Globalisation case studies

Impact of IT

China

On the internet, people don’t care who or where something came from, nor who they’re buying it from. This allows companies in china to easily sell on the western market, in a way not possible before. China has a serious fear of being overthrown, so attempts to stop local people from accessing info against their government, & harshly punishes people that attempt to talk, or do anything against their authoritarian rule. IT has opened up a way for local people to connect with others, & is very hard to censor. The government of China has also used this as a weapon against foreign powers, with hacking.

UK

Sharp increase in internet users, particularly young & old ones. The average use of the internet in 2015 was 4h a day, & 2h on mobile devices. More than half access news online, & Book sales deceased following the introduction of e-readers. Activities previously on the high street moved to the internet, resulting in store closures & loss of jobs

Cuba

The US embargo on Cuba meant that people within the country could not access the regular internet or services. They could not get any undersea cables, & so had a very limited satellite link installed in 1986, with a cost of 10000 USD a month. The US has in the past blamed the government for cyber espionage. Illegal grassroots networks, & local WIFI hotspots have appeared in recent years allowing easier, albeit expensive connections to the outside world.

Containerisation

  • Reduced theft Easier transportation through standardisation
  • Lower costs
  • Far quicker to load a ship, rather than waiting for majority of time in ports.
    • Allows for up to a 320% increase in bilateral trade
    • Easier onwards travel, allowing for fewer larger ports
    • Less ability for dock workers to strike, & stop everything.

Global trade organisations

World Bank

The World bank lends money on a global scale, for important projects such as dams, poverty reduction & MDGs. In 2014, 65 bn was loaned, but like the IMF imposes significant conditions on loans & grants. All presidents have been US citizens, & the US has over 16% of the votes in meetings. Examples of projects include a 470mn loan to the Philippines in 2014 for a poverty reduction program, & funding for a mega dam in the DRC. This allows for countries to complete projects that funding has ended on. Overall, this is important to globalisation, although it is very much controlled by MEDECs. The world bank has two main goals for 2030, ending extreme poverty, by reducing the number on less than 1.90 a day to lower than 3%, & promote shared prosperity through income growth in the bottom 40% of every country.

World Trade Organisation

The WTO draws up international rules of trade, & intends to supervise & liberalise international trade. It asks countries to remove tariffs on imports, & subsidies on domestic products so trade is free for all, & aims for a global economy. For a country to receive loans, they need to follow the WTO rules. It does however lead to reductions in local employment, for tomatoes in Italy (Ghana) & rice in India (from US) The WTO meets in Geneva, & has around 650 staff. The current president is Roberto Azevedo, from Brazil.

International Monetary fund

The IMF is also based in Washington DC, & channels loans from rich nations to those needing help. These countries must agree to run free market economies, & allow for the entry of TNCs. It was formed in 1944 to stabilise currencies after the great depression & WW2. 44 governments joined to create a fund, to prevent spread of communism. The US has significant influence over the IMF, even though the president has always been from Europe. The IMF rules are controversial, & can lead to cutbacks on healthcare, education, housing & sanitation in these countries. It has currently 185 members, with votes given out based on money invested in fund. The US has 17%, & the EU 25.7%. The BRICS & Africa have less than 11% of the total vote. It contributes to globalisation by requiring free market economies in those countries where money is short, but also imposes US & EU regulations & ambitions on other countries, as either block could veto any funding. “The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.” An example of these issues are when Tanzania cut off water to many towns when it was privatised, in return for a 143m debt relief. This leads to countries being exploited by richer countries. They require SAPs to be introduced in these countries.

