education, health, tourism and finance.
Small quaternary industry which is growing.	A rapidly growing quaternary sector, but still quite small.	Quaternary industries are quite large, with a big focus on IT, research and development, media, culture as well as key decision making.