Being Part of a Globalised World: How do we respond to tensions arising from some economic impacts of globalisation?
Economic Impacts on Countries
A Global Economy
Economic Impacts on Companies
Economic Impacts on Countries
Interconnections between different countries are intensified due to in creased economic activities across different parts of the world
Economic Growth
Economic Downturn
Increased trading and expansion of businesses due to globalisation
Increased tax revenue benefits countries who can improve infrastructure
Increase in trade and business makes available greater variety of goods and services for consumption, benefits population
SG looks to global economy for expertise, products and resources due to limited natural resources (Early years of independence)
Foreign Direct Investment
GDP increased from $1310 per capita in 1960 to $71 138 per capita in 2014
In 2012, FDI of $747.7 billion
Investors attracted as SG enhances business and strengthens important activities, enabling them to expand their business
2004 US-Singapore Free Trade Agreement
Tariff savings
Increased trading between SG and partner countries
Negative Impacts
Competition with local products due to FTAs since local products may be more expensive, affecting livelihood of local businesses
Little evidence of transfer of knowledge and skills from foreign companies or investors due to FDI
Limited employment opportunities from FDIs which do not benefit locals
Economic linkages with domestic businesses are weak/do not bring about significant advantages
Country may withdraw investments, leading to less income and employment in that country
2008 Global Financial Crisis caused US economic downturn, many European banks lost money due to economic interconnections with US
Higher Profits/Market Share
Lower Profits/Market Share
Setting up operations in different locations
Access to new markets abroad
Access to lower labour costs and cheaper resources like land
American companies dominate global companies as they leverage opportunities from global economy e.g..Pepsi producing potato chips
Singapore companies expand operations overseas, gaining higher profits, government offers assistance like loans
With globalisation, increased competition from companies in global economy, harder to compete for share of profits, company needs to constantly innovate
Introduce new features to products and services
Anticipate how much market might change and ensure products remain relevant
Since 2000, many SMEs have found it harder to compete with larger companies with same services due to globalisation as they have a small domestic market and shortage of expertise and labour, cannot earn enough profit to sustain operations (Carrefour, French hypermarket chain closed only branch in SG after 15 years)
Some play complementary role to MNCs eg. MMI Holdings (SME) supplies hard disks to Seagate Technology (MNC)
Positive
Negative
Higher Income
Loss of income
Globalisation facilitates mobility, easier for individuals to look for jobs overseas
Higher income
Greater competition for jobs benefit some as companies may want to higher them
Better job prospects
Jobs lost when global companies close down and shift to another location(USA in 1970s when work could be done in India/China at lower cost)
Unable to equip themselves with skills for job(increased demand for cognitive skills like interpersonal skills)
iIncreased competition cause some to contend with lower income/lose jobs as companies have more access to foreign markets with lower cost
SG Measures
Continuing Education and Training Masterplan from MOM supports citizens in remaining employable with better/new skills, offers training courses
Workfare Training Support Scheme allows older low wage workers to upgrade their skills to remain employable, upgrade jobs and earn higher wages