Globalisation

 Sample Exam Questions 

 

Who are the winners and losers in economic globalisation?

 

   Economic globalisation is the way in which the economies of different nations are becoming interlinked and in the process interdependent. Different countries and groups of people have been advantaged and disadvantaged as globalisation has occurred and these impacts can be assessed to judge who have been winners and who have lost out.

   One way in which winners and losers can be identified is through the examination of the pattern of world trade. As trading links between nations have been established, some countries have been put a t a clear advantage. MEDCs for instance tend to raise barriers to imports and tariff charges o protect their own economies. LEDCs who attempt to export commodities overseas to MEDCs can therefore make little profit for every pound spent on Ecuadorian bananas for instance, twenty three pence is charged on European import duty. Those LEDCs who rely heavily on commodities therefore, such as Ecuador where 2 million of the population are involved in the banana business, lose out. Prices can be dictated by MEDCs and often a stable market for their products are hard to find; Tesco import mangetout from only 4 farms in the world they can rapidly change supplier if needs be. Because of this pattern of world trade, many countries have lost out (particularly in Africa) on the benefits of economic globalisation.

   On the other hand, MEDCs and those LEDCs which have substantially increased their exports have been winners. In particular those countries that have been able to join trade blocs can experience trading with other member countries, with more relaxed barriers to trade and on preferential terms. For instance, the UK joined the EU in 1973 and now trades more freely with other member nations, fuelling economic growth. Countries such as China (RIC) and Taiwan (NIC) have joined the South East Asia trade bloc and so can also be identified as winners.

   Other countries can also be identified as winners as a result of intervention from trans-national companies. Such countries who have attracted foreign investment due to an educated, willing to work labour force, or cheap raw materials / land costs for instance, have dramatically improved their position in the global economy. Nike for instance manufactures no shoes or products in Oregon where it is based, or indeed in the USA, but sub-contracts in South East Asian countries such as Vietnam and Indonesia. Manufacturing used to also take place in countries such as South Korea (more than 50% in 1989) but very little production occurs here now as activity of TNCs causes economic growth and forced wages to spiral upwards. South Korea is an excellent example of a nation which has benefited from globalisation as it has been transformed through the development continuum from an LEDC to a RIC then a NIC and today a powerful MEDC capable of investing overseas itself. In 1997 for instance the Korean company Luck Goldstar invested in the Newport area of Wales.

   Although the shifting of manufacturing overseas from MEDCs to LEDCs did cause some deindustrialisation for example in the UK, Germany and now Japan; such countries should not be considered losers as a result of globalisation as a whole since economically they remain incredibly powerful. Furthermore, although LEDCs may benefit from TNC production outlets in their countries, the profits of such operations still largely go to the MEDCs. Nike, Coke and McDonalds for instance all with outlets across the globe are owned by the USA.

   It is further possible to consider winners and losers based on the social issues that arise as a result of globalisation in other words it is possible to identify people who benefit and lose out in addition to nations as a whole.

   In many LEDCs, RICs and NICs, globalisation has resulted in a massive increase in wages for some people. In Vietnam the wages from the Nike factory a three times the national average of $54 a month. Consequently workers at the factory (who tend to be female) have been able to drastically improve their quality of life through the purchase of consumer goods such as TVs for instance. Globalisation has not benefited all however; its effects are concentrated on a few urban regions only many remote areas have not benefited for instance. Moreover, exploitation is a key problem and many workers face poor working conditions e.g. strip lighting and shifts as long as 24 hours in the Gap factory in Indonesia. Therefore there are large variations between winners and losers in LEDCs.

   In MEDCs, winners and losers can also be identified. On the one hand, the population as a whole may be seen as a winner as globalisation introduces new, cheap overseas products, exposing people to different cultures and foods for instance and keeping prices in shops relatively low. Certain communities however have lost out as a result of globalisation for instance, particularly in areas where the economy was traditionally based on heavy manufacturing. In Birmingham more than half a million jobs were lost between 1971 and 1993, causing deprivation and social issues such as high divorce rates and low school attainment levels in those areas dependent on manufacturing. An example of this would be Longbridge where a large percentage of the male population were employed at the Rover plant.

   In conclusion, winners and losers can be viewed in many respects. Generally however, MEDCs and their populations have been winners along with some RICs and NICs. The benefits of globalisation have bypassed many LEDCs who can be considered losers. In the future, this pattern is likely to continue, with the rich getting richer and the poor getting poorer.