Development and Globalisation Flashcards
Name some common developmental indicators?
GDP/Capita IMR Doctor access Literacy rate Birth Rate Death Rate
What is HDI?
Human Development Index - a compound measurement of development (better than single indicators)
Economics issues in LDCs?
- low incomes (Ethiopia GNI/capita is $380
- poor trade links/presence (10% of population in LDCs, 0.4% of trade)
- debt: money must go towards high interest repayments
- trade in low-profit goods, mostly primary resources e.g. minerals
- trade deficits
- economic instability and lack of diversification
Social issues in LDCs?
- limited health care (30,000 patients/doctor in Ethiopia)
- high IMR (75/100,000 in Ethiopia)
- high levels of malnutrition and disease
- low education and literacy levels (30% in Ethiopia)
- lack of access to clean water and sanitation
Demographic issues in LDCs?
- low life expectancy (56 in Ethiopia)
- rapid natural population growth leading to food shortages
Political issues in LDCs?
- not truly democratic
- corruption
- war and conflict
Cultural issues in LDCs?
- conservative religion hampering development
- inequality between genders and ethnic groups
What are the benefits of National Groupings?
ECONOMIC BENEFIT:
- reducing barriers to trade, thus increasing trade (NAFTA)
- larger market for business
- comparative advantages as countries can specialize to maximize productivity
PROMOTING DEVELOPMENT:
- tackle issues of global concern e.g. UN Millennium Development Goals which highlighted global issues
TO INCREASE SECURITY AND PEACE
- less likely to go to war with an economic partner and also agree on policies to increase regional and global security
Positive consequences of National Groupings?
- increase development due to increased trade
- increasing QoL
- can support declining regions or industries e.g. EU rural development policy
- freedom of movement
- better global representation for smaller countries
- reduced conflict and improved relations
- global security e.g. NATO
Negative consequences of National Groupings?
- loss of some self-determination
- sharing resources, some will lose out
- can reduce extra-group trade
- richer states must support poorer ones
What is the EU? (National grouping CS)
Closely integrates economic and political union:
- single market
- many countries with a single currency
- common laws and policies e.g. CAP
Positive Impacts of EU? (National grouping CS)
- trade increased (not just displaced but created outright), 12-23% GDP from EU since 1970
- Euro means price consistency and less uncertainty about XRs
- support for industry e.g. CAP
- increased security from external threats e.g. biometric passports, Schengen DB
- freedom of movement
Negative Impacts of EU? (National grouping CS)
- joining can be expensive e.g. environmental requirements must be invested in
- sharing resources e.g. CFP means British fishing grounds are now open to other states
- extra-EU tariffs stifle extra-EU trade and are protectionist
- unskilled immigration fueling tension and driving down wages
- loss of some self-determination
Economic and environmental sustainability…
are often in conflict
Timber Industry in Sarawak? (Economic/Environmental Sustainability CS
- one of largest tropical hardwood exporters (19mil m^3 in 1990), becoming vital to the national economy
- this has caused widespread deforestation (70% of forests gone) leading to habitat loss, soil erosion and flooding
- rate of logging became so great that they were going to run out in under a decade
- since 90’s, forest management plans in place with a 25 year cutting cycle
- illegal logging still occurs
Commercial Agriculture in Sarawak?
(Economic/Environmental Sustainability CS)
- rising since 1990’s -> mostly palm oil (6% of exports)
- plantations require forest clearing
- monoculture reduces biodiversity
- use of chemicals and waste causes water and soil pollution
- still rising due to demand causing continued harm
Other Industries in Sarawak? (Economic/Environmental Sustainability CS)
- since 2000, increased investment in manufacturing/construction
- these industries require power, usually coal generated
- this contributes to GG emissions
- not currently environmentally sustainable
What/Where is the Great Barrier Reef? (Sustainable tourism CS)
- largest coral reef system on Earth
- NE coast of Australia
- tourism accounts for 87% of area’s economic output
- generates over AU$5bn annually
Negative Impacts of tourism on GBR? (Sustainable tourism CS)
- coral reefs are very sensitive to pollution through waste, litter and boats
- coral can be damaged by boat anchors and careless divers
- GBR has passed a point of no return and will never fully recover
- tourists disturb wildlife e.g. seabird nests upsetting local equilibrium
- culturally and economically important area to indigenous people - this can be obstructed by tourism
- developments can damage coastal ecosystems which sustain the reef
GBRMPA steps to make tourism more sustainable?
