People and the Planet Globalisation - 3

Globalisation
1. How does the economy of the globalised world function in different places?

Globalisation: The ways in which countries become increasingly connected to each other. Globalisation has led to: Jobs and wealth in one country being increasingly dependent on trade and investment from other countries Countries specialise in certain types of economic activity. .g. China manufacturing! "# finance Jobs move from high cost to low cost countries The amount of trade in goods and services is increasing The world is increasingly connected by air travel! shipping routes! the internet and other forms of communication.

Globalisation has led to changing employment patterns in countries. This is illustrated by the Clar$e %isher model: mployment structures change over time. 6ften as a country starts to develop it will move from an economy based on primary industries to more secondary industries! with the most developed countries having most employment in tertiary and 9uaternary sectors.

Changing employment structures: &s countries develop their employment structure will change '. (rimary )ector: (eople e*tract raw materials from the land or sea %arming! fishing! mining +. )econdary )ector: (eople manufacture raw materials into a finished product house building! car ma$ing! wor$ing in a clothes factory 3. Tertiary )ector: (rovide services. These include a wide range of ,obs -etailing! financial services! .octors! ducation /. 0uaternary )ector: (rovide information or e*pert help! often associated with $nowledge based industries 1T! 2io-sciences! -esearch and .evelopment. These changes happen for a number of reasons 3 4any people in less developed countries live in rural areas5 this means many are employed in primary industries li$e fishing and farming to provide themselves with food. 6ften the technology and money is not available to build factories 7that is why they have low numbers in secondary employment8.

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&s : .C;s develop 7into <1C;s8 they start to use more machines. This means there are less ,obs available in primary industries 7e.g. a combine harvester can do the wor$ of 3= people harvesting by hand8. These people migrate to cities in search of wor$ in factories! therefore secondary industries increase. 4 .C;s are wealthy5 therefore the people demand a high standard of living and lots of services 7high tertiary employment8. 1t is also cheaper to import raw materials and food! so the number of people employed in primary ,obs is low.

Working conditions and pay will vary depending on the sector of employment. .g. (rimary: & subsistence farmer 7Ethiopia8: >ard! labour intensive farm wor$. ?ulnerable to weather 7floods @ droughts8. Children will often wor$. <o pay will grow food to feed family )econdary: & factory wor$er 7China8: :ong hours! repetitive wor$. "nions are often banned and wor$ers have few rights. (ay - A'!=== - A3!=== @ year 7low! but reliable wage8 Tertiary: &n <>) nurse 7 !8: Good wor$ing conditions with health and safety regulations @ unions. (aid holidays and pensions. Can be high stress. (ay - A+=!=== - A/=!=== @ year 7good wage8 0uaternary: (harmaceutical researcher 7 "#8: ?ery good wor$ing conditions. >igh stress ,ob with T<C demanding new products. (ay A+B!=== - A'==!=== @ year 7very good wage8

Globalisation and the role of global institutions Global shift has led to the change in location of many ,obs. .g. the movement of many manufacturing ,obs to countries in &sia 7li$e China8. Three global institutions have been important in helping these changes to create a more globalised world economy: Corld Trade 6rganisation 7CT68: (romotes free trade by persuading countries to reduce trade barriers li$e ta*es and 9uotas. 1nternational 4onetary %und 714%8: Gives loans to developing countries. This helps them improve their infrastructure and therefore encourages investment from T<Cs Trans <ational Companies 7T<Cs8: &im to reduce costs and increase profits by moving factories to cheaper locations. This creates new ,obs in developing countries.

Chat is the impact of globalisation on different groups of peopleD

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$. What changes ha%e taken place in the flow of goods and capital?
&oreign 'irect (nvestment 7%.18: Chen money from one country is invested in another. .g.to build a new factory. %.1 is very important as it creates ,obs! particularly in developing countries 4ost %.1 goes to developed countries. .g. the 2ritish T<C 2ritish (etroleum 72(8 investing in &merica. The amount of %.1 going to developing countries has increased. .g. 2ritish Telecom 72T8 opening a call centre in 1ndia. The amount of %.1 going into China has grown from almost E= in 'FG= to E''/ billion in +='=. (nternational trade has increased in the last B= years for many reasons. Transport technology has vastly improved and because of this the cost has reduced! especially due to container ships! but also road! rail and air transport. The reduction in cost has made it easier and cheaper to produce goods in places li$e China and e*port them to countries li$e the "# and ")&. T<Cs have also led to increases in international trade. This is because have supply chains which include many countries around the world 7e.g. &pple produces many goods in China and then sells them in developed countries li$e the "# and ")&8. The larger T<Cs will also often merge and buy out companies in other countries to increase their trade 7e.g. )ony bought ricsson in order to increase its sales of mobile phones8. The internet has also made it very easy for companies to reach customers and increase trade in any location around the world. )tate led investment: Countries li$e China have set up &ree )rade *ones 7%TH8. These offer incentives to T<Cs such as reduced ta*es! few regulations on health and safety and banning unions.