Trading blocs

European Union

What is it?
  • Group of 28 European countries in Europe.
  • Originally designed to ensure that Europe could never fight another war against itself, by splitting up all of the required production such as coal & steel throughout many countries.
  • Has charter of fundamental rights, which all countries are initially required to sign, even if membership of single market is not intention
Positives
  • Standardised outward & inward trade tariff
  • Promotes European unity & growth
  • Large science budget, allowing for far faster growth than any one country could achieve. Large projects easily funded.
  • Promoted peace & stability, whilst also assisting with human rights issues (Kosovo/Serbia).
  • Forces nations to yield to the collective environmental & science goals, for the benefit of all countries
  • Encourages regional transparency
  • Easier subsidies for agriculture keeping it alive for longer
  • Protection from outside Asian imports
Negatives
  • Some people feel they have “overstepped their mark” with regards to regulations, & imposed pointless regulations.
  • Some countries are against free movement of people during migrant crisis.
  • Some countries pay more into the budget than they receive back in benefits.
  • Certain countries have near complete control of certain departments (ex germany)
  • Standardised laws undermine local regulations.
  • Sometimes seen as not doing enough to help countries in need of assistance politically; potentially lead to the rise in protectionism, nationalism within the block countries.
  • Large budget for projects such as dams.
  • Slightly increased taxes
  • Increased food miles
  • Lead to increased separatism

ASEAN

What is it?
  • Ten member states in South East Asia. Established in 1967, contains a mix of high income & low income countries, intended to improve political power for these countries.
  • Member states have 600m people & a combined GDP of 2.4TNUSD
Positives
  • Eliminated tariffs between countries, improving Indonesian manufacturing, & the Philippines call centre services.
  • Creating of single market in future, allowing free movement
  • Promotes political stability, without nuclear weapons.
  • Reduced exploitation of competitive advantage, as more level field
Negatives
  • Cheap imports flooded markets, some countries have high power even with corrupt governance
  • Thailand’s agriculture decreased due to imports which were cheaper.
  • Cambodia is not yet a full member due to domestic & regional disputes, even 20 years after joining initially.
  • Reluctant as a bloc to provide assistance to other countries in need of help.
  • Have been reluctant to promote human rights & democracy throughout Asia.
  • Some countries have has significant economic & employment issues due to loss of industry

    Attracting FDI

    China's open door policy

    Mao Zedong changes significantly local policy from restricted movement & contact with the outside world, to a more trade first policy, embracing globalisation within a communist society. Agriculture communities were dismantled, & they were allowed to make profits, & population controls were implemented. 300m people left rural areas for the cities, but policies were then implemented to stop villages disappearing entirely. Mega centres of 120m people have appeared around Hong Kong. SEZ were implemented in Shenzhen, Xiamen & Shantou to allow foreign investment. People that have money also have some power. The central governance thought it was imperative that certain areas became open to the world, whilst hiding the less well developed parts from the west. SEZs lead the way in making the east of china more open to the world, with Shenzhen alone having 82bn yuan in technology exports, 40% of the entire state’s GDP. 50% of the entire country’s GDP comes from these SEZs, & 400m escaped poverty due to it. VAT & utilities were of lower costs to foreigners. They had very low labour costs. Over 1.5% of the country’s GDP is spent on subsidies for pure exporters.

The policies of China have benefitted China, in that it is now become the workshop of the world, & foreign countries now rely on these products. The low costs here have rapidly increased globalisation from the west to east, but have created what is very much a uneven playing field for the world, & far away from the idealistic free trade that people like the WTO would like. Domestically, it has lead to more westernisation, & a significant loss of culture, as goods need to be produced for foreigners over local people. China has to make the most of the east of the country due to the geographical challenges faced in the west & north. As a result, overpopulation due RUM have, & continue to occur, as well as a loss of workforce & communities in the west.

TNCs in globalisation

Renault Zoe

ZOE’s production occurs in France, but small parts come from Korea (battery), Germany (engine components), GNSS from Netherlands. This is seen worldwide, small countries rely on imports to make goods, whereas in large economies domestic goods (made & sold in the same country) are more prevalent. Some countries export most goods if they make raw materials. Not all places are suitable for manufacturing, & not all have large markets. Poorly managed GPNs lead to image damage, & susceptibility to political unrest & natural disasters. Incidents such as the Rana Plaza textile factory collapse which killed 1100 people in 2013, & the Asian tsunamis in 2004 & 2011. Through outsourcing products companies can end up with very long & inefficient supply chains, that are very fragile. Airbus has 7700 suppliers, in over 100 countries. Things are much cheaper if made on a large scale, & so it is often cheaper to subcontract low use parts.

Africa

Many TNCs such as Danone, which took a 40% stake in east Africa's largest milk producer have significant influence in African politics. TNCs have significant control over government on the continent, meaning that they act in the foreign countries interest, rather than local interest. TNCs provide stable, albeit low skilled (mostly) employment to local people. However, they are often seen as taking advantage of the local people, and not acting as they would back at home.

