Globalisation

A2 text p. 310 – p.320 Lesson Objectives Define and explain the effects and consequences of Inflation Assess the impact of FDI and MNCs in the globalisation process Analyse other major flows of capital

A2 text p. 310 – p.320

Characteristics World’s economies have developed closer links through trade, investment and production. Manifest itself in two ways;  Global Brands – Big Mac Index  Global sourcing – Worldwide Production

A2 text p. 310 – p.320 EU One of many ‘trading blocs’

A2 text p. 310 – p.320 Factors promoting globalisation Reduced protection (WTO)  Reduced capital movement restrictions Developments in ICT Fall in real transport costs Liberalisation of domestic markets

A2 text p. 310 – p.320

Globalisation WinnersLosers

A2 text p. 310 – p.320 Effects of Globalisation Interdependence Global brands Improved medical supplies Higher standard of living??? Growth in Inequality Exploitation

A2 text p. 310 – p.320

Deglobalisation?

A2 text p. 310 – p.320 MNCs and FDIs Activity p. 314 Multinational corporation operates in many countries.  Coca Cola, Ford, Starbucks MNCs provide foreign direct investment (FDI) which involves capital flows between countries.

A2 text p. 310 – p.320

What the maps suggest These maps suggest growing inflows of foreign direct investment in the 1990s. In 1970 and 1980, large parts of Africa, Latin America and Asia had zero or small inflows of foreign investment. By 1999 large parts of Asia, Africa and Latin America, as well as all of North America and large parts of Europe, have FDI inflows greater than 1% of GDP. This expansion of foreign investment into the global South indicates increasing global economic integration. However, much of this expansion may be due to sale of state enterprises, known as privatization, rather than the setting up of new factories (Sutcliffe 2001: 78). And, FDI is heavily concentrated in only a few, industrializing nations. In 1997 nearly 71% the foreign direct investment in developing countries (the global South) went to just 9 nations, and of that over 30% was invested in China alone (Todaro, 2000: 578). Whether you see expansion of foreign direct investment as positive or negative may depend on your ideas about social change (see also "For and Against" button below).

A2 text p. 310 – p.320

Articles – Positive or Negative? 93.stm 93.stm 39.stm 39.stm

A2 text p. 310 – p.320 FDI good or bad for China? ProsCons

A2 text p. 310 – p.320 FDI good or bad for China? ProsCons Injection in Circular FlowMNCs may underpay and use capital intensive Credit balance of payments (Exports +)Less jobs to tax More tax revenueOutflow of profits may outweigh positive impact on balance of payments (Net Effect Minus) Improved productivityEnvironmental costs! Technology transfer

A2 text p. 310 – p.320 Other Financial Flows ‘Hot Money’ Chasing Interest and Exchange rates  Disruptive  Short termism Portfolio Investment Chasing shares and bonds  Longer term Foreign Aid Loans Remittances

A2 text p. 310 – p.320 Lesson Objectives Define and explain the effects and consequences of Inflation Assess the impact of FDI and MNCs in the globalisation process Analyse other major flows of capital