Development and Globalisation Flashcards
What is development?
Development is economic and social progress which leads to an improvement in the standard of living and quality of life for and increasing proportion of the population.
What is globalisation?
Globalisation is the process of the world’s economies, political systems and cultures becoming more strongly connected to each other through the flows of people, products, services and capital.
What are the changing factors as development changes? (4)
- Economic – there is a shift in employment from the primary sector like agriculture into manufacturing and modern service activities. Productivity increases and international trade expands. As economic growth continues manufacturing moves up the chain to focus on technology and advanced production. Income inequality often widens between the rich and poor. Economic development can be measure by GDP and GNI.
- Demographic – Mortality rate falls as living standards improve and medical technology becomes more widely available. Fertility declines as contraception becomes available and the advantages of a large family are no longer in an industrial economy. With a declining mortality and increasing life expectancy the population starts to age – move towards the end of the DTM.
- Political – A country is said to more political developed if its government is a democracy where people get to vote and have a say.
- Cultural/social – Secondary education becomes widely available changing values and narrowing gender inequality. Urbanisation is experienced as an ever-growing proportion of the population move to urban areas. Western ideas change traditions.
What is the development gap?
the gap between the low income countries and the high income countries
What is the development continuum?
The development continuum is the rank of countries by their levels of economic development form the poorest to the wealthiest countries. It is a measure that considers life expectancy, GNI and an education index to give a value between 0 and 1, 1 being the most developed. This is powerful as it includes both economic and social factors.
What are the 3 types of globalisation?
- Economic globalisation – the growth and spread of TNCs, rise of NICs and global institutions like the IMF and the world ban. The IMF offers financial and technical assistance to its members imposing conditions. The World Bank internally invests in projects aimed to reduce poverty.
- Cultural globalisation – Multi-directorial process caused by the internet and migration of ideas, initially from western countries but now we are seeing a rise in culture ideas from the east such as Bollywood.
- Political – influence of the United nations, trading blocs and western democracies on the rest of the world
What are flows of capital? how does this encourage globalisation?
Money that is invested historically within a country to expand companies or setting up new branches. Over time the amount of foreign direct investment, capital investment in foreign countries, has increased. Between 1996 and 2006 FDI increased from $3000 billion to $12000 billion. Improvements in technology have encouraged flows of capital around the world as it can instantly be transferred via the internet. These increasing flows of capital are making the world more interconnected and most countries’ economies are dependent on flows of investment.
What are flows of production? how does this encourage globalisation?
Historically manufacturing was located in more developed countries and the products being produced were sold in the same country they were made in. Recently manufacturing has decreased in developed countries like the UK who saw a drop in the number of people employed in manufacturing by over 2 million between 1985 and 2009. Now manufacturing has been relocated to lower cost and products are imported by developed countries. Changing flows of production are increasing international trade between LEDCs and MEDCs making them more interconnected. For example The UK imported £200 billion of goods in 1990 and in 2008 they imported £550 billion of manufactured goods from elsewhere.
What are flows of services? how does this encourage globalisation?
Improvements in ICT have allowed services to become global industries like banking and insurance. Services can locate anywhere in the world and still be able to contact customers who are anywhere else in the world. Deregulation in the 70s and 80s meant that it was easier for financial institutions to do business in other countries. High level services like finance tend to be in more developed countries e.g. London and new York, whereas low level services like call centres are increasingly being located in less developed countries where cheap labour is available e.g. India. Increasing flows of services are increasing interconnections across the globe through huge international organisations like banks.
What are flows of people? how does this encourage globalisation?
International migration has doubled since 1975 sometimes because they are forced to because of something like war but others who chose to for work. Some migrants are highly skilled who move to developed countries for better wages and working conditions – the UK has a fair amount of Indian doctors. Others are unskilled who move because of unemployment and poor wages in their own countries such as eastern European workers to the UK and Jersey who usually take employment in the agriculture sector. People bring aspects of their culture which can sometimes be integrated like China town and people have family all over the world making countries connected.
What is global marketing and Glocalisation?
Global marketing involves treating the world as one single market and using one strategy to advertise a product all over the world. Global marketing gives economies of scale as it is cheaper to have one campaign for the whole world. However marketing needs to be slightly adapted to regional markets as different populations have different laws and cultural attitudes. A term used to describe this is Glocalisation.
What are newly industrialised countries?
Newly industrialised countries are countries that are rapidly getting richer as their economies change from being based on the primary industry e.g. agriculture to secondary industry, manufacturing, and in some cases tertiary industry like ICT services.
Who are the Asian Tigers?