This increase in globalisation and world trade has led to positives and negatives in both developed and developing countries:

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Positi%es of globalisation Cheaper imports for consumers The growth of global economies will increase the demand for services Can lead to improvements in the environment The growth in employment helps to spread wealth helping countries to develop *ports rise which generates income and can leads to investment. This can have a Imultiplier effect; on the economy +egati%es of globalisation )ome ,obs in factories are lost as they go abroad The ,ob losses are often concentrated in certain areas and industries. .eindustrialisation can lead to unemployment and social problems <ew ,obs are often in urban areas. This results in urbanisation and often slums and shanty towns There can be social impacts where wor$ers are e*ploited in sweat shops 1t can lead to over dependence on a single manufacturing process. This is a problem when prices of products change 1t can reduce food supplies as more people move to cities! giving up ,obs in agriculture nvironmental issues become a problem due to rapid industrialisation

Case "tudy, # secondary )+C - +ike <i$e operates in many countries around the world. The head9uarters and much of the research and development for new products is found in the ")& and other developed countries. This is because of the s$illed labour and hi-tech facilities. The secondary wor$ in factories is found in countries li$e China and 1ndonesia. This is because labour is much cheaper and laws are less strict. 1.e. health and safety regulations are more rela*ed which helps to $eep costs lower. <i$e has even been found to employ children. Cor$ers often have poor wages and difficult wor$ing conditions 7long hours and they have been $nown to be beaten8. <i$e is also attracted to China because it is offered incentives li$e lower ta*es to locate factories there 7in %THs8. The environmental rules are often ignored! this helps $eep production costs low as <i$e do not have to pay to reduce pollution. &lso T<Cs li$e <i$e and 4c.onalds will try to e*pand shops and restaurants into new countries around the world to increase their sales. <i$e has also grown by merging with other companies such as Converse and >urley 7to increase its mar$et share8. 1t has also diversified its products and sells a greater variety of goods to increase profits.

Case "tudy, # tertiary )+C - .ritish )elecom /.)0 2T is a T<C which operates in different countries around the world. The head9uarters are found in the "# due to the s$illed labour. 2T also operates in 1ndia and has call centres in 2angalore. 1t has located its call centres in 2angalore because the labour is cheaper! and wor$ing hours are longer. This helps to cut costs. 1t is also because 2angalore has a well educated population with many people spea$ing nglish 7due to its Commonwealth lin$s8 and universities 7well educated population8. This is important as the wor$ers will need to spea$ to customers in the "#.

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2T has located its call centres in 1ndia because 2angalore is well connected and has good enough infrastructure to support their footloose industry! reduce their costs and therefore increase profits. 2angalore has also attracted other hi tech companies which helps improve the infrastructure and also attracts highly s$illed wor$ers. 2angalore attracts a lot of this outsourcing so wor$ers are specialised and well trained. 6utsourcing to 1ndia also helps 2T to e*pand into new mar$ets! which it has also done by buying out smaller companies or mergers.

What are the ad%antages and disad%antages of )+C1s to different countries and people?
&dvantages of T<C;s to : .C;s 2usinesses are set up which the host country would not have otherwise have. 2etter transport lin$s and medical and educational services may be established in the host country. mployment is created in the host country. The economy of the host country is improved. .isadvantages of T<C;s to : .C;s &ny ,obs created are often poorly paid and e*ploit local wor$ers. T<C;s act on their own behalf and profits are sent out of the host country. T<C;s often only stay for a short period of time before closing down and moving to another country when production becomes more e*pensive. <either safety! nor environmental sensitivity has ever been good. .isadvantages of T<C;s to 4 .C;s Jobs will be lost as industries are lost to : .C;s The ,ob loses can lead to social and economic problems in certain locations

&dvantage of T<C;s to 4 .C;s Cheaper imports from : .C;s mean consumers in 4 .C;s pay less for goods The loss of industries in 4 .C;s can help to improve their environment