(from last time) HW – part 2 Awareness of trends in the UK economy since year 2000 Please prepare an annotated graph of US and UK economic performance for discussion next time: (will allocate student per topic in the lesson). Site www.tradingeconomics.com has all of the above (click on forecast or market – we will go through this) Unemployment Rate GDP Growth Rate (Gross Domestic Product – the value of all goods and services in the Economy over a given time period) Government Debt to GDP (A Ratio showing how indebted the Government is, relative to the value of a Countries economic activity) Balance of Trade (Net flows of the value of all imports and exports of goods and services in relation to the UK) Population Exchange rates of the British Pound against US Dollar and Euro (GBP/USD and GBP/EUR) Macroeconomics: Theme 2 - The UK Economy - performance and policies

Opening Activity A: Short presentation of graphs by authors B: Working through in the groups below compare your graphs - find similarities / differences in the timing of major events shown on your graphs across markets. (ie Comparing Unemployment (“UE”) and Short Term Interest Rates (“STIR”) -> did rising UE precede/follow lower STIR, any ideas why?) – please get a paper copy Learning Objective: Have an appreciation and understanding of recent UK economic history

The UK economy - performance and policies Comparison Groups Session Group A Group B Group C 1 GDP GDP Growth Rate Gov.Debt to GDP Interest Rate Oil Price Unemployment Population GBP/USD GBP/EUR Balance of Trade 2 Gov. Debt to GDP Balance of Trade Unemployment 3 The UK economy - performance and policies

Opening Activity – Globalisation Revision Globalisation What is it? What causes it? What are its impacts? Macroeconomics: Theme 4 - A Global Perspective

Definition of globalisation ‘The ability to produce any goods (or service) anywhere in the world, using raw materials, components, capital and technology from anywhere, sell the resulting output anywhere, and place the profits anywhere.’

Impacts of globalisation and global companies on individual countries governments producers and consumers workers the environment Showbie TRACF

Globalisation – Developing Countries Inward investment of TNC (Transnational or Multinational Corporations “MNCs”) into developing world (ie McDonalds, 30k restaurants in 119 countries) Increased employment and foreign exchange can be used by developing countries to build infrastructure, schools and hospitals Globalisation has also significantly increased investment between TNC’s in MEDC’s due to gradual erosion of protectionist trade barriers, supported by work of WTO Demands of TNCs in developing countries may have positive externalities such as provision of constant power supplies within the country and infrastructure benefits Transfer of western management skills and working practices may provide a more efficient work culture (at the expense of destroying the local culture) Western standards, values & technology have the potential to be distruptors in a developing economy (the phone camera put Kodak out of business; promotion by merit might be unknown in a tribal society) http://www.economist.com/node/21542796 Macroeconomics: Theme 4 - A Global Perspective

Macroeconomics: Theme 4 - A Global Perspective Developed Countries Developed countries are main beneficiaries of Globalisation with cheaper goods for consumers, wider choice and more plentiful access to raw materials and LDC markets Profits from firms owned by TNCs located in LDCs tend to be repatriated to the MEDC where the TNC is based Developed countries have more political power than LDCs who may rely on Developed counties for aid – hence trade agreements are likely to be skewed in favour of developed countries Extent of “trickledown effect” may depend on how effective TNCs are at retaining all profits Developed countries benefit from migration of skilled persons from developing countries (who then lose vital skills) Partnerships and cooperation becomes more common between developed and Developing Nations (perhaps with benefits in terms of better international relations) Macroeconomics: Theme 4 - A Global Perspective

Producers (manufacturing/services) & Consumers Producers based in developing countries benefit from cheap raw materials and labour – and potentially access to a growth market Governments in developing countries are likely to be more supportive of inward investment from TNCs TNC’s in developing countries likely to crowd out local competition due to economies of scale in cost and purchasing power Consumers in both developing/developed countries have a far wider range of goods to choose from Goods produced using cheap LDC labour are much cheaper – hence great benefit to consumers Consumer awareness of issues in LDCs (ie Fairtrade products, support for Tsunami victims etc.) Increased awareness of Global Issues: Deforestation, Global Warming; Sustainable Development; Women’s Rights Macroeconomics: Theme 4 - A Global Perspective

Macroeconomics: Theme 4 - A Global Perspective Environment An absence of enforced international laws in LDCs means TNC’s may exploit opportunities to produce and pollute in developing countries. Typical actions in developing countries include pollution of the environment, poor safety controls, poor working conditions Cultural pollution: Inward investment can “crowd out” local economies and companies, traditions and languages (ie replacing horses with tractors can destroy the local economy based on raising, feeding and selling horses) Danger that LDCs become clones of (capitalist) North and West (Ie Hotel in Peru will serve same food as Hotel in Egypt) Hollywood films dominate cultural landscape – when was last time cinema showed a film made in China? (despite China having a large film industry) https://www.theguardian.com/global-development/2013/dec/14/toxic-ewaste-illegal-dumping-developing-countries Macroeconomics: Theme 4 - A Global Perspective

Workers in developing/developed world Developing World Potential for exploitation in developing world as working conditions are likely to be far worse/no trade unions permitted etc. Transfer of skills from MEDC to LDC, especially in industries with a high labour cost component Conversely inward investment may bring much needed employment opportunities and the opportunity to migrate to MEDC Developed World Wages may fall and competition for entry level jobs rise in developing countries as a result of increased migration of labour from LDCs to MEDCs. Transfer of skills from MEDC to LDC, especially in industries with a high labour cost component Conversely inward investment may bring much needed employment opportunities and the opportunity to migrate to MEDC Macroeconomics: Theme 4 - A Global Perspective

Governments in developing/developed world Developing World: Potential for increased taxation Enhanced Links to developed country governments / better international relations / more focussed aid Potential for transfer of western ideas (Democracy, Human Rights, Education) More money / higher GDP growth = more potential for corruption, government destabilisation / internal strife (ie Niger Delta) https://en.wikipedia.org/wiki/Conflict_in_the_Niger_Delta Environmental damage (especially if TNC’s “lobby” developing nations) Developed World: Potential for loss of taxation from jobs (and potentially TNC profits) exported to developing world Benefits to the western consumer ( = the electorate) from cheaper goods Danger of dependency / economic security on developing world for manufactured goods Potential for greater threat of epidemics from developing world due to better transport links Security issues from unconstrained migration from developing world Macroeconomics: Theme 4 - A Global Perspective

SOME HELP… Debate Showbie TRACF

Macroeconomics: Theme 4 - A Global Perspective Links… http://www.tutor2u.net/economics/reference/globalisation- evaluating-benefits-and-costs https://www.youtube.com/watch?NR=1&v=wGULEb3rYeg&feature=e ndscreen Macroeconomics: Theme 4 - A Global Perspective