CHAPTER 2 Sustaining Economic Development in a Glo alising !

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STUDY NOTES FOR Definition of Globalisation: Process by which people, their ideas and their activities in different parts of the world becomes interconnected or integrated. 1. Key Driving forces of Globalisation 1.1 Development in transportation and communications Improvement in transportation and communication technology led to globalisation. ransport system: People, materials, products transferred from one place to another. !ommunication system: "eans by which information is transmitted from place to place in form of ideas, instructions and images. 1.1.1 ransportation Improvements in transportation reduce time ta#en to get from place to place, thus $shrin#ing% the world. !ommercial &et aircraft, large ocean'going vessels and containeri(ation )used in *+th !entury, greatly increased movement of goods and people. !ontainerisation is a system of cargo transport in which standard'si(ed containers can be loaded on container ships, rail cars and truc#s. !ontainerisation reduced time and cost of moving goods over long distance. In world, there is increase mobility of goods and people. !ountries build efficient and integrated transportation infrastructure. -fficient transport system world wide made it possible for goods to be moved around world easily. People also travel easily. 1.1.* !ommunications Improvement in technology made communications among people in different locations faster and more convenient. .atellite technology enabled messages to be transported and received almost simultaneously. /ptic fibre systems have very large capacity and transmit info at very high speed. Internet invention enabled customers to access information more conveniently and efficiently. Internet greatly transformed way one communicates and obtain info. 0dvances in communication tech allows 1!s to coordinate and control world'wide activites easily.
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1.* ransnational !orporations 1!s are large global firms that operate in a number of countries and have production outside country of origin. 1!s set up operations in different locations around the world so as to2 .ource for new mar#ers 3ower cost of production. .ource for components around the world. -conomies integrated. -.g. 4oeing airplane. 2. Impact of globalisation
5-co: -conomic. 5.oc: .ocial 5-n: -nvironment

*.16-co Improvement in standard of living - "any countries which are globalising have en&oyed increase in income level. - !ountries trade and open their doors to foreign investment, thus earning more revenue. - Government ma#e use of revenue for education, health, defence, housing and transportation. hus higher standard of living. - 7ith free trades, consumers can purchase variety of foreign goods besides local goods. - Increase in lifestyle choices leads to better 8uality of life. *.*6-co Increased competition among nations *.*.1 Investment and mar#et - Globalisation leads to counties facing more intense competition. 1!s see# out locations for e.g. lowering cost of production. - Governments in turn compete with one another to attract these corporations to invest in their countries. - -.g. !hina opened doors to foreign investors in 19:+s. Dalian developed rapidly. !hina now attractive country for foreign investors and pose strong challenge to countries in that region. -.g. .ingapore;s port facing new competition from "alaysia;s an&ung Pelepas Port which is claimed to offer cheaper rates than .G;s an&ung Pagar erminal. -.g. .urging traffic puts 4ang#o# 0irport ahead of .ingapore !hangi 0irport as air traffic through 4ang#o# grew strongly in *++<.

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!ountries that are able to offer incentives to foreign investors will be more successful in attracting them compared to others. .uch competition for investments leads to further growth in the country when infrastructure is more developed. "any developing countries difficult to attract foreign investments due to poor infrastructure and political instability. hey are trapped in the poverty cycle.

