Theme 4 Sustaining Economic Development in a globalised world

Theme 4
Sustaining Economic Development

Chapter 2 of Secondary 4: Sustaining Economic Development in a globalised world    

·       Drivers/causes of globalisation

·       Impact/Consequences of globalisation

·       Strategies/solutions Singapore uses to succeed in a Globalised world

SOCIAL STUDIES : THEME 4 - GLOBALISATION

Globalisation Part 1/3 : Drivers/Causes of Globalisation

Note: To explain how globalisation is caused by the 3 factors show how each factor will make the world more interconnected and interdependent

TNCs/Transnational Corporations ·         TNCs are large international companies that do business globally ·         TNCs make the world interdependent and interconnected /globalised because of how they obtain their business, manpower, resources/product parts. ·         TNCs source for the best quality material and manpower at the lowest price worldwide to gain a higher profit.  ·         TNCs drive globalisation by setting up operations in many countries outside their home country and by sourcing for parts, raw materials and manpower from these countries, driving international trade and raising interconnectedness between countries. ·         For example, Boeing obtains parts for its planes from different factories around the world. This causes the various producers to be interdependent on one another to fulfil the need to build the plane. Trade between these countries where the factories are located is stimulated. ·         TNCs make the world more interdependent/globalised as the various nations have to rely on one another to produce the final product. ·         Another example of how TNCs drive globalisation is that TNCs source for manpower worldwide, and form international work teams residing in different countries working together. ·         This increases international communication and thus creates a more interconnected and interdependent globalised world.

Improvements in Telecommunications ·         Improvements in telecommunication make communication between people across the globe convenient and prevalent. ·         Communication platforms such as satellite technology that drives the internet makes communication more efficient and frequent. ·         Hand-phone communication, email and social media platforms like YouTube, Facebook and WhatsApp all help drive interconnectedness amongst people across the world. ·         People, organisations, nations become interconnected globally as the exchange of ideas and information becomes more frequent. ·         The world has become closer and globalization happened.

Improvements in transportation ·         Improvements in transportation have globalised the world as it is more effortless and less costly for people to travel and for goods to be transported across the world. ·         Improvements in transportation networks lead to improved efficiency and frequency of trade ·         Airports, seaports, railways and highways enable people and goods to move easily. ·         This convenience causes people to travel regularly and for goods to be transported more frequently. ·         Improvements in transport technology such as containerisation have increased the amount and frequency of the shipping of goods. ·         Containerisation is placing goods in same sized containers which make for the transport of goods more efficient raising world trade increases. ·         With bigger and faster planes and ships, people also travel more frequently for business and leisure, increasing the interconnectedness between countries and their people, driving globalisation.

Globalisation Part 2/3  – Impact of Globalisation

	Economic Impact
Standard of Living (+) §  Better quality of life §  Increased free trade §  More products to choose from around the world §  Wider array of goods and services §  Worldwide TNC operations TNCs pay its educated and skilled employees well.	Widening Income Gap (-) §  The result of a widening income gap is social tension between rich and poor nations and between the educated/skilled and uneducated/unskilled workers within nations §  Developed nations and developing nations strive to attract TNCs §  Developed nations more successful §  Developed nations will have high-value TNC operations §  Attracts TNCs that offer higher paying jobs §  Developing nations with poor infrastructure and a poorly skilled workforce cannot attract TNCs §  Good jobs are not created in these nations §  Rich-poor gap widens between (1)     Developing and developed nations and between (2)     Educated/skilled versus uneducated/unskilled workers	Increased Competition among Nations (-/+) (-) Creates winners and losers §  Nations that want to attract TNCs will be those with the ability to develop better infrastructure that will help TNCs be more efficient in their business §  Hence, nations who can afford such infrastructure will attract TNCs and benefit from globalisation (+) Better infrastructure §  Developing nations may also strive to attract these TNCs §  They may also spend money to improve the infrastructure of the country such as better public transport systems and roads. These systems will benefit the citizens and raise the standard of living.	Competition for talent globally (-/+) §  (-) Brain Drain §  TNCs source for talent world-wide and can attract people from different nations to work for them §  Nations can lose their most talented people easily as they can move and migrate to work overseas. §  The nation which has spent money developing these people may lose their talented people very quickly à this is a brain drain leading to nations losing their talent pool. §   (+) Wider choice of jobs and candidates §  People are also able to work in different parts of the world §  With improved communications, people can apply for jobs world-wide and work in different cities. They have more choice for work and can successfully apply for more jobs globally
Environmental Impact		Social Impact
Improved Environmental management  (+) §  Increased awareness of environmental degradation §  Governments are investing in developing “clean” or sustainable and renewable energy sources (wind, solar, geothermal) Increase international conservation efforts for world’s forests	Environmental Degradation (-) §  More free trade= more goods required, more fossil fuel burnt by factories that produce them §  More global demand for products damages the environment e.g. Beef from Brazil, more land is cleared for raising cattle, deforestation. Cattle produces Methane, a great house gas, causes global warming. §  Outcome of globalisation is more demand for goods which leads to: §  Global warming o    More greenhouse gases produced, sea levels rise, floods §  Deforestation o    More factories, farms, mines, cities built o    Forests are cleared o    Global warming o    Haze Irreversible damage to the environment.	Increase awareness of foreign culture (+) §  More people in the world are interacting frequently due to ease   in transportation & telecommunication §  More aware of other nations’ languages, culture and traditions §  More appreciative and respectful of the culture of other communities Promotes a harmonious international community via increased understanding.	Loss of local culture (-) §  Local culture is displaced by homogenous international trends, ideas and culture in fashion, food and entertainment §  Global culture trends are spread through social media and ease of movement of businesses §  Example: Starbucks and MacDonald’s is replacing preference for local food. Local culture may become extinct.

