global systems and governance - international trade and access to markets

what stimulates international trade?

Particular national economies may specialise in the provision of particular goods or services globally

what is an example of specialisation?

The umbrella city - Songxia

what is the umbrella city?

Umbrellas are thought to have originated in China

They are a worldwide global product, with over 5000 models on sale on Amazon

Around 70% of the world’s umbrellas are made in China

The factories are concentrated in Songxia, in the Shangyu district of China where over 1000 umbrella factories are located. 

A single worker here makes 300 umbrellas a day

how does umbrella city maintain its prominent position?

COMPARATIVE ADVANTAGE

SPECIALISATION

ACCESS TO DOMESTIC AND INTERNATIONAL MARKETS

CHEAP COSTS (particularly labour costs)

GOVERNMENT SUPPORT (including tax incentives)

SONGXIA UMBRELLA INDUSTRIAL PARK

what is the volume of trade and investments?

trade:

Globally, the amount of exports has been steadily increasing. The only time trade has decreased was during the Global Financial Crisis. World exports of manufactured goods has increased from US$8 trillion in 2006 to US$ 11 trillion in 2016.

investments:

volume of global investments is also rising. FDI has risen from $400 billion to $1500 billion in 20 years.

how have global trade and investments changed?

• Trading and investments used to be heavily concentrated within the most developed countries . Investments are now mainly concerned with High Income Countries investing into Low Income Countries , due to the profits that can be made from lower labour costs etc.

• Investment patterns have also changed because emerging economies are beginning to invest in low income countries , causing these emerging economies to rapidly develop. For example, China invests a lot of money into Africa

what are some patterns arising in international trade?

• Although high income countries remain the largest exporters, many emerging economies are also arising as huge exporters, such as China (the world’s largest exporter). Developing economies’ share of world merchandise trade is currently at 41%.

• Low income countries are also trading more, but the growth at which LICs trade is the slowest out of every economy → LDCs make up less than 1% of global merchandise and commercial services exports.

why is international trade changing?

due to new international relationships, including fair trade and trade blocs.

Trading relationships between high income, middle income (NEEs), and low income countries generally follows the same pattern.

what are the global features of international trade and investment?

1. Global Trade Volume Growth:

   • International trade has increased significantly since the mid-20th century due to advancements in technology, transport, and communication → Trade volume is dominated by manufactured goods (e.g., cars, electronics) and services (e.g., financial services, IT).

2. Global Investment Expansion:

   • Foreign Direct Investment (FDI) has grown exponentially, with multinational corporations (MNCs) investing in countries with favorable economic conditions.

3. Regional Trade Dominance:

   • North America, Europe, and Asia-Pacific are the key hubs of trade activity. Emerging economies (e.g., BRICS nations) are becoming significant players.

   • USA, China, and Germany are the largest exporters and importers globally.

4. Role of Trade Agreements:

   • Increased regional integration through trade blocs like the EU, NAFTA/USMCA, and ASEAN has streamlined cross-border trade.

   • WTO promotes freer trade, though debates over fairness persist.

what are the Trends in Volume and Pattern of International Trade?

1. Shift to Emerging Markets:

   • Growth in trade from developing countries (e.g., China, India) due to industrialisation, cheaper labor costs, and export-driven economies.

   • "South-South" trade (developing countries trading with each other) is on the rise.

2. Trade Imbalances:

   • Wealthier nations like the USA have significant trade deficits, while countries like China have trade surpluses due to their export-heavy economies.

3. Global Value Chains:

   • Production is increasingly fragmented, with components manufactured in multiple countries before final assembly (e.g., Apple products).

   • "Just-in-time" production systems depend heavily on efficient trade links.

4. E-Commerce and Digital Trade:

   • Online platforms (e.g., Amazon, Alibaba) are reshaping trade by increasing the volume of cross-border digital and physical goods.

what have been the trends in global investment?

1. FDI Growth in Emerging Economies:

   • Emerging economies (e.g., Southeast Asia, Latin America, Africa) are receiving more FDI due to growing markets, infrastructure needs, and resource availability.

   • China’s Belt and Road Initiative (BRI) exemplifies this trend, with massive investment in infrastructure globally.

2. Shift in Investment Patterns:

   • Growth of investment in renewable energy, technology, and innovation, alongside a decline in fossil fuels and heavy industries.

   • Greater focus on sustainable and ethical investment.

3. Rise of Sovereign Wealth Funds:

   • Countries with significant revenues (e.g., oil exporters like Saudi Arabia, UAE) use sovereign wealth funds to invest globally in assets like infrastructure, stocks, and property.

4. Role of MNCs:

   • MNCs dominate FDI flows by relocating operations to low-cost regions, benefiting from global tax advantages and labor markets.

what are the advantages of trade in the global economy?

• Economies of scale – a narrower range allows countries to produce at higher volumes and lower costs

• Increased employment – as a result of the multiplier effect and increased export production

• Purchasing power –increased competition results in lower prices so consumers can buy more

• Comparative advantage- specialising in goods that can be made more efficiently at lowest cost

• Exploitative and labour intensive industry – labour is the biggest cost in industry, profits can be maximised if these costs are squeezed.