*.*.* alent - People who are highly s#illed are in high demand. - Globalisation has presented wor#force with opportunity to find employment in another country. - 0dvanced economies with stable or shrin#ing populations are searching for new talent pools. - -merging economies are trying to attract bac# their own best s#illed citi(ens. - Increase in wor#ers; mobility may lead to situation of brain drain. *.=6-co 7idening income gap between rich and poor - Globalisation has rapidly increased income gap between rich and poor countries. - >esult in rapid development in many countries but also spread of poverty in many other countries. - D!s e?perience rapid income growth as they own most manufacturing activities. -.g. "any 1!s from 1orth 0merica and 7est -urope. 1!s able to draw investments, s#illed people and resources a8ay from poor areas and relocate them to regions that benefit them. - Developing countries however, often face trade restrictions put up by D!s. - 1ot capable of producing better 8uality goods that fetch higher prices. - Due to e.g. lowly's#illed wor#ers. 1!s often locate labour'intensive and low value'added production in poorer nations. - 7or#ers may e?perience poor wor#ing conditions. *.@6.oc Increased awareness of foreign culture - Person can learn about history, culture and way of life of people around the world through travelling, surfing the internet and watching foreign movies from comforts of their homes. - 4rought about by globalisation. *.A6.oc 3oss of local culture - Global brands )-.g. "cDonald;s, dominate consumer mar#et in D!s. hese corporations has standardi(ed methods of operation and identical outlets. hey created a largely homogenous culture across the world.
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Globalisation also led to spread of pop culture )rap music, " B, Collywood movies,. Pop culture may have influenced youths negatively as they lose interest in local culture. "any people uncomfortable about advancement of foreign culture. Perceive these countries to be forcing their beliefs, cultures and languages upon rest of world.

*.<6-n -nvironmental degradation - -nvironmentalist feel globalisation can be a destructive force to natural environment and protested against it. - 7hen 1!s set up factories in different parts of the world, many natural resources needed. he resources are often found in abundance in many developing countries. - Developing countries eager to fain economic benefits that come with globalisation. - /ften, natural environment suffers because these developing countires are more concerned with profits and mar#ets than environmental protection. - 3ac# resources to implement and enforce environmental regulations. *.<.1 Deforestation and related problems - >ainforests have been cut down to ma#e way for development of industries, agriculture, housing and transportation. - .ome government allows trees to be cut down at rapid rate as economic activities can generate revenue for country. - -nvironmental degradation caused by country;s pursuit of economic development: - -.g. 0ma(on >ainforest rapid deforestation due to high international demand for 4ra(ilian beef. 66 !attle ranching destroyed millions of hectares of rainforests. - -.g. Indonesia tropical rainforests disappear very 8uic#ly so as to plant cash crops and development pro&ects )to achieve higher level of economic development, 66 3ed to environmental problems such as ha(e, e?tinction. - -.g. !hina hree Gorges Pro&ect to build dam across Dangt(e >iver to generate electricity and ensure flood control. Dam important source of energy for country;s growing electrical consumption. 66 4ut create soil erosion, e?tinction, water pollution etc. *.<.* Global warming - 7ith globalisation, goods move freely around the world. - "ovement contribute to global warming as aeroplanes and ships produce large 8uantities of greenhouse gases e.g. !/* - Eactories and different modes of transportation emit enormous 8uantity of fumes into atmosphere.
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Presence of gases leads to increase in average global temperature.

