Going Global

Going Global- Globalisation is the concept of the world becoming increasingly interconnected and

interdependent.- World is culturally shrinking- Disney is an example of this as it’s the 3rd biggest global brand and known all over the world- In 2006 had an income of $32bill- Employs 130 000 employers plus 40,000 suppliers in 50 different countries

Demographic Transition model

- Stage 1 – high birth rate and death rate. People aren’t educated and have children early on. Children may not survive so have lots of them. No medicine available so high death rate.

- Stage 2 – globalisation leads to decreased death arte as medicines become available.

- Stage 3 – death rate constantly low and birth rates start to fall as women become more educated and children live for longer

- Stage 4 – population increases as migrant population increases and death rate lower than birth rate.

Factors leading to globalisation:

Colonialism

- Colonialism was the first form of globalisation- 1492 Columbus landed in America and established European control- A new pattern of trade and development shaped the global economy- Early connections were made- some gained, others lost- Colonialism led to core and periphery

The core

- owns and consumes 80% of global goods and services- earns the highest incomes- makes most decisions about the global economy- Provides most global investment.

The periphery

- owns and consumes 20% of global goods and services, despite having 75% of global population

- 2.5 billion people live on under US$2 per day- make few decisions about the global economy- Provides little global investment.

New technologies

- Development of jet aircraft, high speed trains and better road systems- E-technology – internet- 1998, 2.3mill UK households had access to internet. This had risen to 14.3mill by 2006.

TNC’s

- Branch plants throughout the world- Their ability to locate anywhere has been enhanced by other factors – transport- Companies often become ‘transitioned’ to increase sales and drive costs

New markets

- Countries such as India and China have new found wealth and their high demand has fuelled globalisation.

Decreasing costs of transport and communication

- TNCs can contact headquarters via satellite and can travel to them quickly- Internet search engines has fuelled home shopping

International agencies

- GATT, IMF, UN, World Bank, WTO (world trade organisation)- Established since 2nd world word- Promoted free trade and economic interdependency.

Rostow’s model

- Designed by the Americans to combat Communism- The idea was that countries would see that reducing poverty was linked to increasing

development- Modernisation theory

Globalisation leading to migration- EU- Similar cultures around the world- Same languages spoken- Advertisement f better living conditions else where- Distance from family and home reduced

Problems this causes

- Loss of expertise from home countries, e.g. Poland, many African countries- Resentment/ unrest in host countries- heightened by the current economic climate- Quota systems, e.g. the EU- Ethnic enclaves- are we really a multi-cultural society?

How countries are grouped- Level of development- Political alliances- Trade blocs

OUTDATED IDEA:

- First World comprises those countries, largely MEDCs, where a capitalist system prevails (e.g. Western Europe, North America and Australasia)

- Second World consists of socialist and communist countries where government economic control is paramount. This includes a mix of LEDCs and MEDCs, but only a small number of countries are Second World (e.g. China, North Korea etc.)

- Third World embraces those relatively poor and under-developed countries (LLEDCs and LEDCs) located mainly in Asia, Africa and South America

Political-economic alliances

- G8- the group of eight- Canada, France, Germany, Italy, Japan, Russia, USA and UK- OECD (Organisation for Economic Cooperation and Development). 30 countries share the

principles of market economies, democracy and respect for human rights. - The Commonwealth- 53 countries- The EU- 27 members. Members can trade freely within the union and are protected to some

degree by external trade barriers.