• Transfer of technology – new technologies are used which  can lead to improvements and innovatio

what are the disadvantages of trade in the global economy?

• De-skilling – traditional skills and crafts may be lost when technology replaces manpower

• fewer domestic monopolies –imports from overseas help to take away control from a single domestic firm

• over-specialisation – centres that are too specialised struggle to diversify when faced with competition

• Stunted growth or decline of local industry – home-grown new industry will find it difficult to establish

• Protectionism – a country may protect domestic industry by imposing additional tariffs

• Product dumping – exporting at a price lower in the foreign market than domestically

what is free trade?

when government trade is left to national countries without government imposing tariffs or quotas

when is free trade imposed?

try and protect domestic production

why are nations better off from free trade?

nations are better off when buying and selling from each other, hence the focus on liberalising trade through free trade agreements. 

The foreign producer is able to sell more and make increased profits and the consumer has access to products that might not be available domestically → however, foreign products may be brought in cheaply and a more costly domestic seller will lose a sale. 

who benefits the most from free trade?

particularly powerful HICs exert political and economic power

why should we have more free trade?

• Free trade benefits all parties, in theory, because it allows countries to maximise trade with other countries in those activities which they are relatively more efficient and skilled at producing.

• Each country has its own particular trade strengths. Germany is highly regarded in engineering while the UK is said to excel in financial services, for instance.

• Trade agreements which provide states with free access to one another’s markets and break down “protectionism” ought, in theory, to maximise trade and wealth creation for all participating countries. 

what has been a recent pattern in globalised trade?

regionalisation of trade → when countries in the same region trade more with each other than with the rest of the world.

e.g. the EU accounts for over ½ the UK’s trade

have there been any patterns in volume of trade?

• service exports - more than double from 2001-13, double from 1995-2001

• trade agreements and services grow exponentially after 2000

• global exports nearly triple in the last 20 years and service exports double

• trade agreements - little growth until 1993, after which has increased x6

• up until 2000, 90% of trade agreements are goods but in 2014 goods and services make up at least 40%

is international growth even?

Although the ratio of exports to GDP has risen for most countries, even in LICs,  the 49 poorest countries only account for 0.6% of global trade, compared to 37% of the top five exporting countries. 

The differences are exaggerated by the type and range of exports from LICs which tend to be dominated by low value primary cash crops. 

• China, EU + US make up almost half of the imports and exports in 2018

what are the trends in investment?

USA	$250 billion
China	$220 billion
Belgium	$102 billion
Hong Kong	$90 billion
Brazil	$72 billion
Australia	$66 billion
Singapore	$64 billion

what is an example of the impacts of free trade?

Positive Impacts

1. Increased Market Access: Free trade reduces tariffs and non-tariff barriers, enabling peanut-producing countries to access larger international markets and boost exports.

2. Enhanced Efficiency: Global competition encourages peanut producers to innovate, improve productivity, and adopt cost-effective practices.

3. Economic Growth in Exporting Countries: Developing countries with strong peanut production, such as Senegal or Argentina, benefit from greater trade opportunities and foreign exchange earnings.

Negative Impacts

1. Pressure on Small-Scale Farmers: Farmers in developing countries may struggle to compete with larger, subsidized producers (e.g., U.S. peanut growers benefiting from government subsidies).

2. Market Volatility: Increased exposure to global markets makes peanut prices more sensitive to international economic changes, affecting income stability for producers.

3. Loss of Domestic Industries: In importing countries, free trade can hurt local peanut industries if they cannot compete with cheaper imports.

Case Studies and Trends

• U.S. and EU Markets: These regions dominate peanut trade, and their subsidies or trade policies can heavily influence global prices and competitiveness.

• Developing Countries: Free trade agreements (FTAs) like the African Continental Free Trade Agreement (AfCFTA) have bolstered trade among African peanut-producing nations, but concerns about infrastructure and export readiness persist.

who are the major trade players globally?

presently the USA and the EU are now the major trade players globally, with China increasing in power rapidly.

• These three entities make up 45% of all world trade.

what were the main global trade corridors in 2017?

• Europe dominates global trade, with a total trade value of $4,591 billion, highlighting its role as the largest trading hub.

• Asia-Pacific is the second-largest trade region, with a total value of $3,451 billion. It has strong trading ties with both Europe and North America.

• North America has significant trade volumes, particularly with Europe ($872 billion) and Asia-Pacific ($1,711 billion).

• Latin America, Africa, and the Middle East have relatively smaller trade values compared to other regions. However, Latin America trades significantly with North America ($825 billion), and Africa shows ties with both Europe and Asia-Pacific.

• Interregional Trade: Regions like Asia-Pacific and Europe trade extensively within themselves, reflecting strong intra-regional economic integration.

what were the main global export and imports in 2018?

