G3A Globalisation Case Studies Flashcards
Factors of Economic Globalisation
World Trade Organisation
- 159 countries
- Forum for trade agreements
- Agricultural Agreement led to cut of tariffs on all agri-goods - 36% of MEDCs, LEDCs exempt
- Supervises 95% of global trade
- Rich countries such as the US can block imports of clothing from developing countries through high import duties and quotas
- Does not monitor poor labour rights in countries such as El Salvador where labourers earn $0.30 per hour
Factors of Economic Globalisation
European Union
- Regional agreement between 28 countries
- Ensures development and international stability through tariffs that protect intra-regional trade
- Within the Schengen area, free movement of people, goods and services
- Of the top 500 largest corporations by revenue, 161 have EU headquarters
Factors of Economic Globalisation
Information Technology
- 6.8 billion cell phone subscriptions worldwide at the end of 2012
- Total number of users reached more than 2.7 billion by 2013 (39% of global population)
Factors of Economic Globalisation
Transport
- In 1940s, London to Brisbane took 11 days and $20,000 - now only takes 22 hours and $2000
Factors of economic globalisation
Foreign Direct Investment
- 1066 foreign companies invested in the UK during the years 2004-2005 and made up almost half of the new projects
- In 2004, FDI totalled £38 billion in London and 32% of the UK stock market was foreign owned
Causes and Effects of Global Shift
Toyota in the UK
- UK had an open door policy so government and local authorities welcomed investment
- Strong Japanese affinity for the UK as they are both islands with colonial histories
- English is the international language of business, Japan’s second language
- Abundance of skilful workforce in Burnaston (20,000 job applications by the end of 1992)
- Transport links to the EU; M1 and M6 were directly on the link road where the plant is
Causes and Effects of Global Shift
Call Centres in India
- Operating costs 10-60% lower
- Salaries 10-15% cheaper
- Operators demand uniformity of language, dress and lifestyle and knowledge of western culture
- Loss of tradition as workers at call centres are required to dress in a Western fashion + hours influenced by American / UK holidays
Causes and Effects of Global shift
Movement into Eastern Europe (Slovakia)
- Volkswagen plants in Slovakia output 250,000 cars a year (Mexican plant output = 500,000), whilst Peugeot outputs 300,000 and Kia 200,000
- Attracts investment due to good infrastructure - highway, railway, airport, skilled labour
- Lowest business cost base of any EU country - 7 tesco stores in 1996
- Subsidies to Kia of 228million EU
- Free land to Peugeot created 10,000 jobs
Causes and Effects of Global Shift
Mattel (caravan capitalism)
- Mexicali plant lasted 7 years from 1968-1975
- 3000 jobs were lost in the USA due to the closure of plants
Causes and Effects of Political/ cultural globalisation
USA
- Output of US economy $14 billion nearly 3x times second placed Japan $5 billion in IMF 2009 report
- US dollar = global reserve currency
- USA has world’s second largest army behind China, however 25,000 aircraft (China, India and Russia combined only have 10,000)
- Defence budget in 2009 was $515bn, second to China’s $62 bn
- Americanisation through Coca-Cola, also English = global language
- Widespread geographical influence for example the military base at Diego Garcia which allowed US to counter Soviet influence during Cold War
Causes and Effects of political/ cultural globalisation
Bhutan
- Attitudes in young people have changes - violence has increased
- Dress style has changed from traditional to hip-hop - loss of culture
- Loss of family due to TV
- Graffiti in sacred places
- Car ownership doubled in Timpu
Causes and Effects of Political/ Cultural Globalisation
Fair Trade
- Low income developing countries account for >40% of the world’s population but is involved in <3% of all trade
- UN estimates that poor nations are denied $700 billion due to unfair trade
- If Africa received 1% increase in its share of exports, it would receive 5x what is does in aid
- Banana plantation workers earn 6x more thorugh Fair Trade
Causes and Effects of political/cultural globalisation
Tanzania
- Main export is coffee and tea (55% GDP) however many of these are grown in MNC controlled farms who control wages
- Babati Agricultural Project aims to involve locals and increase prosperity in the region through bottom-up schemes
Winners from Globalisation
**Nokia, **
- Jucu, Romania
- 3500 workers in new workforce size (from 2000)
- One German worker’s = 10 Romanians
- Creation of formal jobs (£ 180/ week) leads to income tax
- Council fixed the road in Jucu to accomodate Nokia
- However 2300 Nokia employees in Germany became unemployed with a further 2000 workers indirectly affected
- The factory in Jucu closed down five years later
Winners
India
- Risen due to policy change which formerly restricted foreign competition
- FDI in 2000 rose to $2 billion
- Revenue from Indian software exports grew to $4 billion 2000
- Benefitted from filter down business from the developed world e.g. cheaper labour costs, number of countrieshave ICT shortages
- However there are hgh levels of poverty - 40% live on less than $1 a day
- Rapid growth has also led to transport and pollution problems
Winners from Globalisation
China
- Risen due to the success of the coastal area - Shenzen, Dongguan due to favourable policies, cheap labour and superior infrastructure
- Death of Mao Tse-Tung meant China’s economic policy became much less isolationist -> economy grew 20x between 1980-2000
- Household Responsibility System allowed farmers to sell surplus
- Rural communities gained rmb 40bn in remittances in 2002
- Better infrastructure - Beijing-Guangzhou railway
- Chinese companies have benefitted from the go-global policy and thus have seen the rise of Petro-China and Sinopec
- US consumers gain access to cheap imports ($600bn in past decade) whilst the US has benefitted from cheap components
Winners from Globalisation
Taiwan
- Foreign TNCs benefit from the science bank and the free export trading zones as well as their rates being 5x less
- Cultural values from West benefit locals - American comics in Taiwanese
- Western holiday-pay structure has been implemented
- Increase in quality of life as women work too
- GDP per capita doubled from 1999 $16,000 to $32,000 in 2009
Losers from Globalisation
El Salvador Coca cola
- Accused of polluting the river with caustic soda which causes water abstraction
- Fish pop reduced by death/ migration
- Nejapa - import drinking water
- Nonetheless, coca-cola claimed that water discharged from their plants meets local regs and coca-cola regs.
