Consequences of Globalisation

Consequences of Globalisation

1. LEDC

   • These are countries whose state of economic welfare is characterised by low national income per head, high rate of population growth, high unemployment, poor infrastructure and low levels of human capital.
   • Low paid workers in sweatshops
   • farmers a forced to use genetically modified crops
   • privatisation of state owned industries in order to qualify for world bank loans
   • growing dominate of the US corporate culture
   • Globalisation can cause destruction of local and national products, identifies and cultures. this is because big brands such as coca cola and macdonalds are coming into these LEDC's and changing how people live.
   • there is also a controversy surrounding the treatment of local labour by MNC's. this is through things like selling there products for far more than what they were paid to make and then the workers only getting a small percentage
     • however the MNC's argue that although there wages are low they still pay the labourers more than the local firms would pay them.
   • globalisation does encourage large firms to move across the planet and so they are therefore expanding there business and creating jobs in coutries and thus reducing unemployment and increasing living standards in LEDC's

2. MEDC

   • Moving MNC's to LEDC's can have a harmful impact on the economy of the MEDC because it may reduce the wages and living standards however this highly depends on the types of jobs that emerge to replace the ones lost through deindustrialisation
   • it is believe that having free trade which has helped to improve globalisation has lead to a better allocation of resources
   • international competition and the spread of technology has also helped to make people better off
   • trasnfer of wealth and resources to richer countries is promoted by profit flows and interest payments.
     • On an international scale dividends and profits flow from the MNC base in the LEDC to the headquarters in the MEDC so it boosts the circular flow of income in the MEDC