Global Risks and Resilience Flashcards
what is profit repatriation
the process by which a company transfers profits earned in a foreign country back to its home country in hard currency (i.e. USD) after meeting the host nations tax obligations
Apple -> case study
Name some facts about Apple’s plan to repatriate $285 million back into the US
- Trump revealed that he would reduce the tax per cent rate from 35% to 15.5% to get big companies like Apple to bring their money back to the USA from overseas holdings
- Apple’s money was kept in Ireland for years, before the EU investigated Apple about its ability to pay taxes, causing them to move it to the small island of Jersey off the coast of Normandy (2015), which hardly taxes corporations -> Ireland stated it would ban tax avoiding corporations
- The rate of corporation tax in Ireland was the most competitive in Europe at 12.5%, but Apple had arranged whereby the max tax rate was just 1%, and in 2014 it only paid 0.005%
- Apple’s first step is to buy back even more of its shares. It has already purchased 22% of its outstanding shares since 2012
Define tax avoidance
a process used to reduce the amount of tax payable by means that are within the law.
what is a tax shelter
one type of tax avoidance
What is a tax haven
A tax haven is a country or jurisdiction that offers very low or even zero tax rates on certain types of income, making it attractive for individuals and businesses seeking to reduce their tax obligations.
name 2 examples of tax avoidance
- multinational corporations moving certain business activities or profits to countries with lower tax rates (often tax havens)
- others who refuse to repatriate profits back to their country of origin, again as a way of reducing tax burdens.
Nandos case study - tax avoidance
Briefly describe ->
- use the tax havens of Jersey
- if a Jersey-based company technically “owns” Nando’s image rights, the UK-based Nando’s restaurants must pay that offshore company for the right to use its own branding and logos. These payments are treated as business expenses, which lowers the profits (and, consequently, the tax owed) in the UK by about £20 million, while the income earned by the Jersey company is taxed at a lower rate.
- a place in the British Virgin Islands was anonymously owned, by the Nandos family trust to hold money there, therefore inheritance tax could not be paid
Who are the winner of tax dodging _ explain with stats or facts
big corporations and super-rich people:
- Since 2015, the richest 1% have more wealth than the world combined
- The super-rich use tax havens to continue to dodge their taxes
- 2014 -> saw the leak of the Panama papers -> unveiling how tax evasion and avoidance have become a standard practice globally
- 50 biggest US companies stashed $1.6 trillion offshore in 2015
- Europe’s biggest banks have registered over a 1/4 of their profits in tax havens
Who are the losers of tax dodging + explain
Ordinary people and poor countries:
- When rich people stash their profits overseas in tax havens, they deprive governments of resources they need to provide public services like schools and hospitals
- Governments either have to cut back on these services or collect higher taxes from everyone else
- tax dodging costs poor countries at least $100 billion every year -> enough to provide an education for 124 million childrena nd prevent almost 8 million deaths of children and mothers
- Africa loses $14 billion due to tax havens taht could save 4 million lives and get every child into the education system there.
what are disruptive technologies + example
a technology which brings major changes to the way people live and work instead of merely supporting and enhancing the current way things are done. One example is a drone -> unmanned aerial vehicles operated by a remote control - either by an operator or an on-board computer
benefits of drones
- people can mount cameras for their aerial films
- surveillance to help locate victims in earthquake and hurricane zones
- conflict can be waged remotely using armed drones
- can be used for companies -> Amazon use drones to deliver goods to customers
- can make structural surveys of buildings -> to monitor env conditions and provide farmers with info
- employment -> through manufacturing and tech
- monitor large crowds for saftey
cons of drones
- drones are not always properly accurate for war and conflict
- hacking drones - causing civilian fatalities
- spying - invading peoples privacy
- may desensitise armed personnel to war and killing
- problems of cost, breakdown and malfunction of computer software, and human error in operation
- used by terrorist organisations to conduct mass killings or killings of important people, i.e prime ministers, creating chaos within the country
what were the gatwick drone incident 2018
when drones were irresponsible flown closing Gatwick airport - an international transport hub at one of the busiest times of the year
impacts of the gatwick drone incident
- delayed and diverted flights
- introduction of technology to catch and stop drones
- business people may not be able to conduct work
- loses confidence/ rep in Gatwick
- transport on perishable goods may be diverted or lost
Whats is 3D printing
Technology that allows for the creation of 3D physical objects from a digital model, by building it up in a sequence of layers
What can 3D printing be used for? Advantages
- bone replacement, prosthetics -> medical advantages
- less waste from the design
- digital designs can be shared easily via online platforms
- short time
- parts may be printed for aircraft manufacturing (i.e. the fuel nozzles for Boeing and Airbus aircrafts)
- more energy efficient
- could cut the cost to produce manufacturing parts
Disadvantages of 3D printing
- lack of legislation - guns (3d printed gun was used to attack former Finnish PM), weapons and counterfeit goods can be created
- create tools to unpick locks - i.e. off handcuffs (german prisoners picked their handcuffs locks)
- could replace labour in increasingly complex tasks
what is risk?
