Cambridge International AS & A Level Geography (9696): Topic 14 – Economic transition – Study Guide

This guide covers Topic 14, Economic transition, sections 14.1 to 14.4, of the Cambridge International AS & A Level Geography (9696) syllabus for examination in 2025 and 2026. Economic transition is one of four Advanced Human Geography Options assessed in Paper 4, which is an A Level paper (25% of the A Level). You study two of the four options, and the syllabus asks for one TNC case study (14.2) and one country’s regional development policy (14.4).

Use it with the Cambridge A Level Geography hub and checklist. For quick recall, use the revision notes; to test yourself, use the practice questions. This option builds on the population and settlement work in the Core Human Geography guide.

Coverage table

Syllabus reference	What you must know or be able to do (from the syllabus)	Where assessed
14.1	The nature of the primary, secondary, tertiary and quaternary sectors and their roles in economic development	Paper 4
14.1	The nature, causes (physical and human) and distribution of global inequalities in social and economic wellbeing	Paper 4
14.1	Critically evaluate some of the measures and indices of social and economic inequality	Paper 4
14.2	An introduction to global patterns of resources, production and markets	Paper 4
14.2	Foreign direct investment (FDI) and the new international division of labour (NIDL); factors affecting the growth and spatial structure of TNCs	Paper 4
14.2	Case study: the global spatial organisation and operation of one TNC	Paper 4
14.2	Factors in the emergence and growth of NICs; changes in the location of economic activity (e.g. outsourcing and offshoring): nature, causes and impacts	Paper 4
14.3	Regional disparities in social and economic development; the concept of core-periphery	Paper 4
14.3	Cumulative causation from initial advantage(s), spread and backwash effects, regional divergence and convergence	Paper 4
14.4	Case study: one country’s regional development policy, its regional disparities, difficulties in overcoming them, and evaluation of attempted solutions	Paper 4

How this option is examined

Paper 4 lasts 1 hour 30 minutes and is worth 60 marks. For each of your two options you answer a compulsory structured question (10 marks) and one of two essays (20 marks each). AO4 (evaluation) carries about 40% of Paper 4, so “assess”, “evaluate” and “to what extent” need a reasoned conclusion, not a list.

14.1 Economic sectors and their role in development

Primary activities extract raw materials (farming, mining, fishing, forestry). Secondary activities manufacture. Tertiary activities provide services (retail, transport, health). Quaternary activities handle knowledge and information (research and development, ICT, finance, consultancy).

The three-sector model is linked with Allan Fisher, Colin Clark (The Conditions of Economic Progress, 1940) and Jean Fourastié. As an economy develops, employment shifts from primary to secondary and then to tertiary work: farm productivity releases labour, and rising incomes raise demand first for goods and then for services. Quaternary work grows in the richest economies.

Evaluation. The model fits early industrialisers such as the UK. India built a large IT services sector while much of its workforce was still farming. Automation cuts factory jobs while output rises, so employment share is not importance.

14.1 Global inequalities in wellbeing

Nature. Inequality covers income and wealth, and also health, education, gender and political freedom. It exists between countries and within them.

Physical causes. Landlocked location raises transport costs. High disease burdens (for example, malaria in parts of the tropics) reduce productivity. Drought and other hazards destroy assets repeatedly. Resource endowment helps, but does not guarantee wellbeing.

Human causes. Colonial economies built around raw-material exports; conflict; weak governance and corruption; low investment in education and health; rapid population growth; unequal access to capital and technology.

Distribution. Wellbeing is highest in North America, Europe, East Asia and Australasia, and lowest in sub-Saharan Africa and parts of South Asia. The old “North-South” line is too simple: several East Asian and Gulf economies are now high income.

14.1 Measures and indices of inequality: critical evaluation

Measure	What it shows	Strength	Limitation
GNI per capita (often at PPP)	Average income per person; the World Bank uses it to group countries into low, middle and high income	Simple, widely available, comparable over time	An average hides distribution; misses informal and unpaid work
Human Development Index (HDI)	Launched by Mahbub ul Haq with the UNDP in 1990; combines life expectancy, mean and expected years of schooling, and GNI per capita (PPP), as a geometric mean since 2010	Wider than income	Only three dimensions; national averages; ignores inequality and environment
Inequality-adjusted HDI (IHDI)	Introduced in 2010; discounts HDI for inequality within each dimension	Shows development “lost” to inequality	Needs distribution data that are weak in many LICs
Gini coefficient	Income inequality within a country, from 0 (perfect equality) to 1	Captures distribution	Says nothing about absolute poverty; different patterns can give the same value
Multidimensional Poverty Index (MPI)	Developed in 2010 by OPHI and the UNDP; 10 indicators across health, education and living standards; poor if deprived in at least one-third of the weighted indicators	Measures household deprivation directly	Results shift with the choice of cut-offs, indicators and weights

Worked paragraph. “GNI per capita is the most useful measure of inequality between countries.” Assess this view.

