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3 3 The Global EconomyThe Global Economy3 3 The Global EconomyThe Global Economy
The growth in world trade The growth in world trade
A multinational company A multinational company
The global nature of trade and the three key global The global nature of trade and the three key global
economic areas economic areas
Globalisation and how it has impacted on world trade Globalisation and how it has impacted on world trade
Reasons for growth in world trade
Industrialisation Globalisation MNCs
Chapter 3: The Global Economy
Industrialisation
Industrial revolution: changes in how we work, communicate, interact Move from being self-sufficient to reliance on world trade
Chapter 3: The Global Economy
Globalisation
World is interconnected and interdependent Pace of globalisation has increased due to:
advances in telecommunications and transport removal of trade barriers, MNCs
Chapter 3: The Global Economy
MNC
Produces or delivers services in more than one country
Management headquarters in one country, usually in the North
Operations in a number of countries across the world
Large and powerful
Chapter 3: The Global Economy
Pfizer
Global pharmaceutical company Headquarters in US, operations in 45 other countries Sales: Almost $70 billion in 2010 Employs: 110,000 worldwide One of first pharmaceutical companies to locate in Ireland Opened first Irish plant in 1969 Currently has 15 plants in Ireland Employs over 5000 in Ireland and has invested over $7 billion
Chapter 3: The Global Economy
Factors attracting MNCs to locate in Ireland
Tax incentives English-speaking Excellent education system Young vibrant population EU member Well-developed transport system
Chapter 3: The Global Economy
Global trade
The buying and selling of services and goods across the globe
Key global economic areas: USA, Europe, the Pacific Rim (such as Japan)
Global triad: 70 per cent of world trade
Trade blocs: a group of regions or countries that have made agreements to reduce barriers to trade between them
Chapter 3: The Global Economy
Core economic regions
Dominate world trade, industry and wealth Include the triad regions Dominate the service and manufacturing industries Have political influence Have trading relationships with many countries
Chapter 3: The Global Economy
Peripheral economic regions
Include Africa, South America and Southern Asia Lack industrial development Less powerful than core regions Rely on primary activities and exports of raw materials
Chapter 3: The Global Economy
International division of labour
Some countries specialise in the production of certain goods or on providing certain services
Influenced by: growth of global trade, location of MNCs MNCs: Outsource key business functions Reasons: low labour costs, high
populations, improvements in education
Chapter 3: The Global Economy
Regions excluded from manufacturing
Peripheral regions: Southwest Asia, sub-Saharan Africa, Latin America
Reasons: colonialism, political instability, poor infrastructure, unfair trading systems
Chapter 3: The Global Economy
Role of peripheral regions in world trade
Minority role in the global economy Excluded from large-scale manufacturing Main role in world trade is to supply commodities to the North Commodity price fluctuations
Chapter 3: The Global Economy
MNCs and the global economy
Influence local/global economy Locating in an area can impact the local economy Corporate strategy: close and open plants to maximise profits Modern economic activity: mobile Product life cycle: impacts the location of production
Chapter 3: The Global Economy
Intel
Crucial to the prosperity of the Irish economy
5000 employees
Has invested €6 billion
Attracts FDI
Contributes to education
Chapter 3: The Global Economy
Future of economic activities
Manufacturing: continue to move to peripheral regions Research and innovations: core regions Growth areas: Teleservices, e-commerce
Chapter 3: The Global Economy