- established a zoning system of activities to protect the most sensitive areas
- fishing permits are capped and there are strict regulations
- operators pay AU$3.50 per visitor per day to GBRMPA
- operators play a vital role in reporting damage and helping fund research to monitor decline
How does aid help development?
Allows investment in areas aimed at improving QoL e.g. healthcare
Problems with providing aid?
- corruption, a lot of aid money simply disappears
- logistical issues delivering aid, particularly w/ poor infrastructure
- bilateral aid can be tied to benefit the donor country
- dependence on aid can develop
How does trade help development?
- increasing economic growth by creating employment and wealth
- increasing the country’s capacity to reinvest in QoL
Problems with trade?
- less developed countries cannot compete in global market due to low-tech processes or against HIC subsidies e.g. US agriculture
- conflict/disease/problems domestically means money cannot be invested in trade
- can have negative social impacts e.g. depressing wages and poor working conditions
- primary goods generate little profit and are unreliable
- lack of diversification makes growth fragile i.e. if one good reduces in demand could stall economy
Consensus regarding trade and aid?
Combination of the two is required
What/Where is Sudan? (Trade vs Aid CS)
- one of poorest countries in Africa
- long periods of civil war and conflict
- economy has been growing at 5% annually but this had not translated into and improvement in living standards
- half the population live off less that $1 per day
Aid in Sudan? (Trade vs Aid CS)
- 2007, over $2bn in aid (5% of GNI)
- 70% of this was humanitarian
- comes from different sources
- a lot of short-term food aid but this does nothing to address the cause
- some is used to promote education e.g. USID funded construction of 150 schools
- conflict and corruption makes delivery difficult
Trade in Sudan? (Trade vs Aid CS)
GROWTH OF OIL IS DRIVING TRADE AND THE ECONOMY
- 1999, Sudan began exporting oil and it is now their main export with a trade surplus
- driven economic growth and improved their international standing and importance
- most wealth generated remains concentrated at the top
- little is being spent on development
- 40% of GDP is still agricultural, which is very unreliable
- barriers to trade and WTO rules lock Sudan out (HIC subsidies and average 20% tariffs)
What is Globalisation?
The process of the world’s economies, political systems and cultures becoming more integrated and interconnected.
What triggered Globalisation? (mainly in the 80’s)
- telephone network improvements and satellites made global communication instantaneous
- mobile communications becoming readily available
- the internet has enabled the transmission of vast amounts of data very quickly over long distances
- transport advances (reducing air-cargo costs, containerization, etc.)
Four factors promoting Globalisation?
Flows of:
- capital
- production
- services
- people
What are TNCs?
- companies that operate in 2 or more countries
- in 2010, accounted for 25% of global GDP
- quickly spread capital, tech and culture
- can exert huge political pressure (see Nigeria)
- main driving force between globalisation
General Structure of TNCs?
- HQ’d in HICs for skilled labour
- R&D in HICs for educated, skilled labour
- often regional R&D centres (Samsung in Warsaw)
- factories in RICs or NICs
- factories in target markets to avoid tariffs
Why have TNCs grown so rapidly in recent years?
- now able to exploit low costs in NICs
- take advantage of govt policies designed to encourage business
- operate where labour and environmental laws are lax
- access to growing markets
- economies of scale, increasing profits
- control supply chain to minimize costs
Impacts of TNCs upon Country of Origin?
ECONOMIC:
- profits repatriated from abroad
- skilled employment
- deindustrialization and wider decline
SOCIAL:
- range of products increases
- prices go down
- unemployment leading to social decline
ENVIRONMENTAL:
- reduces local pollution
Impacts of TNCs upon Host Countries?
ECONOMIC:
- increased employment and wealth -> multiplier
- TNCs may out-compete local businesses
- little profit remains in the host country
SOCIAL:
- investment may lead to a more skilled workforce
- increase productivity
- keep wages low and treat workers poorly
- managerial positions are likely to be filled by employees from origin countries
- urbanisation
- decisions are made with little consideration for the host country - could just leave one day
ENVIRONMENTAL:
- causes pollution
- construction will destroy habitats
- some investment in sustainability, maybe
What is Wal-Mart?
