Topic 5 a globalized economy
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Transcript of Topic 5 a globalized economy
A GLOBALIZED ECONOMY
UNIT 5
VOCABULARY• GLOBALIZATION• MULTINATIONAL
COMPANY• OUTSOURCING• EMERGING POWER• ASIAN TIGERS
• BRIC• GDP (gross domestic
product)
READ PAGE 52KEY
LANGUAGE
GLOBALIZATION
WHAT IS GLOBALIZATION?GLOBALIZATION
• It refers to the process of increasing interdependence of the world´s economies and societies.
CHARACTERISTICS
HUGE EXPANSION OF INTERNATIONAL
TRADE
BUSINESS CONCENTRATION
GLOBAL ORGANIZATION OF
PRODUCTION
OUTSOURCING
LARGE MULTINATIONAL
COMPANIES
GLOBALISATION
interconnected
massively increased trade and cultural exchange.
Increased the production of goods
and services.
multinational corporations with
subsidiaries in many countries.
It has speeded up enormously over the
last half-century.
Globalisation has resulted in:
increased international trade
a company operating in more than one country
greater dependence on the global economy
freer movement of capital, goods, and services
recognition of companies such as McDonalds and Starbucks in LEDCs
READ PAGE 53. ex 1b, 1 c
Transnational corporations When a foreign company invests in a country, perhaps by building a
factory or a shop, this is called inward investment.
Companies that operate in several countries are called multinational corporations (MNCs) or transnational corporations (TNCs).
The US fast-food chain McDonald's is a large MNC - it has nearly 30,000 restaurants in 119 countries.
The majority of TNCs come from MEDCs such as the US and UK.
Many multinational corporations invest in other MEDCs. The US car company Ford, for example, makes large numbers of cars in the UK.
TNCs also invest in LEDCs - for example, the British DIY store B&Q now has stores in China.
cheap raw materials
cheap labour supply good transport
access to markets where the goods
are sold
friendly government
policies
Factors attracting TNCs to a country may include:
It is a practice used by different companies to
reduce costs by transferring portions of work to outside
suppliers rather than completing it internally.
Outsourcing
Take a look to this video and
the map on page 54
GLOBALIZATION FACTORS
REASONS
Improvements in transportation
Freedom of trade - organisations like the World Trade
Organisation (WTO)
Improvements of communications - the internet and
mobile technology
Labour availability and skills - countries
such as India have lower labour costs and
also high skill levels.
Reduced legal restrictions in LEDCs.
Factors that encourage globalization include transport and ICT (information and communications technologies) developments.
Transport developments:
Container ships make transporting bulky goods quick
and easy.
Air transport means people and goods move quickly from one
place to another. In recent years the cost of air travel has
reduced.
ICT developments:
The internet allows people and businesses to communicate instantly.
Satellite communications allow a global view and communications links even in very
remote areas. They enable TV and telephone communications.
Mobile phones enable people to communicate and to access the internet
wherever they are.
Social networking brings people from all around the world in contact with one
another.PAGE 55. ex 1
WHAT ARE THE POSITIVEEFFECTS OF GLOBALIZATION?
Inward investment by TNCs helps countries by providing new jobs and skills for local people.
TNCs bring wealth and foreign currency to local
economies when they buy local resources,
products and services.
The extra money created by this investment can be spent on education,
health and infrastructure.
The sharing of ideas, experiences and
lifestyles.
Globalisation increases awareness of events in far-away parts of the
world.
Globalisation may help to make people more aware of global issues such as deforestation.
WHAT ARE THE NEGATIVE EFFECTS OF GLOBALIZATION?
Globalisation operates mostly in the interests of the
richest countries, which continue to dominate world
trade at the expense of developing countries.
The role of LEDCs in the world market is mostly to
provide the North and West with cheap labour and raw
materials.
There are no guarantees that the wealth from inward
investment will benefit the local community.
Transnational companies may drive local companies
out of business.
An absence of strictly enforced international laws
means that TNCs may operate in LEDCs in a way
that would not be allowed in an MEDC.
They may pollute the environment, run risks with
safety or impose poor working conditions and low
wages on local workers.
Globalisation is viewed by many as a threat to the
world's cultural diversity.
WHAT ARE THE EFFECTS OF GLOBALIZATION?
