Development and Globalisation Case Studies

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  • Created by: Hannah
  • Created on: 04-06-13 16:06

China (1)

In 2009:

  • World's largest manufacturer
  • World's most populous country = 1.3 billion
  • World's biggest emitter of greenhouse gases
  • World's largest army = 2.3 million
  • World's largest number of landlines, mobiles and internet users

Why China?

  • Purchasing Power GDP per capita = uninterrupted growth from $250 to $6000
  • Proportion in poverty fallen from 60% to under 10%
  • Estimated to be over 800,000 millionaires in 2008
  • Economic expansion - high investment in infrastructure, FDI open door policy, economic zones, consumers of Chinese, huge pool of low-wage and exports that undercut MEDCs
  • Internet and communication (internet users also increased - 2008 = 220 million)
  • Transport costs fallen in 2 decades
  • FDIs in China = 70% in manufacturing, in 2003 over 40,000 firms invested in China
  • Car industry developed
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China (2)

Urban Rich and Rural Poor:

  • By 2007 the richest 10% enjoyed 45% of all income = poorest 10% = 1.4% of income
  • Total number of rural poor has decreased from 250 million in 1978 to 30 million in 2006
  • Still around 700 million rural farm workers
  • 6.5 million ha of farmland have been lost in last 20 years with no compensation

Environmental Payback:

  • 3 days before Beijing Olympics = 91 on scale (50+ is high)
  • Huge efforts to clean up = 50% of city's car banned from driving every year
  • 9/10 most polluted cities are in China
  • Acid rain falls in 30% of China
  • Air pollution costs China $25 billion a year
  • Air pollution kills 656,000 Chinese every year and polluted water = 95,000
  • 2008 Milk Scandal = 6 child deaths and 300,000 people ill
  • 2009 = world's largest producer of solar panels
  • Dependant on coal
  • Between 2004 and 2008 it doubled its installed wind power capacity
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China (3)

Strain beginning to show?

  • By 2008 the number living in urban areas have reached 570 million
  • Energy - 2005-8 new coal power stations every 10 days and coal demand doubled from 1990-07
  • Water - 2/3 comes from groundwater aquifer, around 60% of China's cities are short of water
  • Ageing - 17% of pop expected to be over 60 by 2020
  • Freedom - Chinese Community Party, 1989 Beijing uprising (between 200-3000 people died)
  • Economy - exports dropped = global recession

Investing in Africa:

  • To secure resources, mainly oil - 30% of oil used in China comes from Africa
  • FDI from China to Africa rose from $75mil in 2003 to $400 mil
  • BY 2007 - totala investment = $30bn
  • Between 2007 - 08 trade rose by 45%
  • Greater Nile Pipeline opened in 1999
  • 60-80% of Sudan's oil production goes to China in deal worth $2bn to Sudan annually
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China (4)

Benefits of investing in Africa:

  • Jobs created
  • Provided aid to Africa
  • Chinese factories bring modern working practices to Africa
  • China has modernised resource extraction and increased productivity and exports

Costs of investing in Africa:

  • Jobs filled by Chinese
  • Much of aid is tied to Chinese companies
  • Chinese firms undercut indigenous firms
  • Raw material exports dominate = price fluctuation
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India (1)

Background:

  • World's largest democracy = 700 million eligible to vote in 2009 electiom at 800,000 polling stations
  • Population today = 1150 million
  • HDI is very similar to Pakistan and Morocco

1991 Reforms:

  • Tax system reformed
  • Rupee devalued
  • Licenses for importing and investing simplified
  • State-run businesses deregulated
  • Import tax reduced
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India (2)

Economic Growth:

  • 50% of GDP comes from services
  • Outsourcing - last 10 years = flood of outsourcing (e.g. Dell), estimated to employ 700,000 workers in 2008 with a value of $11 bn with global growth rate of 30-5%
  • Growth focused on call centres and other back-office admin work - 1980s = BA and Amex transferred call centres, 2004 = several large Indian info tech services companies  and 2009 = HP said it was setting up HP Unis in 8 Indian cities

Tata:

  • Based in Mumbai and is 90th in list of world's largest companies
  • Operates in 80 countries with 350,000 employees
  • $60bn in sales with 96 different companies in the group
  • Motors - 19th largest, brought Jaguar Land Rover from Ford in 2008
  • Steel - 6th largest, producing 20-30m tonnes a year, brought Corus Steel in 2007 for $12bn
  • Communications - India's largest, world's largest marine fibre-optic communcation
  • Tea - 2nd largest, employs 60,000 people, brought Tetley Tea in 2000
  • Power - largest private power generator (2700MW capacity in 2008)
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India (3)

