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globalisation EQ3, Tax Havens - Interdependence
Because people and…
globalisation EQ3
migration
Megacities
As the world becomes more globalised, economic migration has increased in pace and scale. This has led to urbanisation and the rise of megacities. Megacities have over 10 million people in the urban area.
Megacities
-In 1990, there were just 10 megacities across the globe. By 2030, it is expected to rise to 41 according to the UN.
-Megacities such as Mumbai, India and Karachi, Pakistan are growing rapidly.
-This is because of rural-urban migration whereby push factors force people to leave their rural homes. Pull factors are factors that encourage people to move to the urban areas
-Megacities have a higher birth rate than the death rate, so this natural increase causes the population to continue to grow.
push factors-Examples of push factors include:
- A lack of access to education.
- A lack of access to health care.
- A lack of access to clean water and sanitation.
Push factors-Examples of pull factors include:
- Better employment opportunities in the city.
- Better healthcare available in the city.
- An overall better quality of life.
problems with megacities
-Rapid population growth can cause environmental and social problems.
-For example, there is a shortage of resources, a shortage of houses, a shortage of services.
-A shortage of homes is caused by the numbers of people moving to the cities on a daily basis - infrastructure cannot be built fast enough to keep up with demand.
-This leads to a lower quality of life, an increase in unplanned settlements and an increase in poverty.
Megacities - Karachi, Pakistan*
Karachi is a megacity growing at an annual rate of 5%. It generates over 25% of the total GDP of Pakistan. Such rapid population growth is causing significant social and environmental problems.
Water shortages
-According to the World Bank, Pakistan is one of the most water stressed countries in the world.
-A lack of infrastructure to supply clean water makes this a serious problem for Karachi.
-The WWF estimates that the city loses 30% of its water through leaks in the system.
Unplanned settlements
-The UN estimate that 50% of the population live in slums or unplanned settlements.
-Orangi Town is Asia’s largest slum and found in Karachi. It is believed to be home to around 2.4 million people.
Tax avoidance
-With around 75% of the slum dwellers in Karachi working in the informal sector, the Government does not receive taxes from these people.
-So the Government does not have the income to spend on improving education and healthcare which would improve the quality of life of the people of the city.
Megacities - Mumbai, India
Mumbai is India’s largest urban area and was home to 22 million in 2015. It has doubled in size since 1970 and, as a result, suffers social and economic problems because of its rapid growth.
Unplanned settlements
-Dharavi is the largest slum area in Mumbai
-5,000 people are employed in the slum in recycling plastics.
-People find their own informal employment in these areas. In these slum areas, people have little or no access to basic services: water, sanitation, power and waste management.
Urbanisation
-People move to megacities from the surrounding area to earn higher wages than they could in agricultural/rural areas.
Air pollution
-Air pollution in Mumbai is an example of an environmental problem caused by its rapid growth.
-In 2018, Mumbai was ranked the 4th most polluted megacity in the world.
International Migration
Elite Migration
As well as the increase in rural-urban migration, international migration has increased in cities and regions that are global hubs.
What are elite migrants?
-Elite migrants are wealthy migrants who are welcomed to a country because of the investment and capital that they bring.
Elite migrants and FDI-Elite migrants are an advantage to the host country because they boost their FDI.
- E.g. In 2013, the Financial Times reported that 82% of property deals in Central London involve foreign buyers.
-Increased international migration increases the interdependence between regions.
- E.g. The migration of wealthy Russian oligarchs (elite migrants) to London increases the interdependence between the UK and Russia as investment flows between the two countries.
Elite migrants and skills gaps-Elite migrants can also be highly skilled people who migrate to a country to work within a particular industry.
- E.g. Skilled doctors who come to the UK to work in the NHS.
-The benefits of increased elite migration are that it increases investment into the host country and can fill the skills gap.
-But the source country can experience a skills gap and lack of investment as the migrants have left the area.
Low-Wage Economic Migration
Low-wage economic migration generally involves less skilled workers moving to new regions to find work.
Benefits for host country
-The benefits of low-wage economic migration for the host country is that this cheap labour can be used to develop the infrastructure of the country.
-This has been the case in the UAE Gulf State where foreign migrants make up 80% of the construction workforce in Dubai.