- largest retail TNC
- owns numerous chains e.g. ASDA
- still HQ’d in Arkansas
- manufacturing shifted to NICs e.g. electronics in China
- expanding in emerging markets e.g. Bharti Enterprises in India
- exported the US’ idea of a supermarket globally, where everything is under one roof (not popular in India)
- some glocalisation by buying locals chains
Impacts of Wal-Mart in USA, the origin country? (TNC CS)
SOCIAL:
- provides huge range of goods - gardens to tyres
- most are open 24/7 for convenience
- most jobs are poorly paid so the govt has to support employees, effectively subsidising Wal-Mart ($85mil in CA)
- poor working conditions e.g. denying meal breaks lawsuit
ECONOMIC:
- provides thousands of jobs
- provides cheap goods
- contributed to decline in manufacturing
- out-price local businesses (for every 100 jobs created, 50 local ones lost)
ENVIRONMENTAL:
- produces vast amounts of pollution
- increases traffic increasing pollution
Impacts of Wal-Mart on host countries? (TNC CS)
ECONOMIC:
- jobs in construction, manufacturing and retail (209k jobs in Mexico)
- use of local companies and farmers ($8bn annually in Canada)
- local suppliers can use Wal-Mart to expand
- pays very little to suppliers
- local companies out-competed
- most profits sent back to US
SOCIAL:
- skilled jobs in LEDCs (policy to fill managerial roles with locals)
- offers a reliable wage
- poor working conditions e.g. 80hr working weeks in Bangladesh
- donates hundreds of millions to give appearance of trying to improve conditions
ENVIRONMENTAL:
- invests in eco-friendly e.g. in Puerto Rico 23 Wal-Marts have solar panels
- uses huge amounts of land e.g. 29000m^2 shop in Hawaii
What are the Asian Tigers?
- first generation NICs in the 1960s
- HK, Singapore, SK, Taiwan
Attraction of NICs?
- cheap labour
- abundance of cheap land and materials
- reasonable infrastructure
- business friendly environment
- reduced tariffs
- lax labour and environmental regulations
- expanding domestic markets
Why do NICs move?
Wages rise, companies move elsewhere, new NICs are created.
Cyclical.
China as an NIC? (NIC CS)
- since 70’s, China’s GNI/Capita has growth consistently at 10%
- since 1978, the govt has allows and encourage privatisation, causing growth
- tariffs and taxes cut to encourage trade - exports rose 20% annually in the 80s
- encouraging the growth of private business
- SEZs setup to draw in FDI, mostly through tax breaks
- investment in education and infrastructure
- joined WTO in 2001, further opening China
Companies moved en masse to China
Negative Consequences of China’s growth? (NIC CS)
- wider gap between rich and poor (coastal vs interior)
- pollution, acid rain, air quality
- poor working conditions, 130 injured in 2010 by toxic chemical in Suzhou Apple Factory
- poor working culture, spates of suicides at many factories
India as an NIC? (NIC CS)
- annual 7% growth since 1997
- mostly based of service industries
- services account for 56% of GDP
Why?
- good supply of skilled, educated labour (500k engineering graduates annually)
- English is widely spoken
- cheap labour
- extensive communications infrastructure
Local Companies driving growth in India? (NIC CS)
- migrants returning to India in the 90s recognized the IT needs of HICs and setup businesses to satisfy them
- low labour costs meant more competitive pricing
- TNCs began to outsource to these companies to reduce costs
TNC Relocation driving growth in India? (NIC CS)
- skilled, English speaking workforce suited for back-office roles e.g. customer support
- average salary in India is 1/10 of UK at £1200
- KPMG employs people in 10 cities in India
Negative Impacts of India’s Growth? (NIC CS)
- TNC profits leave the country
- increasing wealth divide
What has recent economic growth been mainly driven by?
Emerging Markets (China responsible for 20% of growth since 2000)
New technologies role in growth?
- new sectors
- increasing productivity
- R&D investment
- automation to have drastic effects to come