Trade blocs

- APEC- Asia Pacific Economic Cooperation (including China, Australia, Japan, Russia and USA)- OPEC- Organisation of Petroleum Exporting Countries- why are they extremely powerful?- NAFTA- North Atlantic Free Trade Agreement- Canada, USA and Mexico free trade

agreement

Transnational companies- To be close to separate markets- To operate where labour is cheaper and less regulated- To spread risk, e.g. crop failure or industrial action- To receive grants from governments seeking inward investment- To operate inside local trade barriers and tariffs- Can shape culture and the pattern of global consumption- Are economically important as they bring direct foreign investment- They often subcontract work to other companies

McDonald’s TNC – CASE STUDY

- McDonalds burgers eaten in over 100 different countries- Economic importance to a country as they bring direction foreign investment- Invest money in each of the countries they operate in setting off multiplier effect- Many countries have free trade agreements. Applies between EU countries and between the

USA, Canada and Mexico.- First restaurant opened in the US in 1955 and now 30,000 restaurants in 120 countries.- Largest fast-food service company in the world- 50mill people a day using restaurants- UK - MD first opened in 1974 and now over 1,200 restaurants serving 2mill customers a day.- Profits go to USA where company is based- In UK 50% of branches are franchises in which individuals have made a financial

commitment – often more than £250,000 to run a restaurant for at least 20 years.- Profits from these enterprises do circulate ‘locally’ with the subsequent multiplier effect.- Products are very similar but prices vary throughout the world- With the expansion of McDonald’s into many international markets, the company has

become a symbol of globalisation.

- At least 75% of world flows come from TNCs.- 67% of all exports are directly related to TNCs through relations with Third world countries

(LEDCS)- India processes 1% of the food it grows; the U.S. processes 70% of the food it grows.

International supply chain

- Not always produce all of their goods or components themselves – often subcontract the work to other companies who then produce goods under the name of the TNC

- UK is fairly self-sufficient, other countries are not- UK companies that supply McDonald’s in the UK also export products and packaging to other

countries. - In 2007, McDonalds spent over £460mill though its UK supply chain.- Involved over 17,000 farmers working with 6,000 food supply companies.

- Majority of the produce for the companies UK outlets come from the UK just as for example produce for Brazil outlets comes from Brazil.

- Where a country doesn’t have the infrastructure in place to support a local sourcing then McDonalds’ have to source from further afield.

- Globally, McDonald’s sells a hundred million items every day, and the restaurant chain wants to be sure that all its customers get what they ask for.

- The McDonald’s supply chain is 100-percent outsourced: the company owns no factories and no distribution centers.

- McDonald’s does own approximately 30 percent of the restaurants although the rest are franchised, with the franchisees operating within a certain framework

Case study: China ‘winner’- Relatively recent phenomenon- 1195 Chinas GNP per capita was $620 but by 2005 it had risen to $1,700- Chinas development aided by both natural and human resources- Great wealth in natural resources- Vast reserves of coal, oil and natural gas- 21.8% of exports from China are to Europe this contributing to 5.6% of the economy. This

shows quite a lot of GDP is due to exports to many different countries- These are used to fuel the industrial development of country- Since 1990s china has also been developing its energy base –new hydroelectric and nuclear

power stations- Chinas geographical position in the world is also beneficial for its development- Around it are the developing markets of South Korea, Taiwan and India and it is on the major

trade routes.- China has a great human resource in its vast population who are willing to work hard in

education and employment- China trains 600,000 new engineers every year- However millions of rural labourers who are fuelling China’s economic growth are not

treated well by their employers- Despite recent reforms the are shut out of health care system and state education, live in

appalling, overcrowded conditions and are routinely exposed to some of the most exploitive working conditions

- Forced to work long stretches of time under hazardous conditions for very low wages- Many managers withhold pay for 2/3 months to ensure they hold on to their workers who

are in short supply in this rapidly industrialising country.- China has become a divided society- Regional split between the developed urban eastern regions, where most production is

concentrated – Shanghai, Tianjin and Guangdong.- The underdeveloped western regions of Shaanxi, Guangxi and Gansu where the majority of

poor Chinese live.- Although china as a country seems to be developing fast, there is a social cost- Skyscrapers show phenomenal growth of the country whilst there are also tiny small houses

which are the living conditions of poor migrants - China has also recently reached another milestone becoming the world’s biggest trader. - The total value of its imports and exports of goods reached $3.87trn in 2012. - The American merchandise trade total was $3.82trn