Tata Nano -

  • 123,000 rupees = aimed at middle class
  • Small, suitable for India's small roads
  • Aims to get Indian's off mopeds and into cars
  • European version for export = Europa
  • Weight cut by only 1 windscreen wiper, no opening boot, 1 side mirror and no power steering

Barrier to Development:

  • China has done better
  • Remains 2 nations = rural poor and urban rich
  • Remains rural - only 29% of people live in urban areas
  • Agricultural subsidies
  • Relies on import for 75% of oil 
  • 2008 = only 13% of Indians connect to seewage treatment system
  • 700 million have no access to toilet
  • Only 8000km of dual carriageway
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EU (1)

What?

  • Set up by Treaty of Rome in 1957 to achieve economic and political cooperation following WW2
  • Originally 6 members
  • UK joined in 1973
  • 27 member states = over 500 million citizens
  • Also now developed a single currency, the Euro = EMU

Aims:

  • 3 central ideas = convergence, competitiveness and cooperation
  • Intend to reduce the gap between rich and poor countries within Europe by investing in people - 36% of EU budget (2007-13) spent to help poorer regions develop

Funds:

  • European Regional Development Fund (ERDF) - invest in infrastructure and innovation
  • European Social Fund (ESF) - invests in skill training, job creation and support
  • Cohesion Fund - invests in development of renewable energy and infrastruture development
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EU (2)

Benefits:

  • Trading without tariffs = boosts trade and wealth
  • Joint control of food production
  • EU regional policy transfers to poorer areas to increase infrastructure and creates jobs
  • Free movement of goods, services, people and money
  • Can trade more effectively the more members there are
  • Can help poorer countries and areas to develop = money is redistributed to where it is most needed

Consequences:

  • Strict economic rules = difficult for some countries to stick to them
  • Number of countries in EU faced with massive government debt = leading to austerity measures
  • This led to riots on the streets = EU membership became less popular
  • 50% of people in Britain would vote to leave the Eu if a referedum was held now
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NAFTA (1)

What:

  • North American Free Trade Agreements (1st Jan 1994)
  • Trilateral trade bloc = Canada, USA and Mexico

Goals:

  • Market Access for goods = elimination of duties, tariff reductions etc.
  • Protection for foreign investment
  • Protection for intellectual property (trademarks and patents)
  • Easier access for business travellers
  • Access to government procurement
  • Commitment to labour cooperation
  • North American Agreement on Environmental Cooperation (NAAEC)
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NAFTA (2)

Results:

  • Merchandise trade between the 3 countries has more than tripled - USA and Mexico = quadrupled
  • NAFTA partners now trade around US$2.6bn in merchandise on daily basis
  • North American economy has more than doubled in size
  • Mexico was one of the largest recipient of FDI among emerging markets
  • North American employment levels have risen by 23% since 1993 = 39.7m jobs
  • Caterpillar Inc.

Benefits:

  • Increased trade in all goods and services - from $297bn (1993) to $2.6tr (2009)
  • Boosted US farm exports 1993 = 22%, 2007 = 30% (M + C)
  • Created trade surplus in services
  • Reduced oil and grocery prices
  • Stepped up foreign direct investment
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NAFTA (3)

Disadvantages:

  • US jobs lost = labour cheaper in Mexico
  • US wages supressed = not all workers joined union so they lost bargaining power
  • Mexico's farmers were put out of business = 1.3 m farm jobs lost
  • US companies expolited Mexicans living close to US border to cheaply assemble goods to the US
  • Mexico's environment deteriorated - farmers had to use increased number of fertilisers to compete
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Coca Cola

The Company:

  • Sells over 400 brands in over 312 countries
  • 90 billion servings of Coke products consumed every day
  • Profits of $24bn
  • Employ 71,000 people worldwide
  • Bottled in 200 countries

Why are they in India:

  • Labour costs lower = higher profits
  • Manufacturing in country sold = less transport = higher profits
  • Legislation on working conditions may be less strict = lower overheards = higher profits
  • Offer TNCs lower tax rates and incentives = lower overheads = higher profits
  • Widens market = more consumers = higher profits
  • Brand status is raised = more consumers = higher profits

POSITIVE MULTIPLIER EFFECT

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Nestle (1)

Who?

  • Nestle is a food processing company with over 8000 brands e.g. KitKat, Nescafe, Shreddies etc.

Where?

