GI3 - Economic Interactions & Flows Case Studies

Question 1

Outsourcing (Growth of Call Centres)

Answer 1

Philippines

• call centre capital 600,000 workers
• attractive low wages (teleserv agent $4,800 a year), speak english and friendly
• need new tech to compete click to chat, social media and emails now despite 1/4 population in poverty
• wants BPOs like India so offering tax breaks (India $70bn revenue, Philippines $9bn)

Question 2

Migration 1

Answer 2

Poland to UK

• 14% unemployed in Poland (2006)
• 15% migrants want to stay permanently
• 30% don’t know how long staying
• Poland Martial Law 1981 restrictions a push factor

Question 3

TNCs and FDI 1

Answer 3

Shell
- 2004 3% world oil, 3.5% world natural gas
- Operates in over 140 countries
- employs over 112,000 people globally
- $18.2bn income 2004
- serves 20mn people a day
Shell in Nigeria
- GDP $1000, 60% below poverty line, life expectancy 47yrs
- 20% GDP and 95% export earnings shell
- TNC power due to oil reliant economy, locals few financial gain
- TNC and tribes conflict over environmental issues
- Shell employs 5,000 and 20,000 indirectly
- over 4,000 oil spills since 2006

Question 4

TNCs and FDI 2

Answer 4

Toyota

• environmentally-friendly practices for good public image
• 2004 1/3 largest manufacturer of automobiles globally
• 51 manufacturing companies in 26 countries
• employed over 1/4mn people and sold 6.72mn vehicles over 140 countries
• UK for expanding market to avoid EU tariffs / quotas (skilled workforce, large market, second lang in Japan, supportive Gov.)
• 4th largest car exporter in UK
• 2002 £500mn net contribution to UK

Question 5

World Bank / IMF 1

Answer 5

Burma

• struggling to rebuild economy
• WB pledge $2bn development aid for projects
• 70% population no access to reliable electricity (need to expand access for hospital tech, shops stay open etc)
• 2011 start of political and economic reforms = firms want to invest there
• cleared arrears 2013 with Japanese bridge loan
• $200mn aid programme to help achieve universal health coverage by 2030

Question 6

World Bank / IMF 2

Answer 6

Mongolia

• Rural Education and Development (READ) project 2006-2013 funded $5mn IDA grant, supported by WB
• Integrate reading into curriculum = improve education and develop skills for growing economy
• READ teacher training techniques (e.g. role-play) added to Gov teacher training colleges
• set up classroom libraries 383 rural primary schools- 3,560 classrooms got 160 books each
• 200,000 mini and 10,000 ‘big books’ written by students/teachers
• ‘book bag’ system to read at home
• 4,549 teachers trained, 130,000 children use libraries

Question 7

World Trade Organisation

Answer 7

WTO Trade Deal

• ministers from 159 countries, aim to simplify trade across borders and make it easier for world’s poorest to trade
• to tackle barriers to trade (e.g. 36hours goods through customs Zambia to Zimbabwe) and reduce cost = more trade
• could add $1tn to world trade
• GB businesses benefit over $1bn
• potential world economy gain $1bn and 20mn jobs
• rich to cut tariffs on products from poor (help poor countries)
• ‘peace clause’ allowed to break farm subsidy rules for 4yrs for food-security (clause criticised as not solving issue)

Question 8

World Bank / IMF 3

Answer 8

Groundnuts Senegal and USA

• Senegal applied WB loan, competition = prices fell = loan strict rules (privatise and free trade) = flooded by US imports
• USA mechanised, Gov. protection, Huge market and no loan to repay

Question 9

Migration 2

Answer 9

Poorer Locations (e.g. Vietnam) to Thailand

• migrants move for higher wages, more rapid economic growth
• Thailand gains cheap labour willing to do unpleasant tasks
• Human trafficking - girls sold as prostitutes in Thai brothels / tourist spots
• Remittances sent home $200-300mn a year
• Poorer locations deprived of valuable workers
• illegal workers in Thailand who have overstayed visas
• 2mn migrants add 0.5% to GDP a year

Question 10

Outsourcing in ICT industry

Answer 10

India

• Attractive as cheap labour, english spoken, emerging middle class well educated youth, high profitability
• USA more unemployed ICT workers as result
• value of software outputs $150mn 1991-2 $5.7bn 2000
• family disruptions as children leave for cities
• caste system breaking with wealth and education
• 2.2mn employed by ICT industry
• benefits in developed areas of ICT not shared through community e.g. Pune - IT techs modern houses vs. shanty huts
• increased economic efficiency