Bangalore, India

McDonald's

Switched off places

North Korea

North Korea is classified as a switched off place as its government does not allow for access to worldwide information, & many observers would classify the country as being behind, & undeveloped, due to the regime’s tight control, & the high proportion of farmers within the country. It is undeveloped on the most part. Environmentally, most citizens don’t have access to electricity or vehicles, & use animals for tasks such as transport. Journalism is restricted, & ordinary people do not have access to talk to, or organise things on their own.

Africa - Sahel

In the Sahel region of Africa, most places are switched off due to the lack of economic power, & the huge levels of poverty in these areas. They are all post-colonial areas, & some of the least developed countries worldwide, partially due to mismanagement of natural resources by colonial powers & current governors, but also partially due to the. Some countries such as Chad have issues attracting FDI due to the lack of a coastline, & environmental effects of infrastructure are not dealt with well. Many of these places grow products for TNCs, but the people don’t have enough disposable income for these TNCs to have a viable market there

Global shift

China

India

Deindustrialsaton

Redcar and Cleveland, UK

  • Previously very industrial
  • Raw materials on the tees river
  • Steel industry was primary, but no longer
  • Scores lower on IMD on the most part, especially the north & east
  • Nearly 15% of population in most deprived quintile; over 55% in bottom 40% of deprivation
  • Deprivation affects lives & life expectancy for 5.9y (female) & 10.3 years (male)
  • Mostly manufacturing & raw material industries are affected by industrial decline currently, but any industry has the potential to have this occur in the future.
  • Productivity increased during the decline, resulting in a leaner sector that is more competitive

    Causes

  • Loss of competitiveness
  • Lack of investment
  • High exchange rates
  • Human resource issues

Blackburn, UK

  • In the 1920s & 30s over 70% employed in cotton industry; by 1990 only 9%
  • At its peak 15% above national average for manufacturing employment

    Problems

  • High unemployment
  • Long term decline of traditional industries
  • Recent decline in defence & aerospace due thawing of wars
  • Unemployment up to 25% in inner city areas such as Highercroft
  • Shadsworth is largest council estate in Europe
  • Unattractive environment with over 10% of land derelict

    Management strategies

  • EU funding for canal corridor regeneration
  • Derelict land grants from DfBEIS
  • City challenge in 1990s
  • Combination of private-public strategies
    • Blackburn urban devilment initiative from 1987
    • Land available for large scale projects
    • Significant investment in waterside areas
    • £200m in investment, 75% from private sources by 1994
  • City challenge (37.5m over 5y) extended canal zone & refurbished developments & old buildings.
  • Employment corridor around 1997 M65 extension

Megacities

London area, UK

London is, unlike most western cities, growing somewhat rapidly. The city's demographics are also changing, from being made up of mostly middle aged, middle class people to a higher proportion of the super rich, but also higher proportions of lower- income people. For example, in 2011 20% of the residents were between 25-34 age, and over 7% were under 5 years of age. The proportion of older people is also much lower than the rest of the country, with no bulge present in the post-war baby boom area of 60-70

Sine studies such as that by Savills estate agency show that the house prices in the areas around London, such as the Thames valley and Kent are very much affected by house prices in London. This is likely in part due to the urban status of most of these areas, but also the proportion of commuters that the city has, far more than most major cities. as a result, it's 8.5 million residents may be far under a truer value, maybe towards 20-30m, as found in these surrounding areas. London is unique in that there are moderately good transport links, train and otherwise to most of the area around the city, with the population able to reach the centre in under 1h40 being much higher than say LA or NY. This leads to only the ultra rich that can afford the high property prices on the centre of the city, & the poor, who cannot afford to leave remaining, when the middle sector have all moved out into the commuter belt. This leads to a more polarised area, both culturally & economically, which is oftentimes not a good thing.

