Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

Key issues / Content Focus Learning Outcomes

Students will be able to:
How do nations sustain their economic development in a globalised world?
understand how scarce resources affect national and world economies
Sustaining Economic Development in a Globalised World
Globalisation and its challenges and opportunities explain how globalization creates opportunities and challenges for nations
- scarcity of resources
- globalisation and its effects on national and world economies understand how environmental management is necessary to ensure
- competition for investment and markets e.g. industrial parks, port and air economic growth
services
- effects on employment and competition for talent
- balancing economic development with environmental management e.g. air
pollution and tourism industry in Southeast Asia

Taken from http://www.seab.gov.sg/SEAB/oLevel/syllabus/2008_GCE_O_Level_Syllabuses/2192_2008.pdf

What is globalisation?
Globalisation is the process by which people, their ideas and their
activities in different parts of the world become interconnected or
integrated.

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 Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

What causes globalisation?

Identify Factor Describe factor Explain Factor
(What is the factor all about?) (How would the factor lead to globalization?)
Developments in Transportation: With increasing mobility of goods and people,
transportation and Transportation is the means by which people, materials & information and ideas spread faster.
communications goods are transferred from one place to another. Interconnectedness is established among
There were major improvements in transportation technology different countries & it is also easier to integrate
over the years including the widespread use of steam engine new ideas in different places.
th
in the 19 century & the development of commercial jet Globalisation
aircraft, large ocean-going vessels & containerization in the
th
20 century.
Reduced the amount of time needed to get from one place
to another.
Countries have also built efficient & integrated transportation
infrastructure (e.g. airports, seaports, railways & highways) to
facilitate the increased mobility of goods & people in the world.
Easier & cheaper for goods & people to move around the
world

Communication:
Improvements in technplogy have made communication Improvements in communication technology
among people faster & more convenient. enable people to communicate, do business &
People across the world communicate with one another access information more conveniently and
through telephone, electronic mail, fax & video conferencing. efficiently.
Satellite technology enables messages to be transmitted from Inter-connectedness is established among
one location & received in another part of the world almost different countries & it is also easier to integrate
simultaneously. new ideas in different places.
Optical fibre systems can carry a very large amount of Globalisation
information & transmit information very quickly.
Furthermore,
The invention of the Internet also allows people to
Advances in communication technology allow
communicate, conduct business, obtain information &
Transnational Corporations (TNCs) to co-ordinate
purchase goods & services on-line.
& control their worldwide activities easily. (e.g.
instructions from the headquarters located in one
country could be easily sent to branches or
factories located in other countries quickly &
easily via emails or the telephone)
Inter-connectedness is established among

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 Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

different countries through the operations of the

TNCs & it is also easier to integrate new ideas in
different places.
Globalisation

Transnational TNCs are large global firms that operate in a number of Through the operations of the TNCs, economies
Corporations countries and have production and service facilities outside around the world become more integrated and
(TNCs) the country of their origin. Examples of TNCs include Toyota interconnected.
Motor and Boeing. Globalisation
TNCs set up their operations in different countries because
they wanted to benefit from lower cost of production as well as
to source for new markets, components & resources.

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 Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

What is the impact of globalisation?

Identify Impact Describe Impact Explain Impact
(What does the impact come about? / (How would the impact affect people &/or countries?)
What is the impact all about?)
Economic Improvements in standard of living
Countries which are globalising enjoyed increase in income Through globalization, people have access to
level. better social facilities (e.g. better healthcare
As countries open their doors to foreign investment & trade, services, better transport system) as well as a
they earn more revenue. greater variety of consumer goods & lifestyle
The government can then use the revenue to develop the choices
country in areas such as education, health, transportation, People enjoy improved quality of life & higher
housing & defence. standard of living
Furthermore, with free trade, consumers can purchase a People benefited from globalization
variety of goods at competitive prices.

Increased competition among nations

i) Investment & market Competition for new investments is very intense &
When TNCs seek out locations to set up their production some countries with poor facilities & political
facilities, governments would compete intensively with one instability are unable to attract the investments
another to attract TNCs to invest in their country. they needed
Many countries now face competition from China as the labour Without foreign investments, these countries lack
cost in China is low & the Chinese are able to provide well- the funds & resources to develop their economies
developed industrial infrastructure such as rail & road These countries are unable to earn more revenue
networks. These countries are trapped in the poverty cycle &
(Refer to textbook page 52 & 53 for more examples) they remain poor compared to the rest of the
world

ii) Talent
With globalization, countries not only compete for investment, The mobility of talents could lead to a brain drain
they compete for talents as well. in certain countries if they are unable to keep their
People who are highly skilled are in demand all around the talents.
world & very often, these people would move to companies / These countries would not have sufficient talents
countries which offer them the best employment benefits. to develop their economies & attract foreign
investments
These countries will lag behind the rest of the
world in its development and will not be able to
enjoy economic progress

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Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

Widening income gap between the rich and the poor

As a result of globalisation, developed countries experience The income gap between the rich and the poor
rapid income growth as they own most of the manufacturing countries widens.
activities. Poorer countries feel resentful towards the richer
Furthermore, many TNCs are from developed countries & ones
these TNCs are able to earn huge profits by drawing Lead to tension between the rich and poor
investments, skilled people & resources away from poor areas countries
& relocating them in other regions that benefit them.
In addition, international trade also generates a lot of revenue
for developed countries.
However, developing countries do not benefit so much from
globalisation because they often face trade restrictions from
developed countries & have difficulties selling their products to
these countries.
Furthermore, due to the lack of skilled labour, developing
countries are also unable to produce better quality goods that
can fetch higher prices than goods from developed countries.
In addition, developing countries usually depend on labour-
intensive industries which are unable to generate huge
amount of revenue for the country as these industries produce
low value-added goods & the workers are also paid very low
wages.

