1. (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 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

2. 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

3. 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

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

5. 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.’

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

7. 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)
Macroeconomics: Theme 4 - A Global Perspective

8. 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

9. 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

10. 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)
Macroeconomics: Theme 4 - A Global Perspective

11. 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

12. 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)
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

13. SOME HELP…
Debate
Showbie TRACF

14. Macroeconomics: Theme 4 - A Global Perspective
Links…
evaluating-benefits-and-costs
ndscreen
Macroeconomics: Theme 4 - A Global Perspective