In London, many cultures exist, & the number is growing by the day. Most of the immigrants are of childbearing age, or at least those that have been here for some time. As a result, they are having children, & make up 64% (2012) of the newborn children in the city. This can be seen as a bad thing; increasing dependency ratio & population, although is also useful for reducing population decline, from the aging population. There is stress on services, & not enough funding to reduce this

Migration

EU Internal - Poland to UK

  • Better money for smaller jobs
  • 250 per week vs 100 per month
  • Wages 10 times that of Poland
  • Same cost of living in both places, just wages lower
  • Lots of opportunities

    Russia to UK

Resistance to globalisation

Iran

After the invasion of Iraq anti-American views in the country grew, for fear of a similar event occurring in Iran, or other close countries. George Bush was internationally not very popular, leading to an increase in anti-US demonstrations, such as at G7/G20 summits. The government pursued Nuclear capabilities against the demands of the west, had a strong foreign policy against westernisation, & has even supported “terror” groups in operations against western forces or ideals. The country has been, & continues to be heavily sanctioned by western countries, primarily for nuclear reasons

China. The US is also heavily linked to Israel, & often acts in their interests, making them perhaps less popular in the region.

France

France is historically a powerful country, both physically & culturally, & is often shown to be anti-EU, anti-globalisation to an extent; though the near-election of Le Pen. The Académie française has also had anti-English policies, to try to ensure that the French language doesn’t change, & that it remains popular.

Uncontacted tribes

The people that live in the tribes in the pacific & Amazon are at risk not from themselves, but from the loggers that surround them, that don’t care for their wellbeing, & are able to come in a destroy a civilisation in minutes. One could argue that this isn’t so much globalisation, just carelessness within one country. Brazil is attempting to protect them by installing no-go zones & enforcing the no-logging policy. These people that are effectively unable to care for themselves are vulnerable.

Rising tension

Censorship

Resource nationalism is common in developing countries:

  • Venezuela seized ExxonMobil & ConocoPhillips oil operations
  • Restrictions on rare earth exports in China until 2014

However; this can lead to reductions in FDI, which can be very damaging.

North Korea

China

Conflicting opinions

Mekong Delta

  • China owns half the length of the river, & wants to dam the river to encourage development
  • Laos is highly dependent on the river, for 90% of agriculture, dams would limit the ability for these farms to survive
  • Annual river floods in Vietnam allow rice to be grown

    Niger Delta

    Shell have been around since 1958 with oil production; they work with the government The local Ogoni people were moved forcibly by the Nigerian soldiers in the 1990s; a case against shell lead to a 15M USD settlement. MOSOP is a human rights group to stop the repression of Ogoni. Shell was involved in the strategy that resulted in the unlawful execution of the Ogoni Nine, as part of a campaign to form terror. The CCR brought cases against shell for these human rights violations, brought under the Alien Tort statute; shell made many attempts to have the trial thrown out, ultimately unsuccessfully.

    3.9

    Jumbo valley, Canada

    Location

  • British Colombia, western Canada
  • Top of Colombia river

Proposal

  • 23 ski lifts in 4 glaciers
  • 6500 beds & 1300 residences
  • Shopping mall, night clubs
  • Size of Nelson BC
  • 6000+ hectares of public land into European ski resort

Issues

  • 13 ski resorts within 3 miles of the area, none full
  • Glaciers will melt within 4 decades
  • Likely needs to close by 2070 due to lack of snow
  • Glaciers changing so quickly that the ski lifts may need replacement every 5-10 years
  • Land in Canada is almost entirely owned by the government, & given to homeowners & developers on long term leases, the one here intended to be 99 year
  • Loss of tourism to the 10 other resorts within 1h30 drive, which are already all short on tourists
  • No guarantee tourists will come; as seen in other large new-build resorts
  • Ruin natural wilderness
  • Will cause significant pollution
  • Road will cost 10k a year to maintain, with 200k of avalanche control needed, paid for by BC taxpayers

Benefits

Would theoretically bring in USD 450 million investment into the region (highly disputed by even the government)

Todmorden, UK

  • Old mill town in Yorkshire
  • Planting food in small plots of land in the town, without outside help
  • Give away little plant pots
  • Opportunities for local people to contribute
  • Community based
  • Selling things to local companies
  • Growing things in communal space, anywhere from the side of the road to the graveyard
  • Council was reluctant initially

Fair trade

Local Agenda 21

  • Set up at earth summit 1992
  • A strategy for sustainable development of cities
  • Waste targets were set for the UK:
    • 25% of household waste by 2005
    • 30% by 2010
    • 33% by 2015