GLOBALISATION AND

DEVELOPMENT

DONE BY: Suneta and Sangeeta Samuel and Veeshalla Maharaj

CARIBBEAN STUDIES

What is Globalisation?Globalisation is the growing interdependence between nation as a result of the free movement of labour, goods and services and capital. There is world wide economic activities because there is a borderless world or global village.

Factors affecting Globalisation

Technological changes- has played an important role in globalisation the world’s economy. More powerful computers and communication technology have allowed the easy transfer of data. The internet has revolutionised the way in which consumers purchase products.

Cost of transportation- the cost of transportation has fallen. The single most important factor in the falling cost of transportation has been the revolution in the use of containerised transport. The ability to load a contain at a factory, take it by road or rail to a port, transport it by sea and then delivered to the customer at the other end has considerably reduced the cost of transport.

It could be argued that certain factors have contributed to the growth of globalisation

Cost of communication- the cost of communication has fallen. The coast of making a phone call has fallen over time. Communication has also been revolutionised by the use of the internet and email which allows very low cost written communication to take place.

Deregulation- the deregulation of business. Throughout the 1980s, 1990s and early twenty first century many businesses were privatised in countries throughout the world. In the UK the privatisation of former state owned monopolies allowed competition. The removal of restrictions on foreign businesses operating in eastern European and Asian countries also increased the ability of businesses to operate globally. New markets were opened up to foreign competition.

The liberalisation of trade- trade protection has been reduced due to the operation of organisations such as the World Trade Organisation(WTO). For example, reduction of restrictions on trade in textiles is likely to have opened up markets in Asia and the west.

Advantages and disadvantages of globalisation

Facilitators of globalisationWorld Trade Organisation(WTO)- in brief, the world trade organisation is the only international organisation dealing with the global rules of trade between nations. The World Trade Organisation came into begin in 1995. Its main function is to ensure that trade flows.

• The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Decisions in the WTO are typically taken by consensus among all member countries and they are ratified by members‘ parliaments. Trade friction is channelled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform with them.

That way, the risk of disputes spilling over into political or military conflict is reduced. By lowering -trade barriers, the WTO's system also breaks down other barriers between peoples and nations.

• At the heart of the system-known as the multilateral trading system- are the WTO's agreements, negotiated and signed by a large majority of the worlds trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody's benefit. The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.

• The goal is to improve the welfare of the peoples of the member countries.

The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:

• Administering trade agreements• Acting as a forum for trade negotiations• Setting trade disputes• Reviewing national trade policies• Assisting developing countries in trade policy issues, through technical

assistance and training programmes• Cooperating with other international organisations. Benefits of the WTO

• Helps promote peace• Handles disputes constructively• Rules make life easier for all• Freer trade reduces cost of living • Provides more choice of products and qualities• Trade raises incomes• Trade stimulates economic growth• The basic principles make life more efficient

International Monetary Fund- This is an international leading agency/organisation based in Washington that provides short term credits to its 184 members. It is a specialized agency of the United Nations but it practices in Japan, UK, USA, Germany France and Saudi Arabia govern the fund.

The fund was established: To encourage international cooperation in the monetary field

and the removal of foreign exchange restrictions To stabilize exchange rates To facilitate a multilateral payments system between member

countries.

World Bank- Also known as the international bank for Reconstruction and development, it came into being following the Bretton Wood Conference in 1944 and began operation in 1946. World bank provides long term loans to assist economic development. In the early years it was engaged in helping to finance the reconstruction of war damaged Europe. Its main roles is to channel flows of capital from the rich countries of western Europe, North America, Japan to the poor and mainly agriculture countries of Africa, Asia and South America.

It finances projects such as infrastructure development( road, communication, power stations, water suppliers, irrigation and rural development, as well as health care, education etc. Its financial assistance takes the form of long term loans. In addition to financial help it can offer a variety of financial and technical services to developing countries. Its engineers, surveyors, accountants, economists and other experts help countries plan and implement their development projects.

Transnational organisations- This is a business organisation/corporation/ enterprise that has its headquarters(parent company) in one country and has branches/subsidiaries/franchises and plants in many countries. They seek out the best profit opportunities and are largely unconcerned with issues such as poverty, inequality and unemployment alleviation.

Firms develop into MNC’s in order to:• Obtain control over the supply of resources• Take advantage of the lower costs of foreign labour and

material• Avoid paying tariffs on imported goods• To avoid high production cost and taxes associated with certain

operations in the home country

Disadvantages of MNC’s

• Pose a threat to local industries• Create social cost- pollution• Repatriation of profits to home base• Creates competition for local business and may

sometimes create unemployment.• Exploitation of labour and natural resources• Some western- base businesses, such as

McDonald's, have been accused of imposing ‘Western culture’ on other societies by the power of advertising and promotion. This could lead to a reduction in cultural identity.

Technology-

Trade-

Ideologies-

Impact and response of Globalisation and Development

Industry and commerce- industries are not longer limited to suppliers in the country in which they operate. They now have access to other resources from all parts of the world. Sometimes even in the remote parts of the world where raw materials and stock can be sourced at a better quality and at an affordable price as well. This would lower the cost of production for many firms. Therefore they could expand their operations and benefit from economies of scale. This would increase the economic growth in the country. Customers would benefit in that they would be getting a range goods and services of a good quality at an affordable price. Thus this would improve their standard of living and their quality of life.

Distribution sector(Supermarkets, department stores)- with globalisation there is free trade. It facilitates multinational companies in the country. If these companies are located in the country they would reduce the cost of distribution of the goods and services in the country since the goods would be carried in a shorter distribution channel. The shorter the distribution channel the lower the cost incurred to the business. Therefore this reduces the cost of production for the firm. As a result this low cost is passed onto the consumers, they would now be able to purchase goods and services at a reasonable price.

Labour- with globalisation businesses have less difficulties in sourcing labour. Since they are no longer limited to the labour in the country in which they operate. They are able to source labour from all parts of the world. Migration have been much easier and common because of globalisation. Immigrants are also willing to do work that locals would refuse to do and sometimes at a cheap rate. This therefore lower the cost of production for the business. They could increase output thus increasing the economic growth of the country. Trade both create and destroys jobs. If exports are increased, then it is likely that this is based on jobs in the country that produces the exports. However, when there are increases in imports this usually means that those items which could have been made locally are not. Jobs, then, are lost when a society imports more and more of its needs and wants. Other countries with more competitive advantage will food the markets of developing countries with cheap goods( for example China today is able to flood both the developed and developing world with mass- produced goods). The result of these processes is a balance of payments problem and a loss of jobs in the importing countries.

Technology- globalisation has allowed business to get better technology for the business. Since there is free trade they can import freely. They would be able to improve their productivity and efficiency. This would lead to and increase in economic growth of the country. They would now be able to compete on a global market. Technology have also changed the way in which we purchase good. With the use of the internet consumers can buy goods online. Ecommerce has allowed the to have a large share of the market . Therefore increasing the profitability of the business. Not only do they enable businesses to communicate with suppliers and customers in a timely what but computer technology have now become an indispensible part of the actual production. Whether it is in the bottling of soft drinks, the manufacturing of furniture or retailing, key areas of operation are computerized.

Ideology- An ideology is a set if ideas, doctrines or beliefs that forms the basis about how someone or a group thinks of the political, economic, religious or some other system. People have strong views about globalisation, even when they do not understand it. They may feel that it is inevitable and bring about modernisation and development. If they commit to such views, even in the face of evidence to the contrary, then this is an example of casting globalization as an ideology.

Thank You for your time and attention!

Hope this presentation was educational and helpful to you