aos 3 Flashcards
global inequality
60% live in low income countries
11% survive on incomes below extreme poverty line
extreme poverty
a condition charcterised by severe deprivation of basic human needs (food, safe drinking water, sanitation, health, shelter, education + information. depends not only on income but also on access to g+s
developing
developing is used to refer to poorer countries that have a low level of economic development + may be in the process of improving their level of eco development
development
multidimensional process involving economic, social, political and istitutional chnages that are needed to improve the daily material + non-material wellbeing of all in society
evidence of development
poverty rates declining
improved job opportunities + decrease unemployment
distrib of g+s = more equal
ppl = healthier + more literate + better clothed + nourished + live longer
less eco + social insecurity
ppl = happier
eco act = enviro sustain
GDP as a measure of development
↑ GDP ->↑ income -> ↑ consumption -> ↓ poverty -> ↑ living standards
limit of GDP:
> exclude non-marketed g+s
> x distinguish b/w monetary that improve and decrease welfare
> based on estimates
> x account value associated w/ depletion of nations stock of natural capital/neg externalities
> x account value of leisure time
HDI indicators
life expect
infant mortality
access to basic g+s
access to healthcare
risk of disease
access to edu
literacy rate
access to tech
male/female equality
govt spending priorities
policies to lift investment levels
- set up supervise + run secure banks + financial institutions to collect household savings -> available for financing higher levels of investment required to grow prod capacity
- protect rights of all ppl -> fair + efficient -> greater certainty + incentive for invest + expand/ live safe + happy
- international aid -> lift public sector investment levels + grow productive capacity
- ensure rich ppl pay required taxes to help finance public investment + infrastructure projects
- govt incentives -> encourage private investment -> promote self-sufficiency + security in food + comm services
- measures -> avoid wasting/misusing govts limited financial resources/avoid adding to repay debt
govt intervention: provision of basic economic + social infrastructure
quality edu + health/electricity/water supply/ transport/ communications + law + order
lift efficiency of resources, grow nations productive capacity/ lower unemployment/ lift income/ alleviate poverty/ improve quality of daily life
manage debt levels
poor country debt = high t/f need cut to manageable levels
‘white elephant’ projects -> add little to welfare e.g military spending
govts held accountable for spending
reform govt and key national institutions
poor countries need govt reform
vital for freedom of speech + press -> admin transparency -> hold govt accountable -> reduce incompetence corrupt + war
strong legal framework -> protect rights of workers/ child labour = illegal/ gain edu/ civil rights / protect enviro/ promote strong price competition
reduce trade barriers and protection by rich countries
rich nations -> protect farmers farmers/manufacturing/firms/ + miners from comp by poorer countries (export)
heavy protections (tarriffs/subsidies + import quotas)
expand free trade
reduce income inequality
democratic elect/ fair progressive tax
tax revenue promote develop via:
> improve edu + health
> deliver basic welfare -> some dignity
> provide basic eco infrastructure inc water + elect
reduce pop pressures
- govt persuade ppl for smaller fam via advertise + edu
- govt enhance fam planning facilities -> advice on contraceptives + health practices
- govt pass legislation -> promote + enforce gender equal -> fall in birth + increase develop
- govt use neg tax + pos welfare incentives
economic globalisation
reduce/remove barriers limiting free move of bus, trade, invest + labour across national borders
open up of world trade
Internationalisation of financial markets
The increasing importance of global corporations and other institutions that span national borders
The internationalisation of production with individual firms competing with firms in the world economy
The increased mobility of people and other factors of production, capital, information, ideas and goods and services
globalisation
taking international specialisation in the production by countries of particular goods and services, to an even greater level, thereby increasing the economic interdependence and interconnectedness of all countries involved through international trade.
Trade Liberalisation
any govt policy initiative designed to promote free trade/ reduce restrictions + barriers to free trade
Removing barriers forces Australian producers compete on a level playing field usually by seeking to boost productivity and cut costs in order to maintain international competitiveness.
Export promotion strategies (indirect measures)
Deregulation and reform of the labour market
Aimed to keep wage cost in line with worker efficiency therefore improve efficiency and productivity
export promotion strategies (indirect measures)
Cuts in the company tax rate
Aimed at improving cost competitiveness and therefore make our firms more internationally competitive
export promotion strategies (indirect measures)
national infrastructure projects
The government (often in partnership with private business) invest in improving infrastructure in Australia to provide the framework required for businesses to be efficient and therefore internationally competitive
export promotion strategies (indirect measures)
education + training policies
Skilled and educated workers are more innovative and efficient. Therefore labour output for wage input is improve and so to is international competitiveness.
