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