Chapter 12-Key Issue 3: Where Are Business Services Distributed?

Where is a prominent example of an offshore center?

Cayman Island

Explain why business services are disproportionately concentrated in global cities.

Global cities are at the center of the flow of information and capital making them a perfect place to locate business services.

List 3 major characteristics of global cities

Headquarters of large corporations are clustered in global cities, Global cities attract the headquarters of the major banks, insurance companies and specialized financial institutions, Global cities are divided into three levels: Alpha, Beta, and Gamma

basic industry

Industries that sell things to the consumers in the settlement.

What are typical back-office functions? OR Business-Process Outsourcing (BPOs)

Insurance claims processing, payroll management, transcription work and other routine clerical activities.

Explain how a basic industry creates new types of jobs and why it's devastating for communities that lose basic industries.

It brings in money from its exports therefore stimulating the non-basic enterprises. New basic industries also attract new workers and their families to settlements, creating more services and thus creating new jobs. Communities that lose basic industries lose jobs, people, services and their economies weaken.

Why have LDCs been able to attract back offices?

Low wages and the ability to speak English

What functions do offshore centers provide, and explain each?

Taxes: Taxes on income, profits and capital gains are typically low or nonexistent. Privacy: Bank secrecy laws can help individuals and businesses evade disclosure in their home countries. Offshore privacy provides havens against tax dodges and other illegal schemes.