• Exports:

  • China leads with a 16.8% share of global exports, followed by the EU-28 (15.6%) and the United States (11.2%).

  • Other countries collectively account for a significant portion (43.4%) of global exports, indicating diverse export contributions from smaller economies.

  • Notable exporters also include Japan (5%) and South Korea (4.1%).

• Imports:

  • The United States is the largest importer, with a 17% share, reflecting its role as a major consumer market.

  • The EU-28 follows closely at 15.2%, and China ranks third with 13.9%.

  • Imports are also distributed across Japan (4.9%) and South Korea (3.5%), while the "Other" category represents 41.4% of global imports.

why can tensions arise in trade?

arisen between trading entities as they all want to ensure the best deals for their citizens, their workers and for the businesses based within their group

why are there failures to achieve outcomes in the world trade organisation summits?

largely because of disagreements between the EU and USA together arguing with emerging economies such as China and India.

what are the banana wars?

• people of Europe peel back more than 2.5 billion tonnes of bananas every year.

The "banana wars" is the culmination of a six-year trade quarrel between the US and the EU. The US complained that an EU scheme giving banana producers from former colonies in the Caribbean special access to European markets broke free trade rules.

7% per cent of Europe's bananas come from the Caribbean, US multinationals which control the Latin American banana crop hold three-quarters of the EU market and the US itself does not export bananas to Europe.

Despite this, the US filed a complaint against the EU with the World Trade Organisation (WTO) and, in 1997, won. The EU was instructed to alter its rules.

what is the role of rcep in international trade?

aimed at strengthening trading ties among China and others with Asean members.

it would lower tariffs and other barriers to the trade of goods among the 16 countries that were in, or had existing trade deals with, Asean.

the RCEP wouldn’t require its members to take steps to liberalize their economies, protect labor rights and environmental standards and protect intellectual property.

According to U.S. Commerce Secretary Wilbur Ross, it’s a “very low-grade treaty” that lacks the scope of the Trans-Pacific Partnership, or TPP.

how does the tpp influence international trade?

• Promotes Free Trade: The TPP sought to eliminate tariffs (taxes on imports and exports) on a wide range of goods and services, making it cheaper and easier for member countries to trade with one another. This encouraged more trade across borders and greater economic integration.

• Boosts Economic Growth: By opening up markets, the TPP aimed to stimulate economic growth in member countries, particularly for developing economies that could export more goods to wealthier nations.

• Encourages Specialisation: With reduced trade barriers, countries could focus on producing goods they are most efficient at (comparative advantage), leading to better resource allocation.

• Strengthens Trade Networks: The agreement linked major economies like the US, Japan, and Australia with smaller economies, fostering stronger trade ties and reducing dependency on any single trading partner, such as China.

what is the role of china in international trade?

has grown over the last 25 years because of manufacturing of consumer goods for richer “Western” countries, particularly those in Europe and North America.

However more recently China has started to spread their influence into the continent of Africa. Chinese entrepreneurs have seen the lack of development in many African countries as an opportunity for investing in resource development and increased trade.

China’s role in Africa is varied: one clear objective is to extract a range of primary resources including metals to support industrial expansion in China, for example, investment in old copper mines in Zambia and Botswana.

However, there is evidence that China’s investment in Africa is helping some of the poorer countries to develop infrastructure, as well as healthcare and education.

what did SDTs aim to do?

1.Tackle the structural handicaps of LDCs

2.Engage world trade on a more advantageous level

3.Promote faster income growth and development

why were SDT’s implemented?

Special and differential treatment has ruled most of the post-war period→ a danger that protectionist policies would exclude many developing countries from trading freely.

The least developed countries category was created in 1971 looking at special support measures.

In addition to ODA, this included preferential access to markets in trade agreements.

how has trade has positive economic impacts?

• Economic Growth: Trade can stimulate economic development by opening markets, creating jobs, and increasing access to goods and services. For example, the rise of export-led industrialization in countries like China and Vietnam has lifted millions out of poverty.

• Technological Transfer: Trade enables the flow of technology and innovation between nations, fostering industrialization and improved productivity.

how has trade had negative economic impacts?

• Dependence on Trade: Overreliance on specific commodities (e.g., oil or coffee) can make economies vulnerable to global price fluctuations, as seen in many developing nations.

• Exploitation: Inequitable trade agreements may lead to exploitation of less-developed economies, perpetuating wealth disparities.

what are the positive social impacts of trade?

• Improved Standards of Living: Increased availability of goods, such as pharmaceuticals and food, enhances health and lifestyle.

• Cultural Exchange: Trade fosters globalization, enhancing cultural exchange and understanding.

what are the negative social impacts of trade?

• Inequality: Trade benefits are often unequally distributed, with urban areas or elites gaining more than rural or marginalized communities.

• Labour Exploitation: Demand for cheap goods can lead to poor working conditions, particularly in the Global South (e.g., garment industry in Bangladesh).

what are the positive environmental impacts of trade?

