Factors encouraging Globalisation:

Improved communications, the internet, mobile phones Improved transport, the railways, cheaper and faster air travel, package holidays Growth of TNCs, as companies grow in pursuit of profit , they can more easily spread globally, bringing

their cultures with them. Increase in world trade, establishment of World Bank and IMF to secure it. Increasing development in NICs, as they industrialise, they provide the labour for the more advanced

countries that have moved away from the primary and secondary sectors. Began with colonialism, Columbus discovering Americas establish the basis of the global trading

economy

Impacts of Globalisation:

Some companies have higher GDPs than some countries TNCs have amassed huge power and influence over governmental policy Companies such as Sky and News International have the ability to directly influence how people think A loss of national identities as borders become ever more meaningless and traditional cultures are

sacrificed in exchange for Western ideals Global tourism has exposed people to more different cultures than was ever possible before, more

open minded? Encourages global village where people begin to understand their common interests Global trade barriers removed, collapse of Soviet bloc Expansion of international organisations like EU Trillions of dollars exchanged globally and electronically every day.

Indicators of development:

Purchasing Power Parity (PPP)- Links average earnings too average prices Physical Quality of Life Index - Include PPP, school enrolment, literacy rate, infant mortality, life

expectancy Human Suffering Index - Calorie intake, access to clean water, inflation, communications access, political

freedom, civil rights. GDP per Capita - Total amount of money earned y a country divided by the population to give average

income. Human Development Index - Life expectancy, infant mortality rate, literacy rate Doctors per thousand

Global Economic Groupings:

G8 Countries- UK, USA, Germany, Japan etc. Some of the world most powerful countries discuss global issues. Control most of world international governmental organisations, can make the global economy meet their needs. Excellent standards of living, free speech, diverse economy, HDI scores highly.

Organisation for Economic Co-operation and Development- 30 of world’s richest countries, mainly democratic, low levels of inequality, good SoL, lack the military and global political influence to be a superpower, governments often committed to sustainable growth and high public spending.

NIC’s- Asian Tigers eg. North Korea among the first. Actively encourage investment and efficient production methods. Not fully developed but better than LEDCs. Shift from primary to secondary. Public spending increasing, especially on education, workforce increasing in skills, still some inequality and human rights issues.

Organisation of Petroleum Exporting Countries- Libya, Saudi Arabia, Nigeria etc. 13 major oil producing countries, control 60% of global oil reserves. Very high inequality with a small minority of rich elites and the rest in poverty, poor human rights, often political instability due to conflict over oil.

Ex-Soviet States- Russia, Ukraine, Kazakhstan etc. Struggled to cope after independence with high unemployment and social collapse. Rely on natural resources but have been in conflict with neighbours over them. Privatisation left many unemployed as owners tried to cut costs and establish themselves on the global market. Low public spending.

Least Developed Countries- Sudan, Ethiopia, Afghanistan. Some of the poorest countries in the world. Economies based on agriculture, few natural resources. Poor social conditions, low SoL, poor education standards, large debt, corrupt government, low public spending, reliant on aid.

Reasons for growth of TNCs

NICs have provided a source of cheaper labour and production. TNCs locate in these areas and ship their products all over the world

Improved shipping and transportation means goods can be sent anywhere no matter where they are produced.

The World Bank promotes free trade and attempts to remove trade blocs, giving TNCs further freedom to expand into new markets

The IMF enforces privatisation, again to the benefit of TNCs who can integrate new sources of revenue that once belonged to the state.

Horizontal integration- Buying out opposition to get a greater proportion of the market.

Vertical integration- Buying up every link in the supply chain of a product

Economies of scale- Increasing production quantity in order to increase efficiency and reduce unit costs

TNCs impacts

Pros ConsTaxes paid by TNCs by local governments can be reinvested in the area

The majority of profits are repatriated back to the TNCs host country

Workforce receives training and experience and a more solid job than the informal sector

Often have a large environmental impact on the area and the world at whole due to the increased transport miles of products that are made in the east for the western market

They often pay higher wages than the informal sector

Westernised culture of the TNS may infiltrate the local area and remove its traditions

They bring political stability as governments are eager for them to remain there.

Contribute to the growing wealth divide by selectively investing in some countries sand not others

Impact of new technology on global networks:

Communications technology: the internet, mobile phones, has meant people can connect more easily and quicker than ever before.

Transport: Began with steam engines and the industrial revolution, combustion engine and cars, cheaper air travel, Concorde, 747 etc.

ICT- Allows companies to work and trade in a country without having a physical presence in it.

Rural-Urban Migration Crop failure - Primary source of income in rural areas is agriculture. If crops fail, people may be

forced to move to the cities Conflicts - Mostly concentrated in rural areas, conflict and war will often cause people to flee to the

cities Sanitation and healthcare - Although still poor in many overcrowded LEDC cities, the sanitation is

even worse in the countryside, and there are almost no doctors at all. Bright lights - People dream that the city will give them a new start and a better life, so they move

away from traditional ways of life in the countryside. TNCS tend to locate in the biggest cities of a country and set up their production there. This means

they require labour in those areas and can thus offer local people jobs. Those in rural areas wouldn’t have a chance of getting jobs with big TNCS- they have to locate in the urban areas.