- Shiva has stated that it takes nine litres of clean water to manufacture a litre of Coke though Coca-Cola says it is only an average of 3.12 litres.
Losers from Globalisation
Coca-Cola in india
- Drained many farmer’s wells by tapping into aquifers - 290 billion litres of water per day
Uttar Pradesh where women have to walk over 5km to collect water
Pesticide levels 400x over guidelines - water undrinkable
- Coca-cola - 2008-2011 water replenished 80%-150% in groundwater sources
Losers from globalisation
China
- However there are job losses in MEDC countries- steel production cannot be rivalled, nor can LEDCs rival China’s textile industry
- China’s demand for materials has led to price hikes - oil doubled in 2005 to $50 per barrel
- 23,000 Japanese companies now have to operate in China due to investment being drawn away from other countries
- Indonesian forests are being cut down by the illegal logging industry due to Chinese demand for timber - EIA estimates 20 shiploads a month from Indonesia to China
Losers from Globalisation
Telford
- Deindustrialisation of Telford occurred in the 20th Century
- Exhaustion of raw materials such as black-band iron ore
- Competition from other areas such as the Black country which had more accessibility
- Cramped nature of earlier sites (Coalbrookdale) sited in the River Severn Gorge provided no room for expansion
Losers from Globalisation
Shell, Nigeria
- Despite offering 25,000 jobs:
- Corrupted government
- 474 spills in 2012 alone
- Wealth of oil to nation taken overseas
Miscellaneous
Vietnam
8-10% growth between 1992-2000. Industry in south - Binh Duong province some 20 miles north of Ho-Chi Minh. Leading exports = textiles (19%), petroleum (13%), footware (11%).
Miscellaneous
British industrial output
Manufacturing in Britain has fallen 4% from 1979 to 2000 - employment has fallen from 27% to 19%.
Misc
Globalisation Index
political engagement, technological connectivity, personal contact and economic integration
Misc
Internet usage
75% of internet users come from rich country. There are some exceptions, based on this measure, Iceland is most globalised whilst 86.3% of the population has access to the internet.
Misc
How much did Foreign Aid fall by?
International aid fell by 40% between 1990-1999. Ghanaian rice industry undercut by US and Thai imports
Misc
What was the SUDAN 1 crisis?
contaminated chilli entering production - impacting 500 food goods globally
Misc
Losers in Asia
Negative consequences
Social problems
Malaysia - women = 75% of workforce, only 75% of male wage.
Cheap, illegal child labour
Thailand - 1 million 13-14yr olds in agriculture or prostitution
24% Singapore force = immigrants
3D jobs - dirty, dangerous, difficult
Environmental problems
20% vegetated land - degraded
waters contain heavy metal contaminants
Economic problems
Traffic costs $2-6 billion annually
First generation - no longer applicable for trading agreements
Indonesian aeronautics - bonsai industry (obsessive attention, never grow)
Misc
BRICS
Brazil, Russia, India, China = BRIC
BRIC formation
China- world platform w/out ostentatious presence
Brazil - world stage desire
India - better political representation
Russia - desires to become hydrocarbon superpower with links to Asia
Only dev. economies with GDPs exceeding $1 billion outside of the OECD
Lack coherency and political alignment
Three = nuclear powers
Two - UN security council seats
China & India - went to war w/ each other in 1962
Desire inter-trading @ $200 billion by 2015
BRIMC possibility - growing prominence of Mexico
