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Title: Globalisation and the


1
Globalisation and the new globalisers
  • The rise of the East - tipping the global scales?
  • Or Are your wages being set in Beijing/Mumbai
    ?
  • -

2
  • Outline
  • EU The twenty-first century is witnessing a shift
    in the East-West global balance of economic and
    political power with the rise of the two Asian
    giants China and India.
  • EQ 1. How has globalisation contributed to this
    rise in power ?
  • 2. What sorts of pressures might impede this
    rise?
  • 3. What threats and possibilities does the rise
    of the East hold for Singapore? Can Singapore
    respond effectively to these?

3
What will be the overall impact of rise of China
and India on the world economy?
  • Global effects on
  • International trade, markets and finance
  • Global workforce
  • Integration of economies
  • Neo liberal view(economists (who support freeing
    up national and international economies) believe
  • If you free up the flow of private capital,
    goods and services across national borders then
    this will lead to raised levels of productivity,
    GDP growth, employment and real income.

4
The East/South Asia is rising! Incomes increasing
absolute poverty reducing of middle income
earners increasing
5
Globalisation
  • Globalisation and economic interdependence how
    has it contributed to the rise of the East?

6
China and globalisation some key areas for
external markets
  • Manufacturing e.g. cars, white goods (frig,
    washing machines) and garments (clothing)
  • Science and technology
  • 8 cutting edge areas of science and tech
  • biotech, IT, new material, advanced
    manufacturing, advanced energy, marine
    technologies, lasers and aerospace

7
EQ1. How is rise of China shown by a
manufacturing case study? Track a T-shirt!
  • Where does your favourite t-shirt come from?
  • Ever stopped to think about how your t-shirt
    illustrates globalisation in action?
  • How does your purchase as a consumer place you in
    a complex web of inter-relationships that starts
    thousands of kilometres away?

8
History in pictures
  • T-shirts in the 40s and 50s

9
Who wears t-shirts?
  • Traditionally young affluent consumers in the
    developed world (including Singapore). The more
    attractive and new the product, the higher the
    street value
  • Increasingly aspiring new markets (e.g. China)
    which want a slice of the consumer pie
  • In future emerging less conventional markets
    such as the second-hand markets in poorer nations
  • Follow the animation!

10
EQ 1 T-shirts today
  • Before globalisation of markets
  • Consumer American
  • Traditional supplier - American
  • After globalisation of markets
  • Consumer American global consumers
  • Supplier China
  • Cheaper supplier - Bangladesh

?
11
EQ1What are the factors that caused this
globalising shift?
  • Cost in original country (e.g. USA) rising due to
    higher standard of living and labour costs
  • Designers/manufacturers seek new sources (lower
    costs esp. labour)
  • Manufacturers invest in infrastructure (e.g.
    sewing machines, packing machines, distribution
    chains etc.)
  • Supply of goods outsourced to increase profit
    margins

12
EQ 2 Potential pressures? What happens to global
wages?
  • China US117.00 147.00per month
  • Vietnam US 94.00 per month
  • Bangladesh US 64.00 per month

13
EQ1 This is great! Chinas economy develops and
cheaper goods for me
  • Benefits
  • the consumer gets a quality product for a lower
    price
  • Manufacturer gets better profit margins
  • Supplying country (e.g China) gets higher levels
    of employment, better paid workforce, better
    infrastructurehooray!
  • Wealth is shared globally and poorer nations make
    progress in standard of living, education etc.
  • Wider choice of goods and no loss of quality

14
How does a globalised product get to the
consumer? a trans-national Tshirt Who benefits?
How?(EQ1)
  • US design
  • China manufacturer
  • HK owned company
  • Raw materials from
  • Sold to consumers in
  • Shipped under flags of convenience
  • Ships crew from
  • Payroll/financial support in
  • Consumer issues handled by
  • Profits in tax-haven

15
But
  • Problems/issues/pressures (EQ2)
  • Labour costs in new economies rise
  • New sources for cheaper labour sought
  • Emerging economies make short term gains but can
    outprice themselves
  • Increased production creates wasteful consumerism
    (a throw-away attitude)
  • Increased pressure on environment, resources etc.