• Access to Resources: Trade allows countries to access sustainable technologies and renewable energy components, promoting environmental initiatives.

what are the negative environmental impacts of trade?

• Degradation: Trade-related deforestation, mining, and pollution can harm ecosystems (e.g., palm oil trade in Southeast Asia leading to deforestation).

• Carbon Emissions: Global shipping and production for trade significantly contribute to greenhouse gas emissions.

what are some issues with globalisation?

• blamed for manufacturing job loss in advanced economies, environmental degradation and disruption to supplies needed for vital growth

• e.g. in 2022, many countries reacted to disruptions of food supplies from Ukraine by restricting exports of other

what are the effects of global trade on food + nutrition?

continuous trend towards more globalised food markets

1975 = state of produced calories crossing international barriers was 12.3%

2015 = 19.20%

how does international trade contribute to food and nutrition security?

• improving the availability of food products + micro-nutrients

• by lowering the prices of these products

• by improving the quality of these products

what is hard power?

using military and economic influence to force a country to act in a particular way

what is soft power?

more subtle persuasion of countries to act in a particular way, on the basis that the persuader is respected

which power is more important in globalisation?

soft power has become more important in globalisation as countries are increasingly interdependent and want to avoid conflict

e.g. in 2006 the UN security council imposed trade sanctions on Iran over the development of its nuclear program → Iran has no power on the security council despite being in the UN

what is the example of trade in a food commodity?

bannanas

what are the top 3 areas that export bananas to the UK?

1st - colombia

2nd - costa rica

3rd - domincan republic

what is the global pattern of production in bananas?

• concentrated in south-east asia and south america is a large producer

• europe produces lowest amount

• 2/3rds of the world are able to produce bananas in some capacity

• china and india are the biggest producers by volume (10-100 mil tonnes per year) → majority of production is for domestic consumption as opposed for exports

• central and south america are large producers (brazil, mexico and peru)

• south east asia (indonesia, philippines and vietnam)

what is the global consumption of bananas?

• china and india both top consumers

• majority are consumed domestically

• HICS such as USA and Russia are 5th and 12th biggest consumers

what are the biggest producers of bananas?

• Ecuador, Costa Rica, Colombia, Guatemala, and smaller contributors like Honduras and Panama.

• Asia: Philippines is the largest commercial producer.

• Africa: Major producers include Côte d’Ivoire and Cameroon.

what are the economic details of banana production?

• 85% of the price paid by consumers in developed countries goes to retailers and distributors, leaving a small percentage for producers.

• Retailers often earn 36-43% of profits, while banana producers and workers receive much smaller shares (5-9%).

who dominates the banana trade industry?

• Initially dominated by multinational corporations like Chiquita, Dole, and Del Monte.

• By 2002, these companies controlled 70% of the market. However, their share fell to 45% by 2017 due to the rise of national growers and independent producers.

what are some key figures in the global banana trade?

• Bananas are a key commodity for export in developing countries, contributing $15 billion annually.

• Dominated by Latin America, Caribbean nations, and a few producers in Africa.

• Production is heavily influenced by environmental factors, such as susceptibility to diseases, especially in monoculture plantations.

what are the fairtrade issues?

• A growing focus on fair trade seeks to provide better conditions for small-scale farmers.

• Challenges include low prices offered to producers, delayed payments, and the high concentration of buyers in developed countries.

what were the banana trade wars?

• Timeline:

  • One of the longest trade disputes (1992–2009).

  • Originated from EU policies favoring banana imports from former colonies in Africa, the Caribbean, and the Pacific (ACP countries) with tariff-free access.

• Conflict:

  • Latin American producers (dominated by US multinationals) accused the EU of unfair trade practices.

  • The World Trade Organization (WTO) was involved, ruling against the EU's practices multiple times.

• Resolution:

  • In 2009, the Geneva Banana Agreement was signed, reducing EU tariffs on bananas from Latin America.

  • This agreement ended the dispute but had significant impacts on smaller ACP producers, who struggled to compete with larger Latin American exporters.

what issues have the banana trade caused in the past?

been problematic as retailers ‘race to the bottom’ and cut prices – the result of this is a vastly reduced profit margin for everyone else in the supply chain. This is a big issue with global interdependence

what does fairtrade do?

• fair wages + working conditions

• sustainable development = promote environmentally sustainable practices and reduce reliance on harmful chemicals

• strengthen the local community by supporting social projects such as healthcare and education

• help small-scale farmers access global markets by creating partnerships

how has fairtrade helped banana farmers?

• increased income stability → guarantees a minimum price, protecting farmers from volatile market fluctuation

• farmers receive fair trade premium that is reinvested into community initiates such as schools

• encourced labour standards ensure safer working conditions and limit child labour

• encourages use of organic and sustainable farming practices, reducing environmental degradation and enabling long term soil fertility

what are some of the positive impacts of fairtrade?