*.:6-n -nvironmental management - Globalisation brought about an increase in awareness of environmental management. - !ountries aware that sustainable development )development that does not compromise future generations of the resources, is #ey to further growth. - 7hen environment well preserve, future generations can continue to use resources to generate income and en&oy higher standards of living. - 0mount of energy re8uired by globalising world is enormous. - "uch of growth comes from countries that are rapidly developing as they embar# on large'scale industriali(ation. - 1eed to have sustained supply of power e.g. through conservation. - Cowever, conservation not enough to meet challenge of supplying lots of energy. hus, use alternative energy sources F wind, solar, geothermal power. - Problems are however associated with use of alternative sources. - -.g. 4uilding of dam is costly and dangerous. - !hallenge is for countries to source for alternative energy sources and ways to generate power using available sources. 3. Singapores strategies to maximize opportunities and overcome challenges in globalising world -?ample !hallenges that .ingapore face: -conomic slowdown in other countries ransnational terrorism 0geing population "aturing domestic economy >ise of !hina and India as competitors Disease outbrea# e.g. .0>., bird flu. =.1 Diversifying the -conomy - .ingapore aims to be centre for technology'intensive, high value'added manufacturing activities such as chemical engineering and pharmaceuticals. - Benturing into areas li#e 3ife .ciences. his involves setting up supporting institutions such as 05. 0> )0gency for .cience, echnology and >esearch, to build up .ingapore;s >esearch G Development capability. - "any research institutes set up by 05. 0> to underta#e research in different areas such as Institute of "olecular and !ell 4iology )I"!4,. - .uccessful .ingapore'based research pro&ect: 1st .ingapore'developed rapid test for .0>. antibodies.
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.ingapore also attract 1!s to set up high value'added manufacturing activities. Doing so not only generates &obs but affirm .ingapore;s position as manufacturing hub. .ingapore also aims to be regional hub for educationand tourism. !omplementing local universities, leading international universities have set up branches in .ingapore. ourism one of the service industries to be promoted F * I>s built as .ingapore faces stiff competition from neighboring countries as tourist destination. .ingapore unable to offer natural attractions and other countries developing their ma&or tourist attractions. 55Developing various sectors of economy will help reduce .ingapore;s dependence on a single industry or mar#et. .hould any sector of economy slow down, other sectors can continue to generate revenue.

=.* 1urturing growth of .mall and "edium -nterprises )."-s, 7hat;s the importance of ."-sH - ."-s play important role in .ingapore;s economy. - ."-s ma#e up large percentage of business in .ingapore economy. - Important providers of &obs. - ."-s support operations on 1!s by supplying them with components. - -nhance attractiveness of .ingapore as regional manufacturing and services hub. !hallenges ."-s face: - ."-s not successful as face many problems such as not being able to compete with big corporations which have more resources. - Do not have e?pertise in using advanced technology. - ."-s family run and thus have shortage of s#illed professionals to manage company. - Eace small domestic mar#et as many do not have capital to venture overseas. Cow to help ."-H - 4an#s have various loan schemes catering to needs of ."-s. - 0ssociation of .mall and "edium -nterprises )0."-, set up to provide assistance to ."-s. - Include regular seminars and wor#shops to enhance members; capacity. - 1ew companies granted ta? e?emption by government on their first I1+++++ income up to three years. =.= Benturing abroad - .ingapore faces limited land and labour resources.
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In order to achieve further growth, must regionali(e )invest in nearby countries that have abundant land, lower labour costs and new mar#ets,. .G and .ingapore companies provide e?pertise and capital to develop industrial par#s in host countries. In return, host countries provide land and labour for .ingapore companies. -.g. .u(hou Industrial Par# established as !hinese wanted to learn how .G able to achieve economic success within short period, and .G was loo#ing into ways to internationali(e the economy, -.g. International ech Par# in 4angalore, India, as &oint venture between .ingapore and Indian enterprises. .ingapore government also decided to invest in new mar#ers such as "iddle -ast, 0frica, 3atin 0merica and !entral and -astern -urope. 55.pread of investment ensure .ingapore;s economic growth is maintained even if mar#ets and investment opportunities in particular region is wea#ened. 7ith many .ingapore'based companies investing abroad, many .ingaporeans may relocate overseas. Dear spent abroad may be less emotionally rooted to .G as they venture abroad.

=.@ -?panding mar#et reach through economic cooperation - .ingapore has small domestic mar#et as small population. - 1eed to establish trade ties with countries around the world to enable local companies to sell their goods to larger mar#et. - .ingapore signed the Eree rade 0greements )E 0s, with other countries. - E 0 is a legally binding agreement to bring about closer economic collaboration. 4enefits: - .ingaporeans en&oy more choice in goods and services. - .ervice standard improve due to increased foreign competition. - !ompanies en&oy cost savings as ta?es removed. - 0ble to sell their goods in more countries and increase their profits. - 3ocal companies find it easier to venture abroad. .ingapore also set up .pecial -conomic Jones ).-Js, with >iau, Indonesia. 3ess stringent economic laws. .-Js are intended to function as (ones of rapid economic growth by using ta? and business incentives to attract foreign investment. !ooperation could boost business and strengthen bilateral ties. Celp ma#e .ingapore more competitive.