GNI per capita measures average income per person, so it ranks countries clearly; this is why the World Bank uses it for income groups (knowledge, application). But an average hides who receives the income: two countries with similar GNI per capita can have very different Gini coefficients (analysis). The HDI and MPI also show outcomes income misses, such as schooling and clean water. GNI per capita is a useful first comparison, but it is least reliable where inequality is greatest, so it should be read alongside a distribution measure and a multidimensional index (evaluation).

14.2 Global patterns of resources, production and markets

Resources are unevenly spread: proven oil reserves are concentrated in the Middle East and Venezuela. Since the 1970s manufacturing has grown fastest in East and South-East Asia, and China is now the largest manufacturing country by value added. The richest markets remain in North America, Europe and East Asia. Global supply chains connect where resources are, where goods are made and where they are sold.

14.2 FDI, the NIDL and TNCs

Foreign direct investment (FDI) is investment by a firm in productive assets abroad, such as building a factory or buying a controlling share in a local firm. Buying shares without control is portfolio investment, not FDI.

The new international division of labour (NIDL) was set out by Folker Fröbel, Jürgen Heinrichs and Otto Kreye (The New International Division of Labour, English edition 1980). From the 1960s, firms split production into stages: low-skill assembly moved to lower-wage countries, while research, design, management and finance stayed in high-income countries.

Evaluation. The NIDL explains the early shift of assembly work well. It explains later change less well: NICs moved up into design and high technology, and firms from emerging economies now invest in high-income countries. Much relocation is subcontracting rather than FDI.

Factors in TNC growth and spatial structure: lower labour and land costs; tax incentives and export processing zones; locating inside large markets to avoid tariffs; containerisation and ICT, which cut transport and coordination costs; trade liberalisation and political stability; mergers, acquisitions and subcontracting. The typical structure is hierarchical: headquarters and research in the home country, regional headquarters in world cities, production and back-office work in lower-cost locations.

14.2 Case study (TNC): Nike, Inc.

This serves the requirement to study “the global spatial organisation and operation of one TNC”. Figures are from Nike’s Form 10-K for the year to 31 May 2025.

• Origins. Founded in 1964 as Blue Ribbon Sports by Phil Knight and Bill Bowerman; renamed Nike in 1971.
• Headquarters. World headquarters near Beaverton, Oregon, USA, with about 10,500 employees in management, research, design, marketing and finance. Regional headquarters: Hilversum, the Netherlands (Europe, Middle East and Africa) and Shanghai, China (Greater China).
• Production. Nearly all footwear and apparel is made outside the USA by independent contract manufacturers. In 2025, 97 footwear factories in 11 countries and 303 apparel factories in 34 countries made Nike goods. Vietnam, Indonesia and China made about 51%, 28% and 17% of Nike Brand footwear.
• Owned assets abroad. Nike’s subsidiary Air Manufacturing Innovation makes Air-Sole cushioning near Beaverton, in St. Charles, Missouri, and in Dong Nai Province, Vietnam: a small piece of true FDI in production.
• Distribution and markets. Major owned distribution centres include Laakdal (Belgium), Taicang (China), Tomisato (Japan) and Icheon (South Korea). Revenue was US$46.3 billion in fiscal 2025, with about 77,800 employees, not counting factory workers employed by contractors.

Operation and change. Sourcing has shifted towards lower-cost Asian producers, led now by Vietnam. In the 1990s campaigners criticised wages and conditions in supplier factories; Nike later published lists of its contract factories.

Evaluation. Nike fits the NIDL: design and marketing in the USA, assembly in Asia. But it controls a global system without owning most factories, so FDI figures understate its reach. Host countries gain jobs and exports, but contracts can move when costs rise, and most value added stays with the brand.

14.2 NICs and the changing location of economic activity

A newly industrialised country (NIC) has moved quickly from a farming-based economy to one led by manufacturing exports. The first generation were Hong Kong, Singapore, South Korea and Taiwan.

South Korea. After 1961, Park Chung-hee’s government pursued export-oriented industrialisation through five-year plans. From 1973 it invested heavily in six strategic industries, including steel, shipbuilding, electronics and petrochemicals. Family conglomerates (chaebol) such as Samsung, Hyundai and LG received cheap finance and tax breaks. High investment in education, high savings and access to US markets also mattered. Evaluation: state direction was central, which challenges a purely free-market explanation; but the model concentrated power and debt in the chaebol before the 1997 Asian financial crisis.