1. Improved Farmer Livelihoods:

   • Latin America (e.g., Colombia, Ecuador): Small-scale banana farmers in countries like Colombia and Ecuador benefit from the Fairtrade Minimum Price and a Fairtrade Premium, which provide financial stability and funding for community development projects, such as schools and healthcare facilities.

   • In Colombia, the Fairtrade Premium has been used to improve worker housing and build infrastructure like community centers.

2. Better Labor Conditions:

   • Caribbean (e.g., Windward Islands): Fairtrade has helped improve working conditions for laborers in banana plantations by setting strict standards on wages, working hours, and health and safety measures. In the Windward Islands, this has empowered smallholders to compete with large-scale industrial plantations.

3. Environmental Sustainability:

   • Central America (e.g., Costa Rica): Fairtrade encourages sustainable farming practices, such as reduced pesticide use and biodiversity conservation. Many Costa Rican Fairtrade-certified farms have adopted organic practices, improving soil health and reducing their environmental footprint.

4. Market Access and Empowerment:

   • West Africa (e.g., Ghana): Small-scale farmers in Ghana have gained access to international markets through Fairtrade, reducing reliance on middlemen and securing fairer prices. This has increased their bargaining power in global markets dominated by large banana-exporting corporations

what are some of the negative impacts of fairtrade?

• Unequal Distribution of Benefits:

  • Ecuador: While Fairtrade aims to support small farmers, the benefits often accrue to larger, more organized cooperatives that can afford certification costs, leaving smaller and poorer farmers excluded.

  • Some critics argue that Fairtrade inadvertently favors producers with more resources, perpetuating inequality.

• Dependency on Northern Markets:

  • Caribbean Islands: Farmers in the Windward Islands have become heavily reliant on European markets where demand for Fairtrade bananas is concentrated. Fluctuations in demand or economic downturns in these markets can adversely affect producers.

• Cost of Compliance:

  • Colombia: The rigorous standards required for Fairtrade certification, including environmental and social criteria, can be costly and time-consuming for producers to meet. This creates a barrier for smaller farmers who lack the resources to comply.

• Market Limitations:

  • Peru: The global market for Fairtrade bananas is limited, leading to oversupply issues. In Peru, some Fairtrade-certified producers struggle to sell their bananas at Fairtrade prices, forcing them to sell at conventional rates despite incurring higher costs for certification.

• Competition with Non-Fairtrade Products:

  • Dominican Republic: Fairtrade-certified bananas often face stiff competition from cheaper, conventionally grown bananas. This price difference can deter consumers from buying Fairtrade, limiting the effectiveness of the system.

why do TNCs have such large global influence?

employ 45 million around the world and control 75% of world trade (40% is between units in the same company)

• many of the top TNCs make more money than the whole of Africa

what is a TNC?

a global company or cooperation with branches all over the world

where do TNC headquarters tend to be located?

based in HICs such as the USA or Japan with a skilled workforce

where is TNC production and manufacturing typically located?

often based in LICs and developing countries where labour is cheaper and there are fewer regulations

what are some of the key characteristics of TNCs?

• division of labour is the alignment of different parts of manufacturing process or tasks, to different people in order to improve efficiency

• head offices sit at the top of the hierachy with TNCs and are centres of decision-making

• regional facilities and factories in other countries are vulnerable to this decision-making

how do TNCs demonstrate an imbalance of power?

people are vulnerable to TNCs suddenly closing or having poor working conditions

e.g. tata steel in the talbot wales

biggest source of employment in local area and now thousands of people have been made redundant → goes alongside deindustrialisation

e.g. Ford plant in Dagenham

vauxhall factory closed which led to students not being able to access educational facilities

what are the spatial organisation of TNCs?

when division of labour is broken down into tasks across multiple boarders → international division of labour

research and development facilities are typically in the same country as the HQ where there is a supply of highly educated people or close to their markets

• production facilities are then outsourced to the most cost-effective places

how has the spatial organisation of TNCs changed?

first emerged - often located in LICs of the time such as Mexico and Brazil with R+D in HQs in HICs

however as some LICs have become NEEs costs to manufacture in these countries have risen and so there has been a further global shift to countries where production costs are lower e.g. Vietnam and Indonesia

what were some characteristics of the TNCs in 2002?

all of the top 20 are American, Japanese or European

• key industries are energy, veriches and telocomunication

what are some characteristics of TNCs in 2010?

apple, microsoft and amazon are all high value → tech has become one of the highest value

Asia has the most valuable companies for gas which are over $1.8T

Europe is largely decreasing in TNCs whereas Asia is rapidly rising

what are some positive impacts of the TNC on the host country?

• access to jobs and training = may create a skilled workforce

• more brans may invest there, creating a PME leading to higher development levels and a better QOL (agglomeration)

• government can reinvest tax into services

• often invest in infrastructure and education facilities

what are some negative impacts of TNCs on the host country?

• working conditions may be unsafe and workers could be exploited

• may lead to pollution and environmental degradation

• structural unemployment if factory closes

• TNCs can pull out at short notice, short term investment

• manager positions typically filled by TNC employees from other countries

what are some positive impacts of TNCs on the country of origin?