EU Case Study 1957- European Economic Community

1992- Maastricht Treaty, EU established

2002- Euro notes and coins enter circulation

2004- 10 new member states

Trade bloc- A voluntary organisation that supports trade, economic strength and security e.g. internal tariffs removed, free trade.

27 member countries Control 21% of global trade Ensures free movement of goods, services and

people within the Schengen area. Monetary Union of the Euro ensures ease of trade,

no exchange rate can make transactions cheaper Smaller firms within a trade bloc can merge to form

TNCs Businesses protected somewhat by tariffs form

large foreign TNCs taking their trade

Tesco Case Study

Established 1919 in East London Now the UKs biggest TNC Key to their success was diversification into areas

other than food: electricals, toys, stationery etc. the one stop shop.

Increasingly locating overseas, 60% of Tesco’s international profits are now from Asia

2300 stores In 2007, for every £8 spent in the UK, £1 was spent

in Tesco Wages in their overseas factories and stores are

low, but so are living costs Overseas shipping is costly to the environment, but

Tesco has pledged to cut its packaging usage to negate this effect

Company claims not to be eroding local cultures, for example, uses the traditional ‘wet’ vegetable market system in places like Thailand rather than trying to impose European systems

Establishes competition rules, prevents monopolies

Agricultural producers benefit from subsidies European Parliament overseas budget,

representatives not linked to political parties. Redevelopment fund for impoverished parts

of Europe e.g. Cornwall Free movement of people has potential to

cause conflict and migration issues. In the newest EU states, GDP per capita is

40% of the average, reliance? Tariffs punish LEDCs wishing to trade with

Europe, increasing the development gap £6.4 billion a year in governing costs

450,000 employees worldwide Management jobs that are well paid are also

being outsourced to Asia Pressure from superpowers like Tesco forces

farmers into a race to the bottom: they are forced to lower to their prices as Tesco has the resources and manoeuvrability to simply go elsewhere if they refuse.

Local markets and supplies may be forced out, damaging the local economy as the majority of Tesco’s profits will be repatriated

Imposition of western culture in areas with their own tradition is arguably a negative factor: loss of cultural diversity if everyone in the world buys everything from one company.

Nike Cambodia Case Study

In 2012, employed 44,000 worldwide Brand valued at $11 billion

75% of its workforce in Asia 700 factories worldwide Nike owns none of its own factories, outsources

production, meaning it can move quickly and cheaply to new locations

Women can be fired for taking 3 days off Forced overtime, sometimes without pay Paid £8 a week minimum wage 7 day week Evidence of child labour usage, age of workers not

strictly checked. The workforce has little by the way of

representation or unions, any attempt at protest or demand better conditions or pay would invariably lead to dismissal.

Physical and verbal abuse from managers May be treated leniently by the government, given

tax breaks etc, not inspected very closely

easyJet Case Study

Founded 1995, began running flights solely within UK using just 2 aircraft

Flights from Luton to Edinburgh supported by slogan “making flying as affordable as a pair of jeans, £29 one way ”

Now has around 300 routes within the EU In 1998 acquired 40% of Swiss air company TEA as

it begun to develop into a major TNC One of the first airlines to embrace the internet,

first online sale in 1998, now 95% of flights are purchased this way.

Cumulative causation: Nike’s presence may attract more TNCs to the area

Does however provide employment opportunities that locals are in desperate need of

Local economy boosted by the taxes Nike has to pay, though they may be minimal

Pay better than most local companies Sets new standards of efficiency for local companies Nikes influence may undermine local culture Concerns over the political influence Nike holds

over governments Some have called for a boycott of Nikes products to

force them into enforcing their own code of conduct, fines for unethical practises

Protests outside Oregon HQ

By 2006, company owned 122 aircraft carrying 33 million people that year bringing revenue of £2 billion

Places added to easyJet’s destinations become more switched on

Eg, Tallinn in Estonia, home to 400, 000 was added in 2004 and became a popular destination for stag and hen parties. This boosted the local economy, especially bars and nightlife, but also led to increased complaints over noise and disturbances.

Shanghai ‘Switched on’ Case Study

China’s largest port and industrial city Population estimated to be 14 million by 2020 Average 2200 people/sq. mile density

Need of redevelopment, upgrade housing, create more business space.