Globalisation also results in a situation whereby the rich in The rich in the developing countries become
developed countries continue to prosper due to the better richer whereas the poor become poorer.
opportunities brought about by globalisation. The income gap between the rich & poor in
developing countries widens
However, for the poor in these countries, globalisation brings
The poor feel resentful towards the rich in the
about economic uncertainties & problems such as
society
retrenchment.
Lead to tension & greater division amongst
different groups in the society

Furthermore, the widening income gap between

the rich & the poor in developing countries also
leads to political instability as the poor blame the
government for not taking better care of their
welfare & support for the government drops

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 Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

Social Increased awareness of foreign culture This helps to bring the different countries together
Through globalisation, people are more aware of foreign as with increased awareness, there will be less
cultures misunderstandings and cultural clashes.
For example, through the use of advanced technology like the May help to promote peace and stability in the
Internet, people can learn about the culture and history of world.
another country without leaving their homes.

Loss in local culture

Globalisation leads to a situation in which global brands such The infiltration of global brands & corporations
as Starbucks and MacDonalds dominate the consumer into the markets of developing countries leads to
markets in developing countries. the closing down of local businesses which do not
have the resources to compete with these huge
corporations.
The global corporations dominate the markets of
developing countries & create a homogenous
culture across the world through their identical
outlets & standardized methods of operation.
Loss of local brands and culture

Globalisation also leads to the spread of pop culture such as Some people feel that these cultures influence the
rap music and MTV across the globe youths negatively.
This is so as these youths lose interest in their
own local culture & they embrace the foreign
culture totally
Some people are uncomfortable with this & they
Think about this: What are the kinds feel that these foreign cultures are forcing their
of music or tv programs you like to beliefs and languages upon the world & killing
watch? Are you familiar with your local cultures
own culture or the culture of other These people may feel resentful towards western
societies? countries as these countries are taken to be the
sources of negative foreign cultures that are seen
to corrupt the local people & destroy local
cultures
Affect relations between countries negatively
Also creates tension between youth and older
generations who oppose foreign cultures

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 Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

Environmental Environmental degradation

i) Deforestation & related problems The clearing of the forests results in
Globalisation does great harm to the natural environment environmental problems such as soil erosion,
because: extinction of flora and fauna, increase in flooding,
a) Many TNCs which set up factories in different parts of the water pollution & haze
world use natural resources such as timber, oil & metals at Cause environmental damages which would affect
a rapid rate development & human activities negatively
b) Developing countries are more concerned with profits and For example, environmental problems like haze
markets rather than environmental protection will result in less tourists less revenue for the
c) Developing countries lack the resources necessary to country less funds available for development
implement & enforce environmental regulations slowing down of a countrys development
Rainforest in many countries have been cut down to make
way for the development of industries, agriculture and
transportation.
For example, the Brazilian government allows trees to be cut
down at a rapid rate for economic activities like forestry,
mining & cattle ranching which can generate revenue for the
country deforestation in Brazil
Furthermore, the tropical rainforests in Indonesia are
disappearing very fast as they have been cleared to make way
for cash-crop cultivation & development projects (e.g. building
of factories & transport facilities).

ii) Global warming

With globalization, goods are moved freely around the world & Global warming has a huge negative impact on the
such movement of goods contributes to global warming world.
because aeroplanes & ships produce large quantities of It can lead to rising water level due to the melting
greenhouse gases (e.g. carbon dioxide & nitrogen oxides). of icebergs low-lying areas could be totally
Furthermore, factories & different modes of transportation submerged under the sea great economic loss
around the world also release an huge amount of fumes into & people become homeless
the air every day.
The presence of these gases leads to an increase in global Furthermore, the increasing temperature may lead
temperature. to the extinction of flora and fauna because their
natural habitats would be destroyed

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Chapter 2: Sustaining Economic Development in a Globalising World (Part I)

Environmental management
With globalisation, there is increased awareness in Efforts have been put in to reverse the damages
environmental management. done on to the natural environment
Countries are aware that sustainable development is the key May help to prevent the worsening of
to further growth & to sustain development, they have to environmental problems & avoid an environmental
ensure that the environment is well-preserved so that future catastrophe
generations can continue to use the available resources to
generate income & enjoy high standards of living.
Thus, countries try to ensure a sustainable source of energy
supply through conservation efforts as well as to look for
alternative sources of energy such as wind, solar &
geothermal.

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Chapter 2: Sustaining Economic Development in a Globalising World (Part I)