  • Operates in 113 nations around the world

Stats:

  • Sales from 2012 = 92,186mil CHF = 32% from Europe, 31% from America
  • Profits from 2012 = 11,060mil CHF

History:

  • 1866
  • WWI doubled production but this dried up after the end of the war
  • WW2 saw profits dropping but grew following WW2
  • Grown rapidly since then and acquired more companies
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Nestle (2)

Controversy:

  • Child Labour
  • Bottled Life - it brought bottled water and then resold it at a profit
  • Horsemeat

Social Responsibility:

  • Nescafe Plan = transform coffee-farm management to benefit working and future generations of farmers
  • Honey Bee Research = Haagan-Dazs
  • Good Food, Good Life = nurtrition programme to help children adopt healthy habits - 30,000

Sponsorships:

  • Tour de France
  • Beijing Music Festival
  • International Association of Athletics Federation
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Africa and Global Recession

Before:

  • Rising commodity prices
  • Export prices were 3 or 4 times higher at their peak than in 1999
  • Countries such as China were beginning to invest in Africa

Recession:

  • Slashed commodity prices back to 2003 levels
  • Food prices rose quickly - a 'silent tsunami' (UN) - rice rose by 74%, wheat by 130%
  • Could push 100 million people back into poverty
  • Rise in unemployment and falling incomes
  • Zambian currency lost 40% of its value = copper prices collapsed

Effects:

  • Actually recieved more aid than ever before = $120bn in 2008 by OECD nations
  • Only 5 countries met 0.7% of GNP target for aid = unlikely to grow during recession
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Tourism in Bali

Stats:

  • 2.5 million tourists predicted for 2011
  • 50,000 hotel beds in the South

Problems:

  • Tourism is limited to the South = strain and benefits only in the south
  • Narrow streets = jammed with traffic and full of problems
  • Deforestation = unregulated development - led to Balinese being driven from their ancestral homes due to escalating land and property prices
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Ecotourism in Soran, Indonesia

What?

  • Prambanan Temples declared a World Heritage Site in 1991
  • Nearby village of Soran therefore developed by Habitat for Humanity Indonesia and Asian Pulp & Paper

Scheme:

  • Will provide 420 homes and guest accommodation
  • 60% live below poverty line = will create a hospitality industry to promote local culture and heritage
  • Will last 3 years (due to be completed in 2014)
  • Community leaders involved at every stage
  • Up to 250 villagers will be working in or managing the ecotourist accommodation
  • Homes to be earthquake proof
  • 20% of paper company set aside for future disaster relief
  • Villagers will be trained in laundry management, prep of traditional food and marketing of traditional arts and cultural performances
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Economic Development and Pollution - River Delta,

Background:

  • Centre of China's strive to industrialisation
  • Population of 95 million in province of Guangdong
  • Area comparable to England and Wales
  • Pearl River Delta = special economic zone geared to export of manufactured goods

Industrial Development:

  • Region was made a free-trade zone by govt
  • Coastal location and free trade = attracted major inward investment
  • Leading TNCs invested in area e.g. Siemens, Samsung
  • One of most prosperous provinces in China - GDP per capita was 2.5 times greater in PRD than the provincial area in 2006
  • Significant reduction in poverty in the area
  • Around 4/5 of Guangdong's GDP derives from PRD
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Economic Development and Pollution - River Delta,

Environmental Problems:

  • Massive in-migration and urbanisation = 77% of pop. live in towns and cities
  • Treatment of sewage and industrial effluent has not kept pace
  • 3/4 of Guangdong's cities do not have sewage treatment plants = pollutes rivers and threatens water supplies
  • Air pollution - sulfur dioxide
  • Brown smog from motor vehicles 130 days a year on average
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Economy vs. Environment - Brazil (1)

Background:

  • Between 1960 and 2009 the value of Brazil's manufacturing sector increased by more than 50 times
  • HEP output grew nearly ninefold over same period
  • GDP per capita grew by 50% between 2000 and 2009
  • Brazil's population soared from 54 million in 1950 to 201 million in 2011

Economic Growth:

  • Sustainable
  • Huge natural wealth in mineral, HEP, oil and timber
  • Large and highly urbanised population = human capital for development
  • 40% of pop is centred in Southeast
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Economy vs. Environment - Brazil (2)

Environmental Impact:

  • Deforestation = rainforest declined by 7% between 1990 and 2010, 60-70% of this caused by cattle ranching, also problems of commercial farming, logging and infrastructure development
  • HEP - deforestation, loss of ecosystems, increased emissions etc. (Belo Monte!)
  • Air Pollution = huge health risk
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