=.A "anaging resources efficiently

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People are its most precious resource and need to ta#e care of natural environment so future generations can continue to en&oy clean and green environment.

=.A.1 Developing people =.A.1.1 Promoting local entrepreneurship and technopreneurship - In globalising world, business competition will increase. - .ingapore needs more local entrepreneurs who are willing to ta#e ris#s in business ventures to come up with new products to compete. - /ne of the ways of promoting entrepreneurship is allowing entrepreneurs who have failed to start a business again by amending bankruptcy laws. - 0nother way is to give recognition to outstanding local entrepreneurs so as to inspire more entrepreneurs to achieve greater success. - -.g. Kenny Dap, !hairman of Kian Cu Eish Earm =.A.1.* Promoting continuous learning among the wor#force - .ingapore 7or#force Development 0gency )7D0, established in *++= to ensure wor#force remains competitive. - !reate opportunities for wor#ers to enhance employability through s#ills upgrading. - Programme helps e8uip wor#force with s#ills that enable wor#ers to better adapt to new &ob demands and changing wor# environment. - .#ills Development Eund ).DE, provides financial assistance to employers to encourage them to train and upgrade s#ills of wor#ers. =.A.* 0ttracting foreign talent - .ingapore e?periencing declining birth rate and also re8uires new s#ills in a #nowledge'based economy. - 1eed to attract foreign talent to meet its manpower needs. - Eoreign talent bring along overseas business contacts. - Drawing foreign talent help create more business opportunities and &obs in .ingapore. - 0dds diversity to cultural landscape of .ingapore and ma#e country more cosmopolitan. - .ingapore also welcome foreigners who posses speciali(ed s#ills as ma#e up for lac# of such local e?pertise. - -?amples: !hef 0shraf and his restaurant on Pahang .treet 6 "r >en LinEeng offered .0E scholarship. =.A.= "anaging the environment =.A.=.1 "anaging limited land resources - .ingapore is small country with only about <M+#m*. 1eed to have proper planning for land use.
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3and use planning is a challenge as not all land can be developed e.g. water catchment areas, regulation at ampines, .imei, !hangi. - 7ith careful land use planning, high standard facilities for housing, transportation, recreation, commerce, defence and education can be built. - -.g. Downtown at "arina 4ay, Lurong Island as petrochemical industry. - 0lthough land is limited, need to preserve nature sites to ensure future generations able to en&oy natural environment in .ingapore. - 3and also allocated for waste disposal such as in Pulau .ema#au 3andfill. =.A.=.* !ooperation with regional and international organisation - .ingapore ta#es active interest in helping solve regional and international environmental problems. - .ingapore cooperated with 0.-01 on environmental matters such as ha(e that affected .ingapore. - .ingapore helped Indonesia detect forest fires and ha(e using satellites. - .ingapore hosted 0.-01 "inisterial "eeting on Ca(e to discuss measures to combat the problem. - .ingapore has also wor#ed with other countries to loo# into environmental problems. - .ingapore signed international agreement that restrict use of harmful o(one depleting substances. - .ingapore phased out use of !E!s in 199<. =.A.=.= Public education - 3ong'term solution lies in education among schools and general public. - .tudents encouraged to ta#e part in recycling and waster minimi(ation programmes. - Programmes to educate general public e.g. !lean and Green 7ee# - 0ctivities include e?hibitions, seminars and wor#shops, beach cleaning and planting of trees. - 1ational -nvironment 0gency )1-0, wor# with .ingapore -nvironment !ouncil ).-!, and ma&or supermar#ets to organise a N4ring Dour /wn 4ag Day% programme.

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