International trade agreements
Bilateral trade agreements- treaties signed by two countries involving the reduction and removal of industry protection)
Multilateral trade agreements- treaties signed by a number of countries and are aimed at promoting trade and reducing industry protection.
Theses include our membership with international monetary fund (IMF) and the world trade organisation (WTO), both of which seek to develop global economic trade.
Advantages of globalisation & trade liberalisation
- Increased AD (X)
- Increased AS (Access to resources)
-Increased access to a variety of good/services
-Increased efficiency- due to competition
-Encourages international investment in Australia
Considerations of globalisation & trade liberalisation
Increase volatility due to connection/reliance on the rest of the world (GFC)
Increased competition forces some businesses into closure
Biosecurity
Negative externalities
National defence
factors accelerating globalisation
relaxation of government controls and adopt freer trade
World Trade Organization promoting eco benefits of freer trade -> govt reduce protection of local industry by:
cut tariffs on imports
abolish quotas or quantity controls on particular types of imports
lower payment of subsidies to local firms
factors accelerating globalisation
faster more efficient + cheaper transport + communication
e.g containers that can be stacked -> efficiency
transport costs re buy + sell goods = less important as proportion of final selling price
faster transport + lower costs -> bus = more aware of profit opp to move resources + prodn b/w countries -> nation specialise in prodn, encouraging expansion of global bus + international trade
factors accelerating globalisation
increased mobility of global capital and investment by businesses
N+L resources = hard to move b/w countries but money capital + invest resources = not
move investments in + out of countries -> flexibility on decision making for bus -> change + restructure operations as conditions change in countries
factors accelerating globalisation
improved availability of new tech
nultinationals can manufacture goods even in low income countries where edu = low
new tech allow electronic banking + invest -> encourage international trade + global financial transactions
evolution of fast + affordable internet -> advertise + c’er can shop online
factors accelerating globalisation
general belief that glibalisation will improve living standards
encourages countries tospecialisein particular areas of production where they have acomparative cost advantageover other countries-> improves efficiency in the way nations use their limited resources -> lowers the unit cost and price of goods and services and expands the volume of world trade between countries -> raises GDP levels for those involved, increases employment opportunities, lifts real incomes and purchasing power, and ultimately strengthens material living standards.
factors accelerating globalisation
economies of scale
When a business produces, it can experience cheaper production costs per unit of its output, the higher the volume of output it produces.
This is called achieving economies of scale.
Impact of Globalisation
the rise of asia
asia = worlds largest p’er of goods
Integration into the global economy:
Asia = high lvls relatively unskilled, cheap labour for multinational companies prepared to relocate to those countries
The influx of people into Asian cities has caused a massive increase in demand for infrastructure and housing, and consequently building materials and energy.
Impact of Globalisation
The rise of multinational companies
operate in more than one country but are based in one country -> take advantage of many opportunities offered by the factors that also contributes to increased globalisation.
MNCs have taken advantage of:
Economies of scale
Advances in technology
Differences in wages
Government regulations
impact of globalisation on Aust
lower c’er prices + slower inflation rates
aust c’ers = buy quality g+s @ less $. p.p of h.h incomes rise -> higher material L.S
measures to keep price low:
> tariff cuts -> comp
> labour market reforms (use enterprise bargaining + performance based pay)
> privatisation of govt businesses
> stronger comp policy inv ACCC
> deregulation of capital market
> tax reforms (lower taxes)
impact of globalisation on Aust
greater c’er choice + improved satisfaction of wants
globalisation -> ↑ c’er choice b/c h.h + bus = purchase what like in market around world.
surge of e-commerce -> easy
impact of globalisation on Aust
are we more ethical consumers
global communications -> ↑ ethical aware when choosing g+s.