Globalisation Part 3/3 : Singapore’s strategies to maximize opportunities and minimise threats in a globalised world

Five strategies Singapore uses:

Factor 1: Diversifying the Economy §  Allows Singapore to spread risk in different industries §  Many engines for growth §  Diversify into many high value and high tech industries. §  In a recession, some industries may do poorly but others will still do well – overall Singapore’s economy will still do well. §  Focus on high technology industries and services §  These industries have higher barriers to entry for competitors §  Fewer foreign companies can copy us easily §  Less competition = more sales = more profits E.g. : Genetic engineering + high-end services (financial and education	Factor 2: Nurturing Growth of Small and Medium Enterprises §  Strong local SMEs are  important providers of jobs §  SMEs also support TNC operations. §  TNCs find Singapore attractive and remain here to provide jobs if there are capable SMEs to support their operations Government helps SMEs (loan schemes and training for SME workers) to compete in a globalised world and also support and help keep TNCs in Singapore.	Factor 3: Venturing Abroad §  Singapore has limited land and labour §  Singapore companies regionalize to obtain cheaper land, lower labour cost and closer to overseas markets §  Lower cost of production = more competitively priced product by Singapore firms = more profits §  Able to compete with foreign products in a globalised world. E.g. : Singtel expanded overseas  to 20 nations like Australia and India	Factor 4: Expanding Market reach via Economic Cooperation §  Singapore works with nations to help reach new markets for its products/services §  Singapore has Free Trade Agreements with nations (Trade without taxes) §  Helps make SG products/services more competitive. §  Create Special Economic zones (SEZs) overseas where SG companies and businessmen smoother  licensing,  documentation and easier export and import Increases profit = better pay for SG workers and better share prices for local companies = Singapore economy will thrive
	Factor 5: Managing resources (people and environment) efficiently
A)     Managing people and talent (i)                 Develop local talent in entrepreneurship &  techno-preneurship  ( Start-ups) o   Encourage and support Singaporeans to start their own businesses o   More jobs created and Singapore can produce goods/ services to compete with global products/services. o   Promote continuous learning in the workforce to ensure Singaporeans have the skills to remain employable. (ii)               Attract foreign manpower o   Helps complement Singaporeans: Foreign manpower takes on lower skilled jobs, help kick start high value-added sectors where there is insufficient Singaporeans o   Despite the brain drain caused by globalisation, Singapore has enough talent to contribute to Singapore.		B)     Managing the environment (i)                 Cooperation with regional and international organizations o   Singapore cooperates nations to minimise threat of world environmental problems caused by globalisation Examples o   Singapore signed the Kyoto protocol to reduce the emission of greenhouse gases. o   Singapore signed agreement to phase out the use of CFCs. (ii)               Managing our environment a)      Plan properly use of limited land resources o   Careful planning allows for enough land for high standard facilities for housing transport, recreation, commercial and other purposes. Examples o   Jurong Island formed through land reclamation to form a petro-chemicals hub o   The Downtown at Marina Bay created to integrate residential, commercial and recreational areas in a live-work-play environment o   Turn Pulau Semakau into a landfill that will meet Singapore’s waste management needs till 2035. b)      Public education o   Encourage Singaporeans to adopt environmentally friendly behaviour and take personal responsibility in ensuring the environment is protected. o   Singapore educates school children and public in recycling and waste management. Examples  o   Annual clean and green week since 1996 o   NEA(National Environment Agency) and SEC ( Singapore Environment Council) organised bring your own bag day to reduce the use of plastic bags o   Anti-littering campaign aimed to instil a sense of responsibility to keep SG clean