Case Study: Gambia ‘loser’- Remains poorly connected- Not developing at the same rate as china as it lacks physical and human resources- Between 1995 and 200 Gambia’s GNP per capita dropped from $320 to $290.- Gambia has no confirmed mineral or natural deposits and has a limited agricultural base- Only one-sixth of the land is arable- Poor soil quality has led to the predominance of one crop - peanuts.- heavily dependent on peanut exports - and a hostage to fluctuations in the production and

world prices of the crop- about 75% of the people depend on crops and livestock for their livelihood- At least half of the country's poor population is composed of farmers and agricultural

workers- Approximately three quarters of the rural population is classified as poor- small scale manufacturing activity includes processing of groundnuts, fish and hides which

are then exported- country is dependent upon aid for any development- government is trying to aid development by spending in the social sector- a girls scholarship programme was started in 2001 and met with great success enrolling girls

from poor households in school- Without natural and human resources the Gambia will find it hard to become a global hub of

activity like china.

Population Change in the UKPopulation starting to decrease as less people are having children as women are educated and want to work.

In 1900s

- Overcrowded spaces- Share bathrooms- Up to 16 people in a family- Share beds- Small houses

1913 2013Large families Small familiesHigh birth rate Low birth rate

High infant mortality rate Low infant mortality rateHigh death rate Low death rate

Women didn’t work Women work, less childrenLow life expectancy High life expectancy

Less education/awareness Educated/aware

Why is population changing?

- More people migrating – increased number of people- Foreign people giving birth to more children- Women are working so have children later on in life- People are more educated so go on to have good jobs- Natural decrease – high death rate/low birth rate- Natural increase – low death rate/high birth rate

Ageing PopulationAgeing population is the increasing number of people aged 65 and over.

Problems caused by ageing population:

- Less housing in UK- Increased number of dependant older population- More illnesses in older people- Strain on NHS – take up beds and lack of staff- More care homes- Less facilities for younger people- More number of people claiming state pension – bad economic effect

Solutions to ageing population

- Raise retirement age- Increase pension contributions- Increase income tax - Reduce funding for youth services and facilities- Send all the old people abroad- Encourage couples to have more children- Encourage migration to the UK

Regional difference

- Old people migrate to quiet places- Don’t tend to live in city due to noise/population

MigrationForced migration: The displacement of people where they have no choice other than to relocate.

Immigration: The movement of people into a particular country to live permanently

Emigration: The movement of people out of their current country of residence

Asylum seeker: Someone who has entered a country illegally for a particular reason in the hope of seeking help or protection.

Refugee: Someone who is unable to live within their own country for fear of being persecuted

Push Factors: These are features that drive people out of a particular region or country

Pull Factors: These are features that attract people to a particular region or country

Net Migration: The difference between the level of immigration and the level of emigration.

Migration flows to and from the UK:

A8 countries:

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia

Europe

Australia

USA

Caribbean

Germany

Eastern Europe

Poland

United Kingdom

Immigration to the UK

1950 – 1979

- Mass immigration took place during 1950s and 1960s- Led to rise of racial violence and prejudice- Areas such as Birmingham, Nottingham and London experienced rioting- In 1945, Britain’s non-white residents numbered in the low thousands and by 1970 they

numbered approximately 1.4millon.

1972 – 1979

- Government had greatly restricted immigration by 1970s but not stopped altogether- 83,000 immigrants from the common wealth settled in the UK between 1968 and 1975

largely through gaining work permits or obtaining permission to join relatives.

1980s

- Britain’s immigration policy has 2 aspects- Strict controls on entry- State said it would protect the rights of ethnic minorities- As manufacturing declined work permits were harder to get unless you had specialised skills

or professional trading.- Largest immigrant groups were Americans, New Zealanders, South Africans making use of

family ties

1987-2002

- June 1987, 4 non-white politicians were elected - Growth of asylum seeker applications contributed to a new growth of immigration to the UK- 1998-2002, 45,000 people arrived from Africa.- Some 125,000 people were allowed to settle in the UK.

