Globalisation and Development

Human

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by Beren

Updated April 2015

Globalisation • The OECD defines globalization as:“The geographic dispersion of industrial and service activities, for example research and development, sourcing of inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets.”51 of the largest economies in the world are corporations. The top 500 TNCs account for nearly 705 of world trade.

• Globalisation is best defined as a process of deeper economic integration between countries involving:

• An expansion of trade in goods and services

• An increase in transfers of financial capital including the expansion of foreign direct investment (FDI) by trans-national companies (TNCs) and the rising influence of sovereign wealth funds

• The development of global brands

• Spatial division of labour– for example out-sourcing and off shoring of production and support services as production supply-chains has become more international. As an example, the iPod is part of a complicated global supply chain. The product was conceived and designed in Silicon Valley; the software was enhanced by software engineers working in India. Most iPods are assembled / manufactured in China and Taiwan by TNCs such as FoxConn

• High levels of labour migration within and between countries

• New nations joining the trading system. Russia joined the World Trade Organisation in July 2012

Development

• Development is a branch of geography which refers to the standard of living and quality of life of inhabitants of a country or place. Development is a process of change that affects people's lives. It may involve an improvement in the quality of life as perceived by the people undergoing change.

• The main indicators of development are: - GDP-Infant mortality -Birth Rate -literacy Rates - Human development index- Source

Development Continuum

Asian Tiger Economies

Singapore

South Korea

Hong Kong

Taiwan

• Tax on imports

• Allowed primary industry to flourish

• Education of work force

• Investment in land

• Chinese influence

• High Income, Advance economy

• Rapid Growth

• Foreign Investment (loans)

• Export driven

South East Asian Financial Crisis

Tiger Cubs

Singapore

FINANCE

Growth Rate up to 10%

GDP: $55,182 higher than USA

75% Chinese Influence

About 80% of Singaporeans perceive Singapore to be a land of opportunity for achieving a high standard of living

Singapore has become a major worldwide

banking, ship building and petroleum centre.

1998 - Singapore slips into recession for the first time in 13 years during Asian financial crisis.

South Korea

Growth Rate now: 8%

GDP: 35,485

I.T and Technology

MANURFACTURE

1960-1990 Growth Rate: 9%

Daewoo Cars, LG, Samsung

Military threat from North Korea

1950: LEDC

65% Chinese

Hong Kong

95% Chinese

FINANCEEX – British Colony

1 July 1997

Communist

Alpha+ City

Hong Kong Special Administrative Region of the People's Republic of China

GDP: $38123

Taiwan

I.T and Technology

MANURFACTURE

98% Chinese

GDP: $31900

Taiwan is an island which has for all practical purposes been independent since 1950, but which China regards as a rebel region

that must be reunited with the mainland - by force if necessary.

Threat from China

ChinaBy Berrelar and Emily

See separate Powerpoint

Consequences of GrowthIs it fair?

• East Grew Faster than west

• Famines in late 1950’s

• China has a rich energy potential.

• Electricity demand is higher than production.

• Urban Rural inequality

• Raising the living standards in rural areas.

Global Growth

A US intelligence portrait of the world in 2030 predicts that China will be the largest economic power, climate change will create instability by contributing to water and food shortages, and there will be a "tectonic shift" with the rise of a global middle class.

Demand for food, water, and energy will grow by approximately 35, 40, and 50% respectively owing to an increase in the global population and the consumption patterns of an expanding middle class.

Global FactorsIn 2001, China joined the world trade Organisation. TNCs now invest in China to take advantage of low labour costs and the and the special economic zones. Since 2000, china has been the largest recipient of overseas investment and 53% of its exports are produced by foreign owned companies or those in partnership with Chinese companies. 60% of the increase in world trade between 2006-07 was a result of Chinas industrialisation, and in 2007, china overtook the USA, consuming:

• 67 million tonnes of meat (USA 39 million tonnes)

• 258 million tonnes of steel ( USA 104 million tonnes).

Before 2050, China will be consuming more oil and paper than the world now produces.

Energy Since 1980 Chinas energy production has grown dramatically 80% of all power is generated from fossil fuel 17% from HEP stations 2% from nuclear energy. China has a rich overall energy potential, but most sources have

not yet been developed The geographical distribution of energy puts most of these

resources relatively far from their major industrial users: the industrialise regions around Guangzhou and the lower Yangtze region around shanghai have too little energy, while there is relatively little heavy industry located near major energy resources in north-east, central and south-west china.

Although electricity generating capacity is growing rapidly, it still falls considerably short of demand. This is partly because energy prices have been fixed so low that industry has few incentives to conserve. In addition, it has often been necessary to transport fuels great distances from the mines to consumers.

Services

• Service Sector Ranks 7th in the World

• 2005: service Sector produced 40% of China’s GDP

• The biggest boost to this sector was when china hosted the Olympic games in 2008

• Tourism is expected to grow by between 4% and 8% in the next 5-10 years

• Worlds top tourism industry by 2020?

India Tom and Lucia

• India is the second example of a NIC (newly industrialised country)

• India unlike china specialises in Human Products and tertiary services rather than manufacture.