concept of free trade = imp
Impact of globalisation on aust
globalisation affected aust workers + labour market
changes to wage system:
>spread of enterprise bargaining + productivity-based agreements negotiated on ↑ flexible firm-by-firm basis -> now cover 85% of all emp
>simplification + scale back of agree covered under old centralised, complex + inflexible minimum wage system
> promotion of union amalgamation + erosion of union influence in wage negotiations
> some relaxation of the unfair dismissal laws so firms get rid of unproductive + unnecessary workers
impact of globalisation on aust
jobs + unemployment
partial deregulation of aust labour market, which followed trade liberalisation + increased global comp, was intended to closely link wage rises to productivity/worker efficiency
impact of globalisation on aust
effect rate of eco growth
- better efficiency. openness b/c tariffs + less protection -> force allocation of resources efficiently
- cost cutting
- lower prodn costs
4, expansion of export market -> grow faster b/c x tariffs - more foreign investment
impact of globalisation on aust
aust incomes + material L.S
aust grow prodn faster that pop
↑ p.p b/c higher income + lower prices -> L.S rise quickly
impact of globalisation on aust
affect govt
pressured govt to implement ↑ AS, efficiency-promoting policies:
> reduce company rate tax
> build efficient national infrastructure
> promote comp via strengthen competition + c’er act -> price surveil + x anti-comp behaviour
impact of globalisation on aust
shrinking manufacturing sector
loss of jobs
natural disadvantage b/c geo location -> add cost to products exported
aust has poor economies of scale b/c small domestic eco -> unable to reduce average costs to level of other major eco
emerging comp -> restructure w/ small lay offs + major redundancies
impact of globalisation on aust
outsourcing of services
company using external organisation to provide services/undertake some operations of company -> lose jobs
cheaper labour -> reduce labour cost / reduce regulations/ proximity = closer to resources + cust/ access higher level of skill + expertise
impact of globalisation on aust
financial market
deregulation of financial market exposed aust financial sector to int comp -> need to respond effectively to global pressures
domestic and foreign banks compete -> excess credit
deregulation -> large floes of capital into + out of aust
impact of globalisation on aust
undermine national sovereignty + created other problems
national defence -> future resource + national security in int conflict may be compromised
possible loss of govt tax revenue -> companies shift profits to lower tax subsidiaries in low tax countries -> deprive aust govt from tax needed to pay for comm services
housing affordability -> massive purchases of property by foreign buyers -> expensive for young families - finding home ownership unaffordable
impact of globalisation on aust
affect enviro
GHG emissions increased by 70% b/c transport
increased agriculture prodn -> use chemical fertilisers + pesticides that poison soil + blue-green algae
use irrigation to increase crop + meat prodn for export -> soil salinity
increased water use for growing agricultural exports -> export water from driest continent -> water restrictions
impact of globalisation on aust
increased enviro accountability by multinational firms
multinational corps becoming better global citizens b/c:
>fear of poor rep -> c’er boycotts + decrease sales + profit
> bad publicity in media
> backlash by shareholders = reflected in fall in company share price
> fear govt will pass strict legislation -> limit operations
> prosecution under environmental laws
> desire + need for firms to retain competent + ethical staff
Rise of Multinational corporations:
Economic benefits
MNCs provide better pay -> impact competitors b/c take talent from domestic bus -> strain b/c x have best talent
40% higher pay -> employees benefit
extra pay minimise turnover -> ↓ cost for monitor work -> ↑ income + living standards
Rise of Multinational corporations:
Economic costs
after tax profit returned to country of origin -> x local govt get benefit -> x develop + outflow of income
POSSIBLE exploitation of workers inc child labour
Rise of Multinational corporations
social/ethical costs
large corp = accused of spreading homogenous products + culture arnd wrld
replace local culture b/c spread western values
put diversity of other producers at risk by mass generating homogenous product
Rise of Multinational corporations
social/ethical benefits
some MNC embraced fair trade movement
MNC provide better price for local farmer (supplier) -> products @ better value
Fair Trade -> fair price for g+s -> p’ers remunerated fairly
positive impact of MNCs on enviro
Fair trade become more popular + c’er want products enviro ethical
MNC’s consistent emphasis on CSR
negative impact of MNCs on enviro
↑ transportation of products -> pollution
13% of wrld carbon emissions = transport
MNC encourage culture of excessive/unnecessary consumption -> deplete natural resources/deforestation/damage to biodiversity
Globalisation + ↑ inequality in countries
MNC empoly most skilled -> pay emp more than local -> widen gap b/w low + high skilled -> worsen inequality
local bus face ↑ comp + lower income levels
Globalisation + food security
foreign = interest in buying aust farms ->13.6% land = foreign owned -> compromise in future food security -> may need to import
