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chapter 9 - tensions arising from economic impacts of globalisation -…
chapter 9 - tensions arising from economic impacts of globalisation
countries
economic growth
economy dependent on economic activites such as agricultural, manufacturing, tourism or trade and investments
earn more tax revenue = improve infrastructure + generate more jobs over time +greater variety of goods and services for ppl
SG: limited natural resources -> looks to global economy for its expertise, products and services encourages foreign investments, invests in other countries and focus more on techology and info industries to remain competitive and sustain economic growth
Sg: foreign direct investments (FDI) - investments in SG company by foreign company - SG enable businesses to enhance ad strengthen important activities and leverage economic opportunites in SG = expand business overseas = attract foreign investors
SG: free trade agreements (FTA) - treaties between countries to establish free trade area whr exchange of gooods and services can be conducted w/o tarrifs or hindranes, across the borders = tarriff savings + incr tradings ~ e.g. SG and USA
BUT: FTAs cause cheaper products to import to country = competition w local products = affects livelihood of local producers/businesses = close down
economic downturn
causes country to withdraw investments + reduce demand for goods and services overseas = lesser income and employment
GLOBAL FINANCIAL CRISIS! - slowdown in USA economic activity = ppl inability to repay bank loans = unpaid loans and confiscation of property = impact on Europe due to interconnections w USA = impact on other countries = affected manufacturing countries e.g. china and india
SG response to GFC
SGreans: workers who lost jobs given help finding new ones, given opportunities to be retrained w new skills, lower income families given assistance thro rental rebates
Businesses: smaller Sg firms obtained financing w reduced interest rates and incr subsidies for insurance premiums, new businesses and smaller companies granted further tax exemptions
MNCs unable to anticipate changing markets and cant stay relevant = lowered profits and bankruptcy ~ e.g. French hypermarket chain Carrefour closed aft 15 years bc other companies offer similar products in SG
companies
higher profits/market share
MNCs set up operations in diff locations = access to new markets abroad + lower labour costs + cheaper resources like land and raw materials
American MNCs dominating global companies e.g. PepsiCo
SG companies (healthcare, food and fashion, technological expertise): gain assistance from SG gov thro loans, grants and tax incentives = company take advantage of opportunities presented by globalisation = expand operations overseas
lower profits/market share
high competition between companies = harder to compete for share of profits from global economy = constantly needing to innovate and reinvent itself to stay successful OR risk losing its share of market or profits
companies constantly introducing new features into its product and services to stay relevant
small and medium enterprises (SMEs)
unable to compete w larger companies that offer same product and service (shortage of expertise and labour, face small domestic market) = cant earn enough profit to sustain operations
some respond well to competition bc they understand local conditions and offer goods and services that appeal to locals/play complementary role to MNCs
Sg gov provide financial assistance at diff stages of growth, aids in SMEs effort to venture abroad, facilitates partnership between SME and larger corporations, financial assistance thro loans, grants and tax incentives
individuals
higher income
gloabalisation facilitated mobility, easier to find job overseas
ease of movement: incr. competition as indiv compete w one another in same country and others overseas
overseas companies may want to employ indiv due to their skills
loss of income
some workers contend to lower income/risk losing their jobs bc companies get more access to foreign markets offering lower labour costs
jobs lost when global companies close down to shift location ~ e.g. in 1970, many americans lost jobs bc it can be done in china and india at lower costs
economy involve = nature of skills demand changes = ppl lose jobs bc unable to equip themselves with skills required for those jobs ~ e.g. when country moves from agricultural to manufacturing industries and services industries
e.g. japanese brand, Uniqlo: maunfacturing cost in china rose, so uniqlo moved to vietnam where labour costs were halved