Impact on source countries
-The source countries benefit if remittances (earned income) are sent home by the migrants.
-The source countries can be negatively impacted if they lack low-wage workers as a result of migration abroad. This could create a skills gap.
-Like elite migration, low-wage economic migration creates an interdependence between host and source countries.
Patterns of low-wage migration
-Low-wage economic migrants move for different reasons. The migration of low-wage economic migrants from India to the UAE has been mostly construction workers.
-The low-wage economic migrants from the Phillippines to Saudi Arabia has been mostly domestic workers, for example, nurses and carers.
Low-Wage Economic Migration - Danger
Migrants may be forced to work in poor working conditions in their host country. Many migrant construction workers have died building Qatar's infrastructure. If workers are trafficked, they may also face dangers on their journey.
Elite Migrants and Skills Gaps
Elite migrants can also be highly skilled people who migrate to a country to work within a particular industry. In the UK, many skilled doctors come to work in the NHS.
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Country Interdependence
Interdependence between Countries
Elite migration and low-wage economic migration both increase the interdependence between countries and their economies.
Recessions
-if there is a recession in 1 country, it will have knock on impact on the economy of the other country and vice vesra
-If the construction industry in the UAE suffers, then there may be a fall in demand for low skilled migrants. Some Indian construction workers who planned to work in the UAE may no longer be able to go there.
Remittances
-Migrants often send remittances (money) to their families at home.
-In 2016, an estimated $12.5 billion in remittances was sent home from the UAE to India.
-remittances make the indian economy dependant on the economy of teh UAE. a recession of decline in econmic growth in the UAE would cause a fall in remittances being sent to India
Tax Havens - Interdependence
Lewis Hamilton, the Formula 1 driver moved to Monaco, which has no income taxes. The top rate of income tax in the UK is 45%.
Impact on Source and Host Locations
The source location is the country that the migrant has come from. The host location is the country to which the migrant has travelled.
Impact on host locations cont.
-An increase in workers willing to work for lower wages and do low-skilled work is an example of an economic benefit to the host location. In Dubai, 80% of the construction workforce are migrants from another country.
-Migration can help to rebalance a population and reduce the impacts of an ageing population by increasing the tax base. This is particularly key in Western European countries such as Germany.
impact on source locations
-The source location may suffer from brain-drain and a skill shortage if a large number of skilled migrants leave the country. This would be an economic cost to the source location
-This brain drain happened in Poland following their accession to the EU, which enabled their population to freely migrate to the UK.
-Migrants may send remittances back to their families in source locations. These payments should benefit the local economy in source locations.
impacts on host locations
-Large-scale migration can put a strain on the host location's housing and service
-Some people argue this has happened in the UK since 2004 when European migrants started arriving from the A8 countries.
culture
global culture
Because of globalisation, there is a global culture emerging which is based on Western ideas, consumption patterns and attitudes towards the physical environment.
What is culture?
-Culture describes a system of shared meaning.
-The culture of a place or a person is made up of lots of different parts including traditions, language, values, religion and leisure activities.
What is cultural diffusion?-Cultural diffusion is the spreading of a culture into another.
-Cultural diffusion happens as a result of globalisation through TNCs (transnational corporations), global media corporations, tourism and migration.
-Some communities see cultural diffusion as a threat if it means the loss of their own local culture.
- E.g. The loss of tribal lifestyles in Papua New Guinea.
Migration and cultural diffusion
-Migration causes cultural diffusion. People moving to a new part of the world take their language, their customs and often their food with them.
-It is important to recognise that cultural diffusion is not just Western culture spreading.
-E.g. The rise of Indian cuisine in the UK is an example of Indian culture spreading from migrants to the UK.
tourism and cultural diffusion
-when tourists visit a country, they exxpose that culture to their fashion, their food prefrences and their way of life
TNCs and cultural diffusion
-Some communities see cultural diffusion as an opportunity because it can lead to increased foreign direct investment (FDI) in their country through the relocation of TNCs.
-It is an increasingly ‘Westernised’ culture that is spreading.
-E.g. Disney and Netflix are global TNCs that spread aspects of American culture across the globe through their films and TV shows.
The Impact of Spreading Western Culture
This spread of a Western culture has impacts on both people and the environment.
Environmental impacts - China
-In China, the middle class is growing rapidly. As people gain more disposable income, their diets are changing to increasingly match those of the Western world.
