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BAC GEOGRAPHY THE GLOBALISATION OF ECONOMIC ACTIVITY

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BAC GEOGRAPHY

1.1 THE GLOBALISATION OF ECONOMIC ACTIVITY

Transnational pattern of production and global markets including the major hubs and flows in the global economy.

Core-Periphery theory and interdependence in relation to global trade and production processes

Definition Globalisation: increasing interconnectedness of the world economically, culturally and politically through global networks of trade communication, immigration, transportation and political decision making

Core-Periphery theory: Structural relationship between advanced, metropolitan “core” and a less developed “periphery” either withing a particular country or to the relationship between capitalist and developing societies.

Why?: to avoid environmental restrictions

What kind of productions: Primary and Secondary sector

NIDL: global division of labour associatesd with the growth of transnational corporations and the deindustrialisation of the advanced economies. The most common pattern is for research and development in more economically developed countries and cheap less skilled labour in less economically developed countries.

FDI: form of a controlling ownership in business in one country by an entity based in another country

TNCs: Also referred to as a multinational company, I one that operates in many countries regardless of national boundaries, and sees the world rather than the local area- as its supplier of labour, raw materials, component parts (composants) and its area of sales (See chap 20). Its headquarters and main factory are usually located in a more economically developed country and most of its manufacturing assembling plants in those that are less economically developed.

In 1970 there were 7000 TNCs: largest: car manufacturers and oil corporations. It has grown to 63 000 in 2000 => due to the emergence of electronics and high tech firms, many of which are based in the NIC of eastern Asia

TNC:

• employs 82 million people worldwide, to indirectly influence an even larger number

• control over 75 per cent of the world’s trade.

• Responsible of 2/3 of the world’s manufacturing

• Largest corporations have a higher turnover (CA) than all of Africa’s GDP in total

Many organisations and individuals have attacked TNCs as being exploiters of poor people, especially women and children, who live in less economically developed countries. Yet talking to these workers : their attitude was: But it is the only way by which we can find full-time work”

 Are TNCs on balance a blessing or a curse to a less economically developed country

- profits go to shareholders in the source country and do not remain in host country : leakage

- can relocate suddenly and easily if circumstances change: job may not be reliable

- pollute the water, land and the air : bc of no environmental regulations (or poorly enforced)

- local & national businesses cannot compete with the range and quality of products that a TNC sells : lack of competitiveness

- exploit the workers by paying them low wages + by having poorer less safe working conditions

BUT

- invests money by opening mines, factories, shops or offices in the host country leading to infrastructure growth, the development of mineral wealth and energy production, better roads and airports and improved services.

- Creates jobs by employing local people leading to higher/ more reliable incomes and better skills and knowledge

- Government of the host country receives higher tax revenues from the TNC and through employees’ wages which can be spent on public services, such as health and education

- Brings its knowledge and expertise to the host country

CASE STUDY

Nigeria Unilever

- National Governments as actors of globalisation: Factors in the emergence and growth of newly industrialised countries (NICs) and the impact of SEZs and trade blocs.

The Pacific Rim : includes all those countries in Australasia, Asia, North America and Latin America that border the Pacific Ocean. It acknowledges the shift in the location of the world’s manufacturing industry away from countries bordering the North Atlantic (North America and Wester Eu) and the emergence of Newly industrialised countries especially in eastern Asian.

The NICs in East Asia

Encouraged by Japan’s success, other governments in eastern Assia set out to improve their standards of living, initially by investing in manufacturing industry before, later, concentrating on high-industries (see p 139-140). Manufacturing output rose most rapidly in South Korea, Taiwan, Hong-Kong and Singapore = four Tigers.

Like Japan, they lacked raw materials, had government committed to long term planning and had a dedicated workforce that was reliable and, at first, was prepared to work long hours relatively little pay. Economic growth in these NICs continued during the 1980s and 1990s when it was slowing down in the more developed economies and world manufacturing was declining. (Malaysia, Thailand, Indonesia and to a certain extend the Philippines : second wave of the Asian tigers. Latest being China.

CASTE STUDY (Taiwan /South Africa?): only one

International Organisations as actors of globalisation: The role of the IMF, World Bank and WTO in the global economy.

- National Governments as actors of globalisation: Factors in the emergence and growth of newly industrialised countries (NICs) and the impact of SEZs and trade blocs.

Trade blocs: a group of countries that share trade agreements (ASEAN, NAFTA, EU, Mercosur). They can include free trade areas, customs unions, common markets and economic unions

• SEZ (special economic zone): an area in which business and trade laws are different from the rest of the country. Located within a country's national borders,

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