Emigration from the UK

- Balance of people did not change until early 1980s- After2nd world war, migration resumed on a large scale encouraged by the government- Emigration to the US reached 13,000 per year and by the mid-1960s, the net loss by

emigration to the old commonwealth was 104,000 people up to 1974.- Outflow today continues on a smaller scale

2007

- Britain experiencing greatest exodus of its own nationals in recent history while immigration level is at record levels.

- 207,000 British citizens – one ever 3mins – left the country while 510,000 foreigners arrived to stay for a year or more.

- British made up more than half of the 400,000 moving abroad whilst only 14% of immigrants were UK nationals coming home.

- Since labour came in to power, in 1997, 1.8m British people have left but only 970,000 returned.

- More than 50% of the British emigrants moved to just 4 countries – Australia, New Zealand, France and Spain.

- 8 in every 100 went to the USA

Migration from Poland to the UK

Push Factors Pull FactorsS – Better Quality of life S – Many migrants feel that British society is

more tolerant and it’s easier to get promoted on the basis of ability

E – Low salaries – polish workers earn equivalent of £200 per month

E – Unemployment rate in the UK currently stands at 7%

E – Youth Unemployment in Poland has reached a high of 40% in some areas

P – The UK is one of only 3 countries that did not restrict the number of immigrants from A8 countries.

P – Polish government is still not very democratic and many people feel that EU money is not getting to people who need it the most

Positives on source country (POLAND)

- Job prospects for those remaining behind will be improved as there are fewer competing for work

- Migrants often send money home, much of which is reinvested in the home economy- Returning migrants bring back new skills, which may help to revitalize the home economy- Less pressure on local resources such as housing, food and education and health services- Population density reduced- Returning migrants increase social expectations in the community, demand for improved

leisure facilities

Negatives on source country (POLAND)

- The loss of young adults labour force may result in labour shortages- Loss of most skilled and those with entrepreneurial talents may slow economic growth and

result in negative multiplier effect- May be imbalanced population structure with a disproportionate number of elderly and

fewer males, this can have long term consequences, leading to family structure breaking down.

- Returning migrants may impose a social cost on the community if support mechanisms are not in place to cater for them e.g. those returning home on retirement.

- Shortage of skilled workers in construction and IT because they can earn 7x more in the UK

- In 2005, 10% of jobs in the polish construction industry could not be filled- By 2007, this figure had risen to 35% due to shortage of workers caused by migration- In some areas a quarter of all anaesthetics have emigrated. The ones who remain have to

deal with more than one operation at the same time, putting patients’ lives at risk.

Responses from Poland

- Polish magazine has launched ‘stay with us’ scheme sponsored by some of Poland’s biggest companies to persuade the country’s leading young academics to resist the pull to emigrate.

- About 100 scientists and researchers have each received a one-off payment of £5,000 equal to about 10months pay to stay put

- In Poland, legislation is being drafted to try and encourage Poles to return home by offering them more lucrative salaries.

Negatives on Host country (UK)

- Many poles prefer to shop in small local shops run by the polish community rather than integrating more with British society by shopping in Asda or Tesco.

- Impact on welfare state – 27,000 child benefit applications have been approved, some of these children still live in Poland and migrant workers are allowed to claim benefit for them

- Over 50 polish Saturday schools to ensure that the children of immigrants maintain Polish language and culture – loss of language in UK

-

Positives on Host country (UK)

- Migrants have fuelled economic growth rather than undercut British workers in the labour market as has been feared by some

- Non-migrant unemployment rate has remained stable, the large increase in migrant workers did not take jobs away from the non-migrant population

- Young polish workers have been well received with little tension- Hardworking and positive attitude praised by large organisations such as Sainsbury’s

and the National farmers Union- Migrants are playing an increasingly pivotal role in some sectors where employers

say they struggle to recruit- Accept work that British counterparts do not- Polish and Eastern European migrants are making the UK work force younger which

has eased the pension burden and helped to keep interest rates low- Low interest rates have helped all UK residents with mortgages- Influx of young migrants needed accommodation has led to upsurge in the buy-to-let

market- Polish migrant worker on average earns £20,000 per year, of which 6-7000£s is

disposable income. Estimates show spending power for this immigrant group to be

between £3.5 and £4 billion. This is equivalent of adding into the economy the consumer depend of Liverpool is just 2 years which is a major boost.