• creates tertiary and quaternary sector jobs

• could increase countries economy and GDP due to investment in infrastructure

• enables trade relationships to be formed with LICs

• national GDP benefits from overseas investments

what are some negative impacts of TNCs on the country of origin?

• loss of jobs in traditional industries such as manufacturing

• TNCs can lead to cooperation tax

• global shocks can severely impact country of origin hosting many TNCs

what is an example of a TNC?

Nike

what is some background information on Nike?

• Nikes global headquarters is in Oregon, USA​

• Nike employs more than 700,000 contract workers in over 700 factories worldwide ​

This includes 124 factories in China, 73 in Thailand, 35 in South Korea and 34 in Vietnam​

• More than 75% of Nike's workforce is based in Asia ​

Nike generates around $37 billion in revenue per year ​

what are some figures on Nike in vietnam?

• In 2021 Nike had just 138 suppliers in Vietnam, by November 2022 that number had increased to 155.​

• Footwear, apparel, and equipment are all made in Nike's factories in Vietnam. This includes both Converse and Nike branded products.​

•  Nike’s biggest investment in Vietnam is in apparel with 71 factories producing garments. These factories are mostly located in Vietnam’s south, though there are some scattered around the rest of the country as well.​

• Vietnam is a key manufacturer of Nike footwear and they have 13 factories aroun

what have been some positive impacts of Nike on Vietnam?

• 400,000 jobs have been created & improved skill base of local people.​

• Export of Nike products brings money into the country helping which can be invested in housing and infrastructure, helping to raise living standards. ​

• Economic growth is the main aim for Vietnam through accepting Nike into their country. The unemployment rate before Nike investment was over 70 percent of the population in rural areas. Nike provides a decrease in unemployment due to the thirty thousand workers that are employed through the company. Decreasing unemployment in general means that the Vietnamese population is becoming more self-sufficient as opposed to relying on the government. This can improve people's quality of life and standards of living. ​

• Socially, investment from Nike provides huge improvements. The factories brought with them new machinery, better technology, new management skills, production ideas and better education for their workers. All of this means that the workers have transferable skills which can be used in different careers and if Nike were to leave the country, the workers would have the skills and knowledge to acquire a new job. These new skills can also raise productivity and therefore makes Nike as a company more liable to raise wages. Also, growing productivity gives the government the chance to invest in education and healthcare for Vietnam, ensuring that future generations receive the benefits. ​

• Nike factories have also helped decrease the levels of poverty in Vietnam. Since the 1900s when exports of clothes and footwear surged along with other sectors, the economy doubled and poverty fell from nearly 60% to 20.7%.  Also, after investigations into Nike's workforce, they began to offer education opportunities to the workers, with 85% of factories undertaking these precautions

what have been some negative impacts of nike on Vietnam?

• One of Nike’s largest factories, with a monthly production capacity of more than 400,000 pairs of shoes had an audit report leaked in 1970. It showed that there were serious health risks posed to workers in the factory. That resulted from the presence of high levels of carcinogenic chemicals. The chemical was known to cause respiratory problems and skin, and heart disease among some employees. They also reported that workers were not given the necessary personal protective equipment putting them at risk for safety hazards. ​

• On average, Nike workers in Vietnam factories earn $1.60 a day.  This is not enough to afford 3 meals which costs at least $2 a day, let alone pay for any other necessities or to support a family.​

•  Most Vietnamese workers complete 600 hours of overtime a year which is vastly higher than the Labor Law. If workers do not obey these conditions they receive punishment – there have been records of of 15 women being hit over the head for poor sewing and 56 workers having to run around the factory ground of which 12 fainted.​

• Nike is known for using other unethical practices of making products such as sweatshops and child labour. ​
  ​
  There are many inhumane working conditions that these workers must deal with while working. For example, workers are not allowed to go to the bathroom more than once per eight hour shift, and they can't drink water more than twice per shift. It is also very common for workers to faint from exhaustion, heat, fumes, and poor nutrition while they are working​

why does Nike operate as a TNC?

• Access to Cheaper Labor:

  • Nike outsources production to developing countries like Vietnam, Indonesia, and Bangladesh to benefit from low wages and reduced production costs.

  • Example: Workers in Vietnam earn around $1-2 per hour compared to higher wages in developed nations.

• Market Access:

  • Nike targets emerging markets in Asia, Latin America, and Africa while maintaining dominance in established markets (e.g., the USA, EU).

• Flexible Manufacturing:

  • Nike does not own factories but contracts production to independent manufacturers. This lowers operational costs and shifts risks (e.g., equipment or labor disputes) onto the suppliers.

• Global Marketing Strategies:

  • Nike uses iconic athletes (e.g., Michael Jordan, Serena Williams, Cristiano Ronaldo) and events (e.g., the Olympics, World Cup) to build a powerful brand identity worldwide.

what is Nike’s global supply chain?

