G3A Globalisation Case Studies

Question 1

Factors of Economic Globalisation

World Trade Organisation

Answer 1

• 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

Question 2

Factors of Economic Globalisation

European Union

Answer 2

• 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

Question 3

Factors of Economic Globalisation

Information Technology

Answer 3

• 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)

Question 4

Factors of Economic Globalisation

Transport

Answer 4

• In 1940s, London to Brisbane took 11 days and $20,000 - now only takes 22 hours and $2000

Question 5

Factors of economic globalisation

Foreign Direct Investment

Answer 5

• 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

Question 6

Causes and Effects of Global Shift

Toyota in the UK

Answer 6

• 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

Question 7

Causes and Effects of Global Shift

Call Centres in India

Answer 7

• 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

Question 8

Causes and Effects of Global shift

Movement into Eastern Europe (Slovakia)

Answer 8

• 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

Question 9

Causes and Effects of Global Shift

Mattel (caravan capitalism)

Answer 9

• Mexicali plant lasted 7 years from 1968-1975
• 3000 jobs were lost in the USA due to the closure of plants

Question 10

Causes and Effects of Political/ cultural globalisation

USA

Answer 10

• 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

Question 11

Causes and Effects of political/ cultural globalisation

Bhutan

Answer 11

• 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

Question 12

Causes and Effects of Political/ Cultural Globalisation

Fair Trade

Answer 12

• 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

Question 13

Causes and Effects of political/cultural globalisation

Tanzania

Answer 13

• 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

Question 14

Winners from Globalisation

**Nokia, **

Answer 14

• 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

Question 15

Winners

India

Answer 15

• 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

Question 16

Winners from Globalisation

China

Answer 16

• 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

Question 17

Winners from Globalisation

Taiwan

Answer 17

• 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

Question 18

Losers from Globalisation

El Salvador Coca cola

Answer 18

• 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.

Question 19

Losers from Globalisation

Coca-Cola in india

Answer 19

• 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

Question 20

Losers from globalisation

China

Answer 20

• 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

Question 21

Losers from Globalisation

Telford

Answer 21

• 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

Question 22

Losers from Globalisation

Shell, Nigeria

Answer 22

• Despite offering 25,000 jobs:
  
  • Corrupted government
  • 474 spills in 2012 alone
  • Wealth of oil to nation taken overseas

Question 23

Miscellaneous

Vietnam

Answer 23

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%).

Question 24

Miscellaneous

British industrial output

Answer 24

Manufacturing in Britain has fallen 4% from 1979 to 2000 - employment has fallen from 27% to 19%.

Question 25

Misc ## Footnote **Globalisation Index**

Answer 25

political engagement, technological connectivity, personal contact and economic integration

Question 26

Misc ## Footnote **Internet usage**

Answer 26

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.

Question 27

Misc How much did Foreign Aid fall by?

Answer 27

International aid fell by 40% between 1990-1999. Ghanaian rice industry undercut by US and Thai imports

Question 28

Misc What was the SUDAN 1 crisis?

Answer 28

contaminated chilli entering production - impacting 500 food goods globally

Question 29

Misc Losers in Asia

Answer 29

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)

Question 30

Misc BRICS

Answer 30

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