Greater Shanghai Plan: o Redevelopment of the central city:

transport, housing etc. o Development of the Pudong New Areao Creation of 3 satellite towns, all ETDZ

zones where foreign investment is encouraged. By 1995, Pepsi and Coca Cola both has office in one of these areas: Minhang

Africa ‘Switched Off’ Case Study

In the 1980s, interests rates double meaning loans that African nations took out in the 70s to pay for development projects became unpayable and put those countries in a crippling debt crisis

Zambia : Rich in copper, exporting it made up 25% of Zambia GDP. But the emergence of optical fibres as a replacement for copper wire in the 1990s cause prices and demands to plummet. Mines were forced to close and thousands were left out of work. External debt now takes up 83% of Zambia’s Gross National Income

Kenya - During 1990s, Kenya’s pop rose 3.5% each year and was suffering from debt. Needed new sources of income so resorted to cash crops, particularly flowers. In 2001, 23 flower producing countries suffered food shortages due to the lack of land used for food growth. 60% of people suffered a 20% drop in food intake. Water shortages were caused by flower farmers diverting huge portions of the supply to flower growth.

Pudong New Area: Formerly a little-developed agricultural area that was linked only by ferries,

Pudong has grown rapidly since the 1990s and emerged as a financial and commercial hub. Pop over 5 million, including large CBD of corporate HQs. Home of Shanghai Stock Exchange and Oriental Pearl Tower. ETDZ status. New transport infrastructure linking with the rest of Shanghai

Tanzania used to pride itself on good quality education and healthcare despite low GDP. This was because quality soil meant it could grow cotton to be exported. However, in early 80s, cotton prices plummeted due to overproduction. At the same time, the cost of manufactured goods was rising meaning farmers were spending more and earning less. Farm incomes fell and therefore so did tax income and so services had to be cut and development stalled. External, debt now takes up 64% of Tanzania’s GNI.

Mumbai Megacity Case Study

Provides 33% of India’s entire tax revenue 40% of international flights to India land in Mumbai The home of Bollywood, produces more films than Hollywood Rents in the most exclusive areas of town are higher than London and New York Whilst some live in comfort and work professional jobs, other people just a few minutes away 60% of people live

in poverty, perhaps in slums, doing manual work in the informal sector Mumbai is experiencing hyper-urbanisation with people flocking to the city far faster than it can cope with them. High levels of congestion and pollution and a severe housing shortage as a result The new arrivals often the end up in slums and not officially recognised. Central position in Asia makes it a hub of TNCs Success based largely on out-sourcing work Home to around 20 million people with estimated 600 new migrants a day. Population expected to be 26 million

by 2020, could be world largest city.

Dharavi

One of Asia’s biggest slums with over 1million inhabitants Streets are narrow, houses are poorly constructed, and sanitation is poor leading to high levels of disease There is often water shortages as piping is poor and not maintained by the authorities Many homes do however have electricity There is also a large informal, cottage industry sector in which most residents work, producing small cheap goods

for export 80% of Mumbai’s waste is recycled in Dharavi, the recycling industry there employs 10,000 people and is worth

$1.5million a year The total turnover of its informal sector is estimated to be $500 million a year

Vision Mumbai

Attempt to make Mumbai a sustainable city for the future Transport:

First metro line in 2008, total length 50km by 2011 25km bridge connecting city centre with towns on other side of Bay

Housing: More than 200,000 illegal slum dwellers have been moved New apartments built to house relocated people Developers revive 1.3m^2 of commercial land for every 1m^2 of housing they develop

Environment: 325 new open green spaces 300 new public toilets

Employment Hoping to create 200,000 new service sector jobs in healthcare finance and entertainment 200,00 in new industrial zone, base around airport, based around computer assembly 500,000 construction jobs to implement the project

Los Angeles Megacity Case Study Reasons for growth:

Arrival of railways in 1876 Discovery of oil Arrival of Ford car plant and other

manufacturing industries Development of Hollywood in 20s and 30s By 2000, 14 million lived the metropolitan

area

Suburban Sprawl Arrival of trams in 20s and 30s, then the

freeways meant people didn’t have to live as close to where they worked.

When cities grow, their centres tend to become crowded, congested expensive and crime ridden

By contrast, the suburbs offer more space and low density housing for less money, as well as a cleaner environment, better schools and services and often large shopping centres

As a result, within incomes rising and transport improving, the suburbs sprawl out as they become more popular.

However, as more people have to travel longer distances to work, congestion and pollution became issues. The centre also suffered a relative decline.

Other problems

Housing shortage due to migration Ethnic tensions and race riots Water piped from 350km away causes

conflict with other areas. 50,000 tonnes of waste produced each day Only 30% of people using public transport Ethnic enclaves reduce social cohesion.

Donut City

A city whose centre has declined leaving a hole in the middle

Car, tyre, steel, aircraft industries closed due to overseas competition

Workers moved away from the congestion and pollution

High tech industries required large, open sites, and so located in the suburbs

Left a combination of dereliction, crime and a concentration of low wealth residents.

Progressive Los Angeles Network

Requires employers to pay decent wage Provide community benefits like childcare Increased urban parks, cleaning contamination Affordable housing in new developments Improves public transport, clean buses Smart land use, encourage less driving

Solutions to economic and social problems with globalisation

The Free Trade Market often means that producers end up getting a very small percentage of the fial retail value of their goods

Fair Trade advocates a better price for farmers