• Production Locations:

  • Asia dominates production due to lower costs. Nike’s key manufacturing countries are Vietnam (produces over 50% of Nike’s shoes), China, Indonesia, and Thailand.

  • In 2022, Nike worked with 500+ factories employing over 1 million workers.

• Headquarters & Design:

  • Design and innovation are centralized in the USA, where high-skilled research and development (R&D) teams develop products.

• Distribution:

  • Products are shipped from Asian manufacturing hubs to Nike’s global distribution centers, which then supply retail stores and online platforms.

what are the positive impacts of Nike on host countries?

• Economic Growth:

  • Nike provides employment opportunities in developing countries, helping to integrate these nations into the global economy.

  • Example: In Vietnam, Nike employs over 500,000 workers across factories, contributing significantly to the country’s GDP.

• Technology Transfer:

  • Manufacturing contracts bring some degree of skill and technology transfer to local workers.

• Infrastructure Development:

  • Nike’s presence indirectly contributes to improved transport, logistics, and infrastructure in host countries.

what are the negative impacts on host countries?

• Exploitation of Labor:

  • Workers often face poor working conditions, long hours, and low wages.

  • Example: Nike has faced criticism for sweatshop conditions in factories, particularly in Indonesia and Cambodia, during the 1990s and 2000s.

• Environmental Damage:

  • Nike’s supply chain has been associated with pollution, particularly through dyeing and chemical waste from factories.

  • Example: Reports of toxic discharges into rivers in China from subcontracted factories.

• Dependence on TNCs:

  • Host countries risk becoming overly dependent on Nike, which could relocate production to other low-cost regions if conditions change.

what have been Nikes impacts on a host country?

• Economic Benefits:

  • High-profit margins benefit Nike’s shareholders, many of whom are based in the USA.

  • Innovation and R&D jobs are retained in the USA, contributing to high-skilled employment.

• Job Losses in Manufacturing:

  • Outsourcing production to Asia has contributed to deindustrialization and job losses in the USA’s manufacturing sector.

what have been Nikes responses to criticism?

• Corporate Social Responsibility (CSR):

  • Nike faced significant backlash during the 1990s for its involvement in sweatshops. In response, it developed a Code of Conduct for suppliers and launched sustainability initiatives.

  • It now audits factories to improve labor conditions, although enforcement remains uneven.

• Sustainability Efforts:

  • Circular Design: Nike promotes recycling and reuse through initiatives like the “Move to Zero” campaign.

  • Material Innovations: The company uses recycled polyester and organic cotton in some products to reduce environmental impacts.

• Participation in Global Governance:

  • Nike collaborates with organizations like the Fair Labor Association (FLA) to improve supply chain transparency.

how do trade agreements impact access to markets?

access to markets may be improved by trade agreements, as relationships between countries are created that allow more trade to occur → especially true when lower income countries are introduced to trade agreements, as they are able to trade at lower prices, sometimes freely.

trade agreements may also bring negative effects to countries - trade agreements disallow countries within them to trade as well with other countries, which may negatively affect these countries.

• e.g. One of the reasons that the UK has decided to leave the EU was that the EU limits trading with other countries, as trading within the EU is obviously encouraged.

countries left out of trade agreements = Less developed markets especially must pay tariffs when those in trade agreements do not, meaning they may struggle to have access to the market.

• e.g. Countries like Kenya struggle to get a good price for the food they sell to European markets, due to the tariffs placed on non-EU agricultural produce as an attempt to protect EU farmers. Heavy tariffs are also placed on African citrus fruits - especially South African orange produce - in order to protect Spanish farmers.

how do special economic zones influence access to markets?

areas within a country that do not have the same trading regulations as the country they are located in. The regulations within the SEZs are usually less strict, with lower tariffs and lower taxes. SEZs increase access to markets as countries can afford to invest in the area, increasing international trade from that area.

how do special and differential treatment agreements enable access to markets?

put in place by the WTO to help specifically developing markets with poor access to markets . These countries receive special treatment such as reduced tariffs and taxes, priority in trading etc. Overall, SDTs aim to develop the least economically developed countries’ access to markets.

how does wealth enable access to markets?

countries with less wealth have less access to markets .

In HICs, countries can afford to pay for higher tariffs on exports and imports, meaning overall they are able to make profits and receive products. HICs also increase their access to markets through FDI into foreign markets, as this allows some countries to save money through cheaper labour and often avoid tariffs.

LICs - less wealth may struggle to pay for high tariffs, and cannot save money through offshoring and outsourcing as they do not have the funds.

what are some key figures in banana trade?

• Production: Over 113 million tonnes of bananas are produced annually (FAO, 2023).

• Major Producers: India, China, Indonesia, Brazil, and the Philippines.

• Exporters: Ecuador, Costa Rica, Colombia, the Philippines, and Guatemala are dominant in export markets.

• Importers: The European Union, the United States, China, and Russia are the largest consumers of imported bananas.

• Market Value: The global banana trade is valued at approximately $15 billion annually.

what are some of the trade patterns of bananas?