British Migration to Spain

- There are nearly a million British people living full or part time in Spain, 80,000 of them are retired.

- 48.1% wanted a nicer climate- 18.4% wanted a healthier, slower pace of life- 8.9% had family connections there- 6.8% feel antipathy to the UK- 6.2% enjoy the lower cost of living, including tax reasons- 5.0% admire the destination- 2.7% had work or business connections there- Large British communities

Push Factors

- Long and stressful careers- Pensions not stretching far enough in the UK- Recently retired

Pull Factors

- Smaller cheaper houses in Spain- Living off pensions and the equity from their house- Average temperatures on the costa de sol never drop below 10 degrees- Laid back pace of Spanish life in comparison to their hectic lifestyles in the UK- Pensions stretch further- Facebook to keep in touch- Long and happy retirement in the sunshine- Spain is an EU country so entitled to health care- Familiar with local culture as they haven holidaying to Spain for 30 years- Easy jet have recently started flying daily to Malaga.

Problems for migrants

- Credit crunch has led to the pound being worth less against the euro so pensions aren’t stretching quite so far now

- Problems with Spanish property agent and have found it difficult to get in touch with them- Pay more than expected in estate agent fees- Airlines are finding it increasingly difficult to keep fairs low with rising oil prices and green

taxes- Property prices are plummeting in Spain

Problems for Spain

- High proportion of older people- Drain resources- Loss of culture in Spain- Segregation between British and Spanish- Aren’t contributing to economy – don’t work- Less housing for Spanish people

Problems for UK

- Older people aren’t contributing to economy for example they look after their grandchildren encouraging parents to work

- Contribute indirectly (informal economy)

North Africa to Spain Migration

- many people are migrating from North Africa to Spain to find work in farming/greenhouses- Spanish economy is worth 2billion euros- 100,000 Almeria migrants with no papers in costa del sol- Forced to live in ‘chavolas’ – slums- made of vegetable boxes with no running water- Slavery in 21st century Europe- Workers are underpaid- Trapped as the can’t go home- Tickets cost 1000 euros- Youths sacrifice their life to support families- Exploited – papers are not checked- 40-50 degrees in greenhouses

Rural to Urban Migration

Push Factors:

- Drought and flooding- Rural poverty- Lack of services- Lack of investment- Over population and high birth rates

Pull factors:

- Global investment goes to cities no the countryside- Cities becoming global hubs- Communication increase access to perceived urban opportunities- Radios and in some case television allows knowledge- Services are perceived as better – health, education, entertainment, housing, jobs

Megacities- Megacities have over 8million people in them- Million cities – 1million- World cities – most political, financial influential cities –London, New York, Tokyo

Advantages of Megacities

- Potential for effective community development - Education, services and infrastructure are often better in urban areas- Basic literacy, family planning and self-help schemes can be more easily developed- Allows for concentration of industry and finance

Disadvantages of Megacities

- Many migrants remain unemployed- Environmental problems – waste, sewage, water shortage and pollution- Rapid economic development leads to industrial pollution- Services are often located in richer areas, leaving slum areas inadequately served- Inward movement outstrips the pace of economic and social development- Public administration is difficult

Case study: Los Angeles – A Megacity in the USA

- A Mega city is a city which has a population of 8+ million.- Los Angeles County is the world’s 18th largest economy.- With about 200,000 small businesses, Los Angeles is the entrepreneurial capital of the world.

That’s nearly twice as many small businesses as can be found in any other region of the United States.

- LA has 1.2 million college graduates in a labour force of 7.4 million.

Why did it develop?

- The arrival of the railway in 1876 stimulated rapid growth, with half a million people arriving within 40 years.