The original NICS who became rapidly industrialised in the 1960s - Hong Kong, Singapore, South Korea and Taiwan
As manufacturing became successful companies invested in the development of industries e.g. improving technology. The Asian tigers grew to become specialised with a highly educated and skilled workforce.
Who are the tiger cub economies?
second set of NICs - Indonesia, Malaysia, the Philippines, and Thailand - started rapid growth in the 1980s
As these Asian tigers became more wealthy it became more expensive to use them for production so TNCs move their manufacturing to less developed countries leading to the second wave TNCs which are Malaysia, Thailand and the Philippines.
What are the stages that led to the growth on NICs?
Aid, loans, investment and technology meant that countries could invest in manufacturing to produce goods for export. High rates of population growth and inward migration provided a labour force.
Step 1 – Governments in the 1950s-60s encouraged traditional cheap labour industries. TNCS were attracted by cheap labour and raw materials
Step 2 – money form exports was invested in new industries which had previously been imported – import substitution
Step 3 – money saved from reducing imports was invested into higher level manufacturing of computers, TV and cars for export. – Export oriented industries. Foreign currency was used to pay loans, invest in expanding industries and improve education, productivity and skills.
Step 4 – South Koreas economic growth was huge from 1960-90 based on financial loans from the USA. In 1997 the Daewoo conglomerate imploded with $80 billion of debt causing a ripple to other south Asian countries.
Why did the Asian Tigers economies grow so rapidly?
- Investment from TNCS in the form of setting up manufacturing because of what the Asian tigers offered.
- They had a cheap workforce, low cost and availability of raw materials, reasonable infrastructure, and favourable government policies like subsidies, reduced trade tariffs, less strict environmental and planning laws and expanding domestic markets i.e. the expanding middle class and demand for material goods.
- Located on existing trading routes
What are the advantages and disadvantages of growth in NICs?
Benefits of growth
- Wealth and living standards of a population improve
- Better access to health and education
Disadvantages off growth
- Poor working conditions
- Environmental damage from rapid industrialisation
Who are the BRICS?
Brazil, Russia, India, China, South Africa - recognised for rapid growth in 2001 - 3rd generation NICs
Case study - China - NIC
How did Chinas economy grow
- Since the 1970s china has experienced rapid economic growth – GNI per capita rose from around $180 in 1978 to $2940 in 2010 a growth of about 10% each year
- Until 1978 the government controlled all of China’s productive assets but since then there has been a number of economic reforms and changes in government policy which has led to economic growth.
• Encouraging imports and exports by reducing tariffs and taxes – exports rose by 19% per year between 1981 and 1994
• Encouraging the growth of private businesses – allowing farmers to sell their own produce
• Foreign investment was encouraged with the creation of special economic zones were foreign companies would receive tax breaks if they invested in manufacturing
• Greater investment in education to create a workforce more attractive to TNCs
• Greater investment in infrastructure
• In 2001 china joined the world trade organisation further opening markets to inverters and allowed easier exports
Case study - China - NIC
consequences
- Manufacturing boomed seeing economic growth that has led to increased wealth and improved living standards in China
- However there has been negative consequences
• A wider gap between rich and poor, much development has been in cities and along the coast leaving poor rural areas
• Environmental problems, air pollution and acid rain in industrial areas due to increased emissions
• Working conditions, poor in some areas e.g. in 2010 over 130 workers were injured by a toxic chemical at a factory in Suzhou making product for Apple
Describe and explain the globalisation of the service sector
Due to improvements in technology serviced based companies have been able to located anywhere in the world and has caused economic growth in such countries like India who specialised in the ICT service industry.
TNCs are attracted because
- There is a skilled workforce, workers that speak languages and are technologically skilled
- Low labour costs compared to developed countries
- Good communications links, telephone and internet
- Favourable government policies
- Expanding domestic markets – increase in wealth increases demand for services
Case study - Service sector - India
Reasons for growth
The economy has grown by an average of 7% per year since 1997.
In the 1990s economic reforms were made to reduce barriers to trade and encourage foreign direct investment.
In 2011 the service sector accounted for around 56% of GDP and has increased wealth, employment and living standards.
Growth in the service sector succeeded for a number of reasons:
• Plenty of high educated and technically skilled workers, around 3 million people graduate from universities every year in excluding 500, 000 engineering graduates
• English is widely spoken and understood – good for the call centre service
• Low labour costs
• Extensive communications network
• Stable democracy, over 50 years of independence
Bangalore is the IT capital of India and in 1991 was established as a software tech park. It was the first area to set up a tech university and promoted the IT industry through grants.
