39. Globalisation and development

39. Globalisation and development

1. Introduction

   • Globalisation: pressures leading the world to become one 'market', competition between giant firms, the risk that national producers will be squeezed out.
   • Development: moving people beyond a life where feeding family is a constant struggle and uncertainty. Underdevelopment: <$1 a day.

2. Government efforts to increase world trade

   • WTO (1995).. Over 50% tariff-free imports.
     • Free trade ideal for companies at similar stages of development (encourage competition)
       • Less developed countries would benefit from protection of infant industries, until able to compete with MNC's.

3. The case for globalisation

   • Increased competition forces local producers to be efficient = cutting prices and increase standards of living.
   • Providing the opportunity for best ideas to be spread globally. (AIDS medicine, water irrigation, mobiles)
   • MNC's: provide employment, training, allow local entrepreneurs to learn.
   • Providing outlets for exports, boost standards of living by reducing dependence on subsistence farming (enough to feed the family).
   • Provided opportunity for some countries to break away from poverty (Mexico, China, India).

4. The case against globalisation

   • The economic case against
     • Harder for local firms to create local opportunities.
     • Concern that new production doesn't necessarily mean new wealth.
       • Exploitation
         • Extremely low wage rates, poor working conditions.
   • The social and cultural case against
     • Makes lives less interesting by reducing differences between countries/cities.
     • Everywhere starts to look like everywhere else
     • Built on exploitation
     • Hard for local producers to build and grow in a way that is suited to local needs.

5. Globalisation and the British economy

   • Deindustrialisation
   • Share of exports of goods between 1953-2009 dramatically declined.
   • Strong position in sales of services. 2010 2nd to America.
   • World trade has brought significant increase in living standards. Cheap imports from China kept inflation low.

6. Development

   • 1981, 50% <$1.25 a day. 2005, 21%.
   • Countries such as Mexico, China and India.. Key factors have been:
     • Greater willingness to accept inward investment from MNC's.
     • Greater enterprise (local businesses)
     • More stable government
     • Easier access for exports (WTO)