Consequences of globalisation

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Economic consequences of globalisation

Globalisation has caused an increase in global trade. Trade has increased in most countries, but especially in NICs and countries in the Organisation for Economic Cooperation and Development (OECD). Increased trade has different effects on their economies.

Richer nations:

Globalisation has caused the deindustrialisation of many richer countries - manufacturing industries have moved from richer countries to poorer countries mainly because wage costs are lower. For the growth of their economies to continue, rich countries have had to change to a post-industrial economy - one that's based mainly on the service sector.

  • Positive consequence - led to increased wealth for many people. A reason why many rich countries, like the UK, educate their population to a high level is that this attracts investment from TNCs because more people can work in the highly paid service sector.
  • Negative consequence - many manual workers lost their jobs and struggled to find new work because of deindustrialisation. The economies of some cities were ruined by deindustrialisation. Recovery has been slow because the economies were based almost entirely on one industry.
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Economic consequences of globalisation

NICs:

Globalisation has caused the industrialisation of many countries - manufacturing based countries have been moved to NICs, changing their economy from agriculture-based to manufacturing-based.

  • Postive consequesnces - increased wealth in poorer countries. NICs, like China, attract interest from TNCs because of large workforces with lower wage demands than richer countries. This has bought wealth to some people in NICs.
  • Negative consequence - the income gap between rich and poor people has become wider. The wealth isn't spread evenly in NICs - a few people become wealthy, while many remain poor.
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Moral and social consequences

Globalisation has meant that many countries have become more industrialised.

TNCs move factories from richer countries to NICs, and sweatshops are also set up for sub-contract work.

Agriculteral workers from rural areas move to urban areas to work in the factories and  sweatshops -- rural-urban migration.

This can lead to the exploitation of workers. 

  • Workers are paid very low wages.
  • Many workers are killed or injured in accidents because there are fewer health & safety regulations.
  • Workers have fewer rights. If they strike because of poor conditions they may lose their jobs, or the factory may be moved to another place.
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Globalisation- Morally wrong

Dangerous, low paid has just been moved from richer countries to poorer countries, instead of being stopped altogether.

Some sweatshops employ children, which is illegal in richer countries.

Products made in NICs are cheap because conditions are poor and wages are low - exploitation. Many think people in richer countries should take more responsibility and pay higher prices for products produced in NICs, so the workers should get a fairer wage.

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Globalisation - helping people

Urban working conditions & standards of living might be better than those in rural areas.

Sweatshops are the first steps towards a wealthier economy. They existed in the UK and the USA in the 19th century and helped the economy to grow.

Poorer countries have to focus on what they can do best - use their comparitive advantage. They can't supply high levels of education (needed for service sector jobs), but they can supply cheap labour. This means their economies will grow and in time conditions will improve.

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Globalisation - helping people

Urban working conditions & standards of living might be better than those in rural areas.

Sweatshops are the first steps towards a wealthier economy. They existed in the UK and the USA in the 19th century and helped the economy to grow.

Poorer countries have to focus on what they can do best - use their comparitive advantage. They can't supply high levels of education (needed for service sector jobs), but they can supply cheap labour. This means their economies will grow and in time conditions will improve.

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Environmental consequences

Oil polution - increased global trade = more global shipping. Ecosystems damaged by oil polution from shipping.

Deforestation - increased global trade has meant that countries in tropical areas can grow cash crops for money. They clear forests to make space. Tropical forests are a sink of CO2. When trees are burned they release CO2 into the atmosphere, adding to global warming.

Carbon emissions - globalisation has meant that products can be sold a lond way from where they're produced. Transporting goods over long distances creates pollution.

Waste - increased global trade means more people have access to more products at low proces, so they can afford to be more wasteful. This fills up the landfills.

Recycling issues - increased wastage created by global trade means there's more recycling. Waste can be moved a long way to be recycled -> more greenhouse gases emited.

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Solutions to the consequences

The problems caused by globalisation can be handled at a local or global scale, by governements, businesses and individuals.

Governments:

  • Trading carbon credits - international agreements like the Kyoto Protocol set countries carbon emission limits. If they emit less they can sell their credits, but if they emit more they have to buy credits. This encourages reductions in carbon emissions caused by transportation, and reduces the amout of shipping and oil polution. It discourages deforestation as countries gain carbon credits by planting trees instead of cutting them down. It takes a long time for governments to create these agreements, so it may not reduce emissions quickly.
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Solutions to the consequences

Businesses:

Stating distance transported - businesses can label products to show where they're from. This should encourage customers to buy products that haven't travelled as far, helping to reduce carbon emissions.

Using recycled materials - businesses can use recycled materials. This reduces the amount of waste that goes to landfill, but could increase carbon emissions and oil pollution if the recycled material is shipped long distances.

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Solutions to the consequences

Individuals:

Fair trade - individuals can buy products that are fair trade. This means that the producers are guaranteed a fair price for their goods. 

  • Increases wages and the security of an income for poor workers.
  • Some argue that it prevents economic growth - guarenteed prices are much higher than their market value.
  • People are encouraged to produce too much resulting in an excess, and causes the market value to fall.
  • Anyone who isn't part of the fair trade agreement will lose out.

Buying local - individuals can buy local produce which cuts down on transportation. Many workers rely on exporting their goods to make money. If people only buy locally, millions of workers in poorer countries could lose out.

Recycling - people can recycle more wate, re-use produts and refuse to buy products that aren't made from recycled materials.

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