1. Export Dominance: Ecuador is the world's leading banana exporter, contributing approximately 25% of global exports. Latin American countries collectively dominate the export market.

2. Import Demand: The EU and US account for nearly half of global banana imports, driven by high consumer demand and year-round availability.

3. Trade Routes: Bananas are shipped from tropical production zones to temperate regions, often requiring extensive logistics networks and refrigerated shipping to maintain freshness.

how are multinational cooperation’s significant in the supply chain?

Multinational companies such as Chiquita, Dole, and Del Monte dominate the banana supply chain. They control:

• Production: By owning or contracting plantations.

• Distribution: Via sophisticated logistics networks.

• Retail Influence: Negotiating with global supermarket chains for shelf space and pricing.

what can be some environmental impacts of banana trade?

Monoculture Farming

• Biodiversity Loss: Large-scale plantations, such as those in Costa Rica, have resulted in deforestation and loss of native species.

• Soil Degradation: In Guatemala, intensive farming practices have caused significant soil erosion and reduced fertility in agricultural areas.

Chemical Use

• Pesticides and Fertilizers: In Ecuador, one of the largest banana exporters, extensive agrochemical use has polluted rivers and groundwater, affecting nearby communities and ecosystems.

• Health Risks: Workers in plantations in Honduras report higher rates of illnesses linked to pesticide exposure.

Carbon Footprint

• The energy-intensive refrigeration and transport processes contribute significantly to greenhouse gas emissions, particularly in exports from Latin America to Europe.

what are some possible social impacts of banana trade?

Labor Conditions

• Low Wages: In the Dominican Republic, many plantation workers, including migrant laborers from Haiti, earn less than a living wage.

• Poor Working Conditions: In Nicaragua, reports highlight long working hours and insufficient safety measures for handling chemicals.

Land Conflicts

• In Colombia, large banana plantations have led to displacement of indigenous communities and small-scale farmers, exacerbating social tensions.

what are some responses and future challenges to the banana trade?

Sustainable Practices

• Agroforestry: Integrating banana cultivation with other crops to improve biodiversity and soil health.

• Organic Farming: Reducing reliance on chemical inputs.

Climate Change

• Rising Temperatures: Affects yields and increases vulnerability to pests and diseases.

• Extreme Weather: Hurricanes and droughts can devastate plantations.

Market Diversification

• Producers are exploring alternative markets and crops to reduce dependence on bananas alone.

how is shell an example of a TNC?

• Context: Shell is one of the largest oil companies globally.

• Location Example: Oil extraction in the Niger Delta, Nigeria.

• Key Themes:

  • Economic Impact: Significant contributor to Nigeria’s GDP; creation of jobs in oil extraction.

  • Environmental Concerns: Oil spills have led to significant damage to the Niger Delta’s ecosystems, affecting local livelihoods.

  • Social Impacts: Displacement of communities and allegations of exploitation → Niger Delta

how is apple an example of a TNC?

• Context: Apple is a leading technology TNC.

• Location Example: Manufacturing in China (e.g., Foxconn) and headquarters in the USA.

• Key Themes:

  • Global Production Networks: High-tech components sourced globally and assembled in China.

  • Working Conditions: Controversies surrounding Foxconn factory conditions.

  • Economic Benefits: Job creation and infrastructure development in China.

  • Environmental Criticism: E-waste and unsustainable mining for rare earth materials.

how is coca-cola an example of a TNC?

• Context: Coca-Cola operates in over 200 countries.

• Location Example: Bottling plants in India (e.g., Kerala).

• Key Themes:

  • Economic Impact: Local job creation and partnerships with small businesses.

  • Environmental Concerns: Accusations of depleting groundwater reserves in India.

  • Social Impact: Protests by local farmers and activists due to water shortages.

what are some reasons for differential access to markets?

• HICS almost always have the greatest access to international markets and LICs often have poorest access, which exacerbates inequality  

• Trade agreements are a key reason for HICs having better access – many trade agreements and trade blocs were formed originally by HICs, and they have benefitted from these for decades 

• HICs and trade blocs have used taxes, tariffs and quotas to protect their industries and markets from external forces e.g. Trump's administration, put taxes on NAFTA -> called isolationism is to try and protect domestic industry 

-> As a result has led to the increase in regionalisation of trade e.g. 60% of EU trade is with other nations 

• LICs have traditionally been left out of major trade blocs and trade agreements, although this is shifting as China implements Belt and Road initiative – creates interdependent trade deals, gives better access to international market 

• WTO aims to regulate global trade and facilitate free trade as far as possible  

• Some countries deliberately isolate themselves from global trade with highly restrictive trading policies  

• Many countries used deregulation of their domestic economy to stimulate global market entry and economic growth – China did this most effectively in 1980s onwards 

• Trade blocs have caused global trade volumes to become more regionalised in nature – E.U, RCEP 

• Growth requires imports, and exports are only way to pay for imports without creating a balance of payments deficit and constraining demand  -> prevents LIC growth