Case study - Service sector - India
Impacts of growth
Positives • Huge employment growth • Advancement of skill levels • Enabled indigenous TNCS to establish • Growth in average income • More interconnected Negatives • Electronic sweatshops – long and intense hours • Concerns over privacy of data • Discrepancies in wealth – English speaking, middle classed benefit most
What are the impacts of new markets on growth in the 21st century and the global economy?
- Countries which are opening up to international trade and investment. Examples include NIC’s, wealthy oil producing countries like Saudi Arabia and countries that have recently shifted from a closed to open market like Russia.
- BRICs – Brazil, Russia, India, China and south Africa – account for 40% of the world’s population and 25% of global GDP – average economic growth of 6.5% - emerging middle classes and youthful populations contribute to the process of growth, the prosperity of a rising middle class will drive up demand and generate huge markets
- Some new markets have very large populations and as they develop and become more open to international trade the wealth of their population increases. This creates a growing demand in these countries for material goods and services allowing more developed countries such as the UK to grow economically – opportunities are provided for companies in developed countries to increase profits
- New markets are increasingly important for the global economy – China has been responsible for 20% of global economic growth since 2000.
- Some people think that balance of world power might shift into new market countries and away from North America and Europe.
What are the impacts of new technologies on the growth in the 21st century and the global economy?
- Led to growth in many areas of the world economy – work done by computers and robots is faster and more consistent. – computerised aided manufacturing
- Huge profit have been made from the production of new technologies and their sale and distribution to existing and new markets.
- High levels of investment in creating new technologies – growth in research and development
- New technologies are continuing to be created which could create more economic growth in the future like wireless power transmissions and new energy resources.
Case study - growth in the 21st century - Dubai
Initial growth
Its geographical position has always made it an important port of call for foreign traders, until 1930s it was well known for its pearl imports. The discovery of oil in the 1960s caused an influx of foreign workers, the estimated population growth between 1968 and 1975 was more than 300%.
Dubai has invested in new developments particularly those associated with new technologies and has encouraged the flow of foreign capital. It has built the largest man-made harbour in the world and has constructed some of the world’s tallest skyscrapers such as emirates tower. Revenues from oil and natural gas contribute to less than 5%. The population is now estimated at 2 million, 71% male, 81% expatriates, 70% European and Asian.
Case study - growth in the 21st century - Dubai
More recent development
Development of tourism
- Burji Al Arab is the world’s tallest free standing hotel
- Palm island is one of the world’s largest land reclamation – islands have hotels, apartments, villas, marinas, restaurants and sports facilities
- Large choice of accommodation
- Adventure activities, festivals, grand prix
- Heritage attractions
- Shopping
- Business tourism – Dubai World Trade centre holds the middle east’s largest convention venue with eight exhibition halls, multiple meeting rooms and two hotels
Dubai is becoming an increasing hub for service industries such as IT and Finance, the New Dubai International Financial centre and Dubai Internet city. Ownership and taxation benefits have led to internationally known companies establishing there.
What are the economic characteristics of a country at low level of development?
- Low incomes – GNI per person is less than $745 and in Ethiopia in 2010 it was $380
- Poor trade links – the poorest 10% of the world’s population only account for 0.4% of world trade
- High levels of debt – many borrow money for development projects, loans have high interest rates and so struggle to pay them back
- Trade in low profit goods – many less developed countries rely on the export of primary products such as agriculture, timber and mineral
- Trade deficit – spend more on importing goods than exporting them, more developed countries will manufacture products from their low costs products and sell them back to them at high prices
- Economic instability – based on agriculture so if crop fails so does the economy, narrow range of exports makes them vulnerable to change in price and demand.
What are the social characteristics of a country at low level of development?
- Limited health care – thousands of patients per doctor – in Ethiopia there are over 30000 patients for every doctor compared to 360 in the UK
- High infant mortality rate – in Ethiopia in 2010 there were 75 deaths per 1000
- High levels of malnutrition – in Ethiopia between 2004 and 2005 46% of the population were undernourished and malnutrition was responsible for half the deaths of children under the age of 5
- Low levels of education – primary school attendance in Ethiopia was 45% between 2005 and 2010
- Low literacy rates – Ethiopia 2010adult literacy rate was 30%
- Lack of access to clean water and sanitation – in Ethiopia in 2006 42% of people had access to clean water and 11% to sanitation
What are the demographic characteristics of a country at low levels of development?
- Low life expectancy – 2012 in Ethiopia it was 56 compared to 80 in the uk
- Higher birth rate than death rate – rapid population growth
What are the political characteristics of a country at low levels of development?
- Many don’t have a democratic government – dictatorial
- Political corruption
- War and conflict – less money to be spent on development
What are the cultural characteristics of a country at low levels of development?
• Inequality – between men and women and social and ethnic groups