A real or perceived threat against any aspect of social or economic life
How has hacking increased globally
- 15% of hackings originate from China
- over 10% of hacking attacks come from in Russia
- 16,000 websites hacked each year in India
- 25% of all hacking attacks come from within the USA
what are the new threats created by technological and globalising processes to businesses and individuals
Businesses:
- hacking
- trolls
- stealing money
Individuals:
- identity theft
- phishing
- hacking
- trolls
- pop up ads
- spam emails and calls
what is nationalism
Nationalism is a political, social and economic system characterised by the promotion of the interests of a particular nation, especially with the aim of gaining and maintaining sovereignty (self-governance) over the homeland
what are the 4 aspects of nationalism
- the nation
- national identity
- civic vs ethnic nationalism
- sovereignty
what is sovereignty in a nation?
the nation should not be controlled by any other nation or corporation and should have self-governance
what is the difference between hacking and identity theft?
hacking is gaining unauthorised access to data in a system or computer, whereas, identity theft is the fraudulent practice of using another person’s name and personal info to obtain credit, loans, etc
what is a named example of hacking?
- In 2017, Equifax suffered a massive data breach, exposing the information of 147 million people. This data included names, social security numbers, birth dates, addresses and in some cases, driver’s license numbers and credit card details
What are the two examples to illustrate geopolitical tension/conflict
- The UK and Brexit
- The USA and China
how has globalisation led to tension between Uk and Brexit
- the EU has failed to carry out its job - to create job opportunities and economic stability - causing many people to suffer from a lack of jobs, and poor welfare states.
-> Italy’s economy is barely bigger than it started in the EU and Greece’s economy has shrunk by 1/3
what is transboundary pollution
pollution that originates in one country but can cause damage to another country’s environment, by crossing borders through pathways like water or air. It can be transported over hundreds or thousands of kilometres
When is transboundary pollution most likely to occur? (3)
- polluting activities that take place close to borders
- Large-scale pollution events (Chernobyl incident)
- atmospheric, ocean or hydrological processes carry pollution in a direction which crosses a state border
what is the 3 case studys for transboundary pollution?
- forest fires in south east asia (main focus)
- acid rain in north america and europe
- transboundary aquifer pollution in south america
Summarise what is happening with acid rain in N.America/ Europe and its impacts
- Acid rain is caused when the pH value of water is below the naturally occurring value of 5.6
- pH 4 levels are expected in heavily industrialised countries
- Impacts aquatic systems, causing impaired production and tissue damage of fish, reducing biodiversity
- Taller industrial chimney stacks mean more sulphur dioxide from the US power plants in Ohio Valley is carried by prevailing winds over the border into Canada. The higher the stacks, the further the pollution travels -> this is the main cause of acid rain in the region
Summarise what is happening with aquifer pollution in south america and its impacts
- water quality is spoiling in transboundary aquifers
- The Guarani Aquifer underlies 1.2 million square kilometres under Brazil, Argentina, Paraguay and Uruguay.