POSITIVE●Increase in global wealth●Growth and economic development in some countries.●Social progress: health and education
NEGATIVE●Unequal distribution of benefits●Poor countries marginalized in the global economy●Inequalities within countries (rural/urban areas)●States less able to control their own economy
PAGE 55. ex 3a
INTERNATIONAL INSTITUTIONS
WORLD BANK FMI WORLD TRADE ORGANISATION
Influence the global economy
THE ROLE OF INTERNATIONAL ECONOMIC INSTITUTIONS
Part of United Nations
THE ROLE OF INTERNATIONAL ECONOMIC INSTITUTIONS
PAGE 56. ex 1
G8 is a forum that brings together 8 global leaders to address
international issues and tackle the most pressing global challenges.
The Presidency of the G8 rotates each calendar year and the country
holding the G8 Presidency is responsible for hosting and
organising the annual summit, with a number of preparatory meetings
leading up to it.
The Group of Twenty is an international forum for the governments and central bank governors from 20
major economies. The EU is represented by the European
Commission and by the European Central Bank.
The G-20 is the latest in a series of initiatives aimed at international coordination of economic policy, which have
been prominent since the efforts during World War II to
create some form of international or global economic governance.
Collectively, the G-20 economies account for
around 85% of the gross world product (GWP), 80% of world trade (or, if excluding EU intra-trade, 75%), and
two-thirds of the world population.
WHAT ARE THE WORLD’S MAJOR ECONOMIC POWERS?
After the II WORLD WAR , UNITED STATES became the major economic power.
WHAT ARE THE WORLD’S MAJOR ECONOMIC POWERS?
Traditional powers
USA
JAPAN
EUROPEAN UNION
Emerging powers (BRIC)
BRAZIL
RUSSIA
INDIA
CHINA
Regional powers
Australia
the “Asian Tigers”
South Africa
Persian Gulf oil producers)
ECONOMIC POWERS
The rest are LEDCs (less economically developed
countries)They are found
in
Latin America
Asiasub-Saharan
Africa
PAGE 57. ex 1
WHO ARE THE TRADITIONAL ECONOMIC POWERS?
CHARACTERISTICSWorld leader companies
Entrepreneurial spirit
High investment in research that lead to high productivity
and competitiveness
Highly skilled labour force
Access to natural resources and energy
Flexibility
Foreign investment
Dollar as the most important world currency
Consumer society highest per capita income UNITED STATES OF
AMERICA
USA VERY HIGH CONSUMPTION Promotes
Production growth
At home
In other countries
They produce what US
buys
2 weak points of The USA
Families debt due to high consumption
TRADE DEFICIT (negative trade balance)
They import more than
export
JAPAN
• After the II World War JAPANESE MIRACLE• SINCE 1990 RECESSION• It is the 3rd largest economy in the world
5 pillars:
high industrial capacity
global exports
high levels of domestic savings
public investment
international financial markets
ECONOMY BASED ON
STRONG POINTS:
Varied industry (new thecnologies, automotive…)
Robotics (Toyotism)
Exports of manufactured products (price-quality relationship)
Second largest global investor
Yen currency used in international transactions
Equal distribution of wealth
Low unemployment rate
JAPAN
WEAK POINTS
Ageing population
Scarce natural and energy resources
THE EU ECONOMY
• Create an European economic space
OBJECTIVE
• It is the first in volume of trade• It is a great economic power.• Although we find different
economic situations and inequalities.
RESULT
• Economic growth, GDP per capita, worker productivity and technological development are lower than in the US or in Japan.
WEAK POINTS:
Who are the emerging economic powers?In economics, BRIC
is a grouping acronym that refers to the countries of Brazil, Russia, India and China, which are all deemed to
be at a similar stage of newly advanced
economic development.
EMERGING POWER:Is a term used as
recognition of the rising, primarily economic,
influence of a nation - or union of nations - which has steadily increased
their presence in global affairs. Such a power
aspires to have a more powerful position or role in international relations,
and possess sufficient resources and levels of development that such
goals are potentially achievable.
Refers to indiviudal countries or states (or a group of countries) that
have power within a geographic region.
The most relevant ones are
AUSTRALIA
ASIAN TIGERS OR DRAGONS
SINGAPORE
SOUTH COREA
TAIWAN
HONG KONG
REPUBLIC OF SOUTH AFRICA
Sometimes include into the BRIC group
(BRICS)
THE OIL-PRODUCING COUNTRIES
REGIONAL POWERS
PAGE 62. ex 1