16
Sidebar! Impact of globalisation on workers
rights
  • Over 300 strikes repressed by employers or the
    police, in nearly 90 countries
  • About 8,500 arrested or detained
  • 209 trade unionists killed or disappeared
  • Over 100,000 harassed
  • 20, 000 dismissed because of their trade union
    activities
  • 20 million bonded labourers worldwide
  • 700,00 women and children victims of cross-border
    human trafficking each year
  • Worldwide, women are paid anything between 10-50
    less than men for doing similar jobs or different
    jobs of equal value

17
EQ 1 China In summary
  • China has reaped tremendous benefits from
    astronomic growth in economy
  • Chinas population continues to develop in terms
    of skills and education
  • Prosperity has brought higher expectations and a
    shift from producer nation to consumer nation
  • This brings significant soft power

18
What about India?
  • EQ1 Context of globalisation in India
  • Slide show http//www.slideshare.net/captaink99/i
    ndia-globalisation?fromshare_email_logout3
  • -- Massive changes since 1990s opening to the
    world, transformed business landscape, IT
    powerhouse, emerging world-class firms
  • -- But lopsided growth benefits urban middle
    classes but not the vast majority of the poor
    unlike China

19
EQ1 Why is India rising (and may be more stable
in long term than China)?
  • Potential drawbacks the most difficult country
    to govern vast, hugely diverse, split so many
    different ways
  • Messy democratic politics multi-party coalitions
    at the centre kaleidoscope of musical-chair
    politics in the states
  • But advantages (compared with China) unity and
    stability checks and balances British-endowed
    liberal institutions the English language
    political and civic freedoms

20
The role of the IT sector
  • http//www.youtube.com/watch?vLnhTQFHkgmw
  • India outsourcing (3 mins)

21
An example NEW DELHI, India, and SAN JOSE,
Calif., December 6, 2006 (press release)
  • - Cisco today announced the next stage of its
    globalization strategy with the selection of
    India as the site for its globalization center,
    called "Cisco Globalization Center East."
  • "Cisco chose India as the location from which to
    expand its globalization vision because India has
    a highly skilled workforce, supportive
    government, innovative customers and world-class
    partners that already have global capabilities,"
    said John Chambers.
  • "As our global development strategy. Under Wim's
    leadership, Cisco will lead the market transition
    being driven out of India with our talented
    employees and partners across the globe to meet
    the needs of customers on every continent in the
    world."
  • As a multi-national corporation that today
    operates in over 120 countries, Cisco's
    globalization strategy represents an evolution in
    traditional business models by delivering an
    enhanced customer and partner experience on a
    24-hour basis.

22
EQ1 India Other areas of globalisation
  • International finance
  • India, despite issues of corruption and
    transparency, has adjusted its regulations for
    financial markets to encourage international
    capital and finance managers and investors to
    operate from India.

23
  • Pharmaceutical industry (medicines)
  • Indias share of world market in pharmaceutical
    manufacturing rapidly increasing
  • As a production location, the country is
    benefiting from its lower wage cost
  • Other advantages over western competitors when
    it comes to producing medicines e.g.
    transportation costs.
  • BUT sectors development slowed by major
    infrastructure problems - qualitative and
    quantitative shortcomings in energy and transport
    sectors.

24
Other potential growth areas
  • Low cost small vehicle manufacturing (for
    domestic market) Tata unveils the 2,500 car
    (but what are the global environmental
  • and energy demand implications ?)
  • Internal consumer demand-
  • (especially for IT- cellphones)
  • Food processing and packaging
  • Medical /cosmetic tourism

25
  • India and China Contest of the Century ?
  • Potential threats to Rise of the
    East
  • Rivalry over status as global forces Asian
    giants
  • Competition between China and India especially
    for raw materials and energy sources
  • Demographic stresses (population aging faster in
    China than in India)
  • Multinationals outsourcing to lower wage
    developing countries
  • Internal unrest (religious/economic tensions/
    strains of rapid growth)
  • Corruption- political, legal and financial
  • Environmental degradation

26
Globalisation
  • EQ3 What might this rise mean for Singapore?

27
Concluding Reflections
  • If emerging economies enjoy only short term
    growth before an industry relocates what
    then?
  • If developed economies cannot afford to compete
    with countries with lower costs, what happens to
    employment in these countries?
  • Globalisation is certainly reducing poverty in
    many developing countries BUT what is the impact
    for developed, more established nations?
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