- Pulp production and cattle rearing is putting the water store under pressure
- pollution in one country ultimately is transferred to its neighbouring states
Summarise what is happening with forest fire haze in south asia (causes)
- Every year, a toxic haze covers the main southeastern Asia area
- Smallholders and plantation holders use illegal slash-and-burn agriculture to cheaply and quickly clear peatland for the growing demand for the production of palm oil
- the thick smog and smoke created by this practice has blown to Singapore and Malaysia by monsoon prevailing winds in the dry seasons
solutions happening for the forest fire haze in south asia
- revoking permits for people found burning land
- people face 10 years in prison
- TNCs, like Unilever, are facing increasing pressure from environmental groups and buyers to ensure their supply chains are environmentally sustainable and do not contribute to transboundary pollution
- Indonesia has been dumping millions of litres of water in affected areas
- it is investigating into 10 corporations at fault
impacts of the south asia forest fire haze
- This has caused an estimated 100,000 deaths across the region, including 6500 deaths in Malaysia
- 500,000 people suffered from respiratory illnesses (state of emergency)
- fires become out of control and can spread into protected forest areas
- the burnt land becomes drier, making it more likely to catch fire the next time there are slash-and-burn clearings
- Forest haze has caused the closure of many schools/ fast food chains suspended their delivery services
- the air quality in Indonesia has reached 2000 AQI (301-500 is considered hazardous)
- destroyed the natural habitat of Indonesia’s orangutans ( the Bornean orangutan is critically endangered)
why is the forest fire haze in south asia been so difficult to stop
- Indonesia is not entirely to blame, as many corporations accused of illegal burning have Singaporean and Malaysian investors, who want palm oil for economic benefit
- corruption and weak governance have contributed to this situation
- some companies have said that Indonesian companies have operated outside the law for years with little sanction - says Greenpeace
- the fires occur in peatland, which is hard to put out as it can burn underground for months, and requires a lot of water to extinguish. Fires can spread underground and spring up in other places later
what are the impacts on people and businesses of the Equifax hacking breach in 2017
people:
- Individuals face long-term consequences like compromised credit scores and the risk of fraudulent use of their personal info
businesses:
the economic costs to both individuals and the company faced billions in fines, law suits and settlements
who is being impacted by hacking
- individuals
- governments
- TNCs
what are the positives of a surveillance society
- it helps to deter crime (CCTV)
- dashcam provides extra evidence to driver claims
- passport scanners help with efficiency
what are the negatives of a surveillance society
- lack of privacy
- risk of leaking privacy
- is expensive to implement
- can be used to collect data on people and sell them
- deepfakes can put innocent people in trouble
what are the physical risks to global supply chain flows
- natural disasters (earthquakes, floods)
- floods in Bangladesh
-2011 Japan tsunami - major impact on motor industry - 2011 thailand floods = shotages of hard drives after up to 1000 factories were forced to close, leading to economic losses of some $20 billion
what are the economic risks to global supply chain flows
SCRT
- currency fluctuations
- trade restrictions
- rising interest rates -> cause havoc for firms that require goods and cheap prices
- countries with a history of strikes
what are the political risks to global supply chain flows
- protectionism (a method that applies tariffs and quotas on imported foreign goods into a country to make domestic goods more attractive and reduce competition for domestic companies)
- trade restrictions
- conflict (UKRAINE AND RUSSIA)
- governments with poor political stability may make poor decisions
3 key facts about pollution from shipping
- 3% of global greenhouse gas emissions come from shipping
- If shipping was a country it would be the 6th largest emitter
- Bunker fuel used for ships is dirty, 3000x more sulphur in bunker fuel than car diesel
impacts of shipping (6)
- oil and chemicals released in deliberate discharges and accidental spills
- waste dumping, including sewage and garbage
- air pollution through the release of greenhouse gases
- physical damage through the use of anchors
- noise pollution, which disturbs large mammals such as whales
- Ships release sulphur and nitrogen oxides in their exhaust, which lead to acidification
what is the importance of shipping
- responsible for transport and distribution of an extremely high percentage of consumer goods around the planet
-> i.e. 99% of total merchandise trade is relied on in Australia - Shipping is an extremely cost-effective way of moving non-perishable items from Southeast Asia to the rest of the world, giving cheaper costs for the consumer
Name an important shipping route and the recent issues it has faces + effects
The Panama Canal
- This Canal is important provides a “shortcut” from the Pacific to the Atlantic ocean, and provides most of the USA’s goods. It is heavily affected by climate change
- Due to a lack of rainfall, there is not enough water for ships to travel through the canal and could affect the long-term viability of this as a usable trade route.
- if less ships can go through, the price of products will increase and will be delivered later
What are the three routes that help carry shipping around the world
- The Panama Canal
- The Suez Canal
- The Strait of Malacca
What is the case study for shipping lanes and water pollution
- South Korea
What is the case study for shipping lanes and air pollution
- Hong Kong