-This means a huge increase in demand for meat and so has many environmental impacts. It is causing an increase in deforestation as trees are cleared to use for cattle ranches.
Environmental impacts - food
-Beef and lamb are the most emissions-intensive food. This is because of the methane produced by the animals.
-By 2015, China had become the world’s biggest market for processed food.
Opportunities for disadvantaged groups
-The spread of Western culture also means new opportunities for previously disadvantaged groups.
-For example, the Paralympic movement. As a global culture of acceptance of people with disabilities spreads (particularly to emerging and developing countries), these groups are getting new opportunities.
-This growing acceptance of people with disabilities was seen in the London 2012 Paralympics, which sold out - the first Paralympic games to do so.
Cultural Erosion
Cultural Erosion and its Impact
Cultural erosion involves a culture being worn away or even lost completely.
Lost traditions
-In some locations, cultural erosion is happening and changing the built and natural environment.
-This might be through the loss of language, traditional food, music, clothing or social relations.
Damaged natural environments
-Cultural erosion has impacts on the natural environment if people start to care less for their local ecosystems because of the rising demand for resources.
Damaged built environment
-Cultural erosion has impacts on the built environment if the landscape of the country changes as more TNCs move into an area.
-As this happens and local culture is lost in exchange for a more Western culture, it is possible that the local ecosystems suffer as a result.
-People’s attitudes may change and they may start to de-value and increasingly exploit their local ecosystems.
Loss of Tribal Lifestyles - Papua New Guinea
Cultural erosion has resulted in the loss of the traditional way of life in Papua New Guinea. This is because people in traditional communities increasingly want to adopt Western ways of life.
Habitat and environment
-There is a direct link between deforestation, disappearing habitats and loss of languages.
-People are generally moving to cities and stopping using their traditional languages.
Language and culture
-There are an estimated 7,000 different cultural groups in Papua New Guinea. Most of them speak their own language.
-But a report in 2014 found that 1 in 4 of these languages was at risk of being lost forever.
-If traditional communities give up their traditional way of life to go and live in the cities, they stop speaking their local languages.
-These traditional communities are also giving up their traditional clothing as tourists introduced the Western t-shirt to these people
Examples of Cultural Erosion
Cultural erosion involves a culture being worn away or even lost completely.
Australia
-Aboriginal heritage in Australia continues to be lost in exchange for a more Western culture.
-The 2008 Australian government removed the protected status of many sacred Aboriginal sites, opening up the potential for TNCs to carry out mining in the areas.
Guyana
-Indigenous groups in the highlands of Guyana (in South America) have lost their language and are forgetting cultural traditions with each generation.
-Some young people see their indigenous heritage as something to be ashamed of because of prejudice against them so they adopt a more Western lifestyle.
-Unregulated and illegal mining in their regions by outsiders also causes deforestation and pollution.
Rising Opposition to Globalisation
As a result of concerns about the impacts of globalisation (the cultural impacts, economic and environmental exploitation), there has been a rise in opposition from anti-globalisation groups.
Against globalisation
-Anti-globalisation groups campaign against the worldwide negative impacts of globalisation. They argue that the negatives outweigh the positives.
Against TNCs
-Anti-globalisation groups argue against the rise of a global culture and particularly dislike the tax avoidance tactics used by many global TNCs.
-E.g. Companies like Apple make sure lots of their earnings are 'recognised' in Ireland, where they can pay tax rates as low as 0.005%.
Against child labour
-Other issues that anti-globalisation groups campaign about include child labour and environmental issues - both of which have arguably increased with globalisation.
Against environmental damage
-some groups also campaign against environmental impacts of globalisation and argue that these must be reduces in order to combat climate change
-these groups often gather outside major meetings of world leaders,for example the G20
Tax Havens - Interdependence
Because people and companies can move, all nations that charge taxes are interdependent on each other. Companies like Apple and individuals like Lewis Hamilton may only pay taxes in one nation. They could choose:
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TNC Tax Avoidance
Anti-globalisation groups argue against the rise of a global culture and particularly dislike the tax avoidance tactics used by many global TNCs.
apple
-companies like apple make sure lots of their earnings are 'recognised' in ireland, where they can pay tax rates as low as 0.005%