Outsourcing is contracting work to another firm; offshoring is moving work to another country. India’s IT and business services show offshoring of services. Causes: many English-speaking graduates, lower salaries, time zones that allow round-the-clock work, cheap telecoms, and support such as Software Technology Parks of India (1991). Bengaluru is the largest hub; the sector employed about 5.4 million people directly in 2023. Impacts: skilled jobs and a growing middle class, but concentrated in a few cities; some job losses in source countries.

14.3 Regional development within countries

Regional disparities are differences between regions of one country in income, employment, health, education and services.

Core-periphery. John Friedmann’s 1966 model has four stages: (1) independent local centres; (2) a single strong core draws labour and capital from the periphery; (3) sub-cores develop in the periphery; (4) an interdependent system of cities with reduced inequality. Evaluation: stage 2 fits many developing economies, but stage 4 is not guaranteed.

Cumulative causation. Gunnar Myrdal (Economic Theory and Underdeveloped Regions, 1957) argued that a region with an initial advantage (a port, a resource, an early start) attracts firms, jobs, income and tax revenue, which pay for better infrastructure, which attracts more firms.

• Backwash effects harm the periphery: young and skilled workers migrate to the core, capital follows higher returns, and core firms out-compete peripheral ones.
• Spread effects help the periphery: the core buys its food and raw materials, and investment diffuses outwards as core land, wages and congestion rise.

Stronger backwash means divergence; stronger spread means convergence. Albert Hirschman (1958) used the similar terms polarisation and trickle-down.

Illustration: Italy. At unification in the 1860s the north already had far more road and rail. Industry concentrated in the north-west and southerners migrated north or abroad: classic backwash. In 2023 southern regions’ GDP per capita still ranged from about 59% (Calabria) to about 86% (Abruzzo) of the national average.

Evaluation. Ratios can converge while absolute gaps widen, so say which measure you use.

14.4 Case study (regional development policy): China

This serves the 14.4 requirement to study one country’s regional development policy.

Disparities. From 1980, reform concentrated growth on the east coast: Shenzhen, Zhuhai, Shantou and Xiamen became Special Economic Zones in 1980. Between 1990 and 2000 the western region’s share of national output fell from about 20.9% to 17.1%, and Shanghai’s GDP per capita rose from 7.3 to 12.9 times Guizhou’s. In 2002 the west covered about 71% of mainland China’s area but held about 29% of its population.

Policy. The China Western Development strategy was proposed in 1999 under Jiang Zemin and covers 12 provincial-level units, including Sichuan, Guizhou, Yunnan, Gansu, Tibet, Xinjiang and Chongqing. Measures: infrastructure such as the Qinghai-Tibet Railway (Golmud-Lhasa section opened 2006, crossing the Tanggula Pass at 5,072 m), the West-East Gas Pipeline (started 2002) and West-East electricity transfer; investment incentives; and farmland-to-forest programmes. Companion plans followed for the Northeast (2003) and Central China (2004).

Difficulties. Distance from ports; mountainous, high-altitude terrain; the continuing pull of coastal jobs on young migrants; weak foreign investment in some western provinces; and political sensitivity in Tibet and Xinjiang, where critics argue infrastructure has encouraged Han Chinese in-migration and resource extraction.

Evaluation. Infrastructure and growth in the west have increased, and Chongqing and Chengdu are now major cities. But the east-west gap remains: Guizhou had the fourth-lowest provincial GDP per capita in 2020. The central government stresses poverty reduction and national integration; critics ask who benefits.

Worked paragraph. Evaluate the success of one country’s regional development policy.

China’s Western Development strategy, proposed in 1999, aimed to narrow the gap between the coastal core and the interior (knowledge). It built links such as the Qinghai-Tibet Railway to replace backwash with spread effects (application). Yet better links also let young workers leave and coastal firms sell into the west, so infrastructure can strengthen the core (analysis). Guizhou remained among the poorest provinces in 2020, so the policy has raised living standards more than it has closed the relative gap; its success depends on whether you judge it by growth or by equality (evaluation).

Common errors

• Treating outsourcing (who does the work) and offshoring (where) as the same thing.
• Calling all TNC expansion “FDI”: most of Nike’s factories are contractors, not Nike-owned.
• Describing the HDI without its indicators, or saying it still uses adult literacy.
• Saying the Gini coefficient measures poverty. It measures distribution.
• Naming core-periphery without spread and backwash effects, divergence and convergence.
• A 14.4 case study that lists projects with no judgement on whether disparities fell.

Links onward

Plan option choices with the exam preparation guide. Migration, which drives backwash, is in the Core Human Geography revision notes and practice questions.

Official syllabus

Cambridge International AS & A Level Geography (9696) syllabus for examination in 2025 and 2026, Topic 14 Economic transition (14.1-14.4), Paper 4. Your teacher will confirm which two Paper 4 options your school teaches.