• Many TNCs have moved there HR and service centres to India due to the low labour cost

IndiaEconomic Growth• 7% per year since 1997

• Focus on service sector/ Territory industry

• Attracted TNC’s

• Local companies support TNCs

• Focus on I.T/ Software/ Call Centrex

• Government focused on education

• Saving of £10 million for every 1000 jobs out sourced to India by TNCs

• 3 million graduates each year

• English speaking graduates

• Labour costs cheaper in India.

• Communications

India

Is it Fair ?

• NO ?

• Money leaves the country to go to TNC HQ

• Jobs only available to well educated middle class

• In 2000 44% were on less than $1 a day (rural poverty)

• 75% of the population are still involved in agriculture

• Mass migration from Rural to Urban ( hunt for jobs) has created slums.

• Less pollution than China

• 2011 Service sector was work 56% of India GDP

LDC – Least developed Countries What is a LDC???

The Development Continuum has lead to some countries being classified as better developed than others.

The UN classifies a LDCs as :

• Countries with the lowest incomes

• Countries where there are limited opportunities for development.

• Countries where there is extreme vulnerability to external factors such as natural disasters and shifts in the global economy such as cost of food and reductions in aid and trade

Usually countries are hard to get out of this level of development and many of the current LDCs are the same as those LDCs of 50 years ago.

How to identify an LDC• GNI per capita of under $900

• Human asset index – this is made up of the percentage of the population whom are undernourished, the infant MR secondary education rates and literacy rates.

• Economic vulnerability index: the extent to which a country would be affected by unplanned shocks. Based on population size remoteness and dependence in exports.

Where are the LDCs • Latin America : 1 –

Haiti

• Africa: 33

• Asia and Pacific: 15

Three Quarters of the 2.6 billion people living below the poverty line live in rural areas. This number has

hardly changed in 20 years

LDCs

Life at the bottom

World bank: 1.2 billion people live on less than $1.25 a day.

This leads to:

• Hunger

• illiteracy

• Unsafe water

• Low paid unskilled jobs

• Natural disaster

• Dependant on overseas aid.

Problems for LDCsPoor quality of life, Due to:

• Rising food prices = high rates of malnutrition

• Climate change = undermines subsistence farming

• Diseases : preventable diseases kill 11 million infants per year

• 500000 women die during child birth / year

• Lack of medical and transport as well as sanitation infrastructure

Girls: • Socially: less girls go to school this

means they marry younger and start families in their teens.

• A girls life has more value at home than in education

• Discrimination towards infant girls means that mortality rates for girls are higher than that of boys.

• Population growth is high due to high fertility rates

• Life expectancy is low • Infant MR is high• HIV/AIDS has reduced the

number of well educated and so those professions suffer – E.g. education.

DEBT just makes it worse!!! Debt repayments take money away from things like health care and education that would help real development.

Where did the debt come from?

• Oil prices in 1970s boosted OEC earnings

• These OECs invested in western banks, who lent money to LICs who spent the money (which they couldn’t pay back) on development schemes.

• The interest rates went up in 1980 this increased the pay back cost to the LICs

• Every year the amount increased and the debt burden got worse.

• To prevent a global collapse the IMF developed Structural Adjustment packages

• Governments in LICs such as Uganda cut spending on health and education = poorest people suffered.

HIPC

• For over 30 years African countries have been trying to recover from the debts of the 1970s. The HIPC are a group of 38 of the worlds LDCs with the greatest poverty and debt, and 29 of them are in Africa.

• Debt has become a world wide problem since 2008.

• In 2010 the debt of the UK and japan was over 400% of each countries GDP

• Debt restricts spending power and therefore restricts development

• Interest payments mean that debt is always growing.

CASE STUDY: LDC Uganda

• Location: Africa• History: Ex – BE colony: 9

October 1962 • GDP (PPP) 2012 estimate - Total $50.439 billion - Per capita $1,414• HDI: 164th • 75% without electricity • Adult literacy rate: 73.6%• Infants underweight: 20%• Life expectancy: 51.9• Population: 31.6 Million

UGANDA Uganda is green and fertile with plenty of resources such as copper and cobalt. Uganda should be a wealthy exporting country but this isn’t the case, WHY?

• Uganda depends on the exports of low value products such as tea and coffee

• Receives limited tax revenues for its exports

• Idi Amin's Military rule of the 1970’s expelled the wealthy Asian community

• Huge loans were used to buy military weapons

• Ugandan debt reached $19bn in 1992

• HIV/ AIDS has reduced life expectancy ( babies born in 2007 had a 62% chance of reaching 70!)

• 56% of the population is under 18 ! Fertility rate is 6.3 birth rate is 47.5

The future for Uganda

The cancellation of $1.5bn of its debt under the HIPC initiative is helping Uganda to make progress:

• Free primary school education has been introduced = 5 million extra children now attend school

• 10% more have access to clean water

• AIDS awareness and sex protection/ Education is a priority

• Improving transport and mobile phone infrastructures

• Wildlife parks = tourism

• Production of bio fuels and fair trade tea and coffee lead to better income

• Service sector jobs

Still a problem with the Women

Uganda’s female population remain its poorest

• Women rarely own land

• most work as labourers as and when needed

• Maternal and infant mortality rates are still high

• Have to gain respect by having children

Continue revising G+D

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