- The discovery of oil, the opening of a ford car plant and numerous manufacturing industries meant continued growth.

- The aircraft industry took advantage of the good weather for civil and military test flights and production sites.

- The development of the film industry in Hollywood in the 1920’s and 1930s was a further factor in Los Angeles’ growth.

- By7 the 1970s, Los Angeles was the fastest growing city in the USA, and by 2000 over 14 million people lived in the Metropolitan District, it has an average population density of 3000 per km2.

Social problems:

- Housing shortages – caused by high rates of migration urban tension – due to ethnic differences. In 1965 and 1992 there were serious race riots in the run-down inner city districts of Watts, South Central and Compton.

- Health and education – many migrants are excluded because they cannot afford to pay for these services.

- Water – piped in from 350km away causes disputes with neighbouring counties and states

Economic problems:

- Work – a changing economy (deindustrialisation) has resulted in the loss of thousands of manufacturing jobs. Replacement jobs are often low paid.

Environmental problems:

- Transport – there are 10 million vehicles on the road, only 30% of people use public transport.

- Waste – 24 million people produce 50000 tonnes of waste every day.- Massive energy use – as we can see from the beautiful photo below.

Proposals for a sustainable city: (PLAN – Progressive LA Network)

Social –- Provide community benefits such as childcare and affordable housing.- Require developers to build affordable housing in all new residential developments.

Economic –- Require employers to pay their workers a decent wage.- Ban new ‘big box’ retail stores which undermine local retail and community activity, and

steer future development to locations near existing and planned transit shopsEnvironmental –

- Promote clean fuel vehicles and green energy- Improve public transport with ‘clean’ buses and new rapid bus lines- Promote smart growth land use where people can drive less and live nearer to where they

work, shop and play

Case Study: Mumbai – A megacity

- Today there are 21 megacities around the world. 75% of them are in developing nations such as India

- Mumbai has 13million inhabitants- It is India’s largest city- City has grown from 3mill in 1958 to 28mill making Mumbai most populated country- Mumbai’s trains carry 6million people per day- same as Israel’s population

Why has it become a megacity?

- Geographically its central position in Asia means it has easy access to china and the west- This has resulted in India becoming a global hub for the worlds TNC and is popular for

outsourcing- Home to Bollywood – the centre of India’s film industry. the Bollywood industry had a

revenue of US $2bn in 2011 and has been growing at an approx. rate of 10.1% a year- Indian transnational companies such as Tata Steel are taking over their European and

American rivals

Problems of a megacity:

- Dharavi has a population of more than 600,000- Not all of Mumbai’s residents are benefiting from growth and wealth- 605 of population live in poverty- The informal sector is increasing- Housing in Dharavi covers land worth $10billion- Good worth over $500mill produced here- Has one of the lowest quality of life in the world, in 2006 it came 150th out of 216 world

cities- Many rural migrants who come to Mumbai to find work cannot afford decent housing- World bank says 54% of Mumbai’s residents live in slums- Water shortages and no electricity- Pressures on land and housing- Disease, high death rates and lethal environmental conditions- Many of streets are no more than 1 or 2 metres wide

Sustainable megacity:

Social

- Since 2004, there has been a massive clean-up of the city’s housing- Over 200,000 illegal slum dwellers have been moved- 45,000 shanties across the city have been destroyed- Dharavi due to its size and population has been given its own redevelopment project- New 7storey apartments are being built to house the slum dwellers- Slum dwellers will have a better quality of life- Lack of space

Economic

- Hoping to create 200,000 new service sector jobs in healthcare, finance and entertainment- 2000,000 new jobs in the new industrial zone based around the airport on computer

assembly and the fashion industry- 500,000 jobs created in construction industry- By 2013, Mumbai should be a revitalised city with developed infrastructure and there

should be no water or electricity shortages

Environmental

- The city is to become greener with creation of 325 new open spaces- The construction of 300 public toilets will help deal with sanitation problems- In a bid to earn carbon credits, Mumbai is adding 160 energy efficient trains to the city’s

overstretched rail network