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Chapter 9: Economic Impacts of Globalisation - Coggle Diagram
Chapter 9: Economic Impacts of Globalisation
Global Economy
Countries participate in
international trade,
where they buy and sell goods and services with each other
Reason: They may want or need goods and services that they are not able to produce themselves or other countries produce cheaper / better quality ones
Countries participate by investing in one other -
international investment
Foreign Investments
Foreign Direct Investments (FDI)
Reason: Businesses have identified opportunities to reduce costs, increase profits or expand into other markets by setting up their operations in another country or investing in businesses in another country.
Benefits:
Help to increase the amount of goods and services produced locally
Promote the transfer of skills and expertise to local businesses and workers and creating jobs with potentially higher wages
Economic Positives
Countries
Opportunities for economic growth (GDP)
Enables goods to reach a larger market (more profits)
Increase productions of goods and services to meet the demands of larger markets
Receive foreign investments = bring in capital and advanced technology
Build production facilities and raise the productivity of businesses and workers
Individuals
Employment Opportunities
MNCs = More jobs in Singapore and higher skills and wages
Job opportunities overseas
Economic Challenges
Countries
Economic vulnerability to happenings around the world (e.g. Russia-Ukraine crisis, USA tariffs in 2025)
Solution 1: Govt Support through economic cooperation with other countries. Free-trade agreement to reduce tariffs.
E.g. Singapore-Australia FTA, EU-Singapore FTA
Solution 2: Attracting and making foreign investments
MAS ensures low and stable inflation to attract foreign investment. They also manages and invests the country's foreign reserves
GIC invests foreign reserves globally in public and private markets to preserve and enhance the value of our reserves
Solution 3: Providing financial support and developing local expertise
Financial support to cushion the negative economic impacts on various sectors in the short term (e.g. Care and Support package during COVID-19)
Provide resources and advice to help businesses innovate, develop their expertise and talent, and even expand abroad (e.g. SME Go Digital Programme)
Individuals
Job insecurity:
MNCs may relocate = people will lose their jobs
Some types of jobs might be automated. Individuals might lose their jobs
As foreign labour can relocate to work in Singapore, local workers might face greater competition from foreign labour.
Solution 2: Save and invest appropriately
Solution 1: Individuals to acquire knowledge and skills to remain relevant. To explore different / new areas of work
SkillsFuture Programme supported by government