UNIT 4 case studies

Superpowers

USA and China (emerging superpower) - influences on the world

USA economic power

• GDP: $27 trillion in 2024 - largest in the world

• GDP per capita - $80 000

• TNC dominance: apple, google and Microsoft

• World bank and IMF influences: US holds 16% of IMF voting power

USA military power

• US Armed forces is one of the world’s largest and most technologically advanced military units

• One in six US household has a family member invoved in MIC

• $900 billion spent per year on military

• 75+ bases in over 80+ countries`s

• NATO leadership

USA political power

• UN Security Council; permanent member with veto power

• Leadership in global institutions: NATO Aand G7

• Diplomatic reach: embassies in nearly every country

USA cultural power

• Hollywood : 70% of global film exports

• English language - dominant language

• Education: 8 out of top 10 unis in the USA

• Technology: Netflix and instagram

China economic power

• GDP: $18 trillion - second largest

• GDP per capita: largest in the world

• World’s larger exporter|; 14% of global exports

• Produces 30% of global manufactured goods

China belt and road initiative

• launched in 2013

• 150+ countries involved

• investment values around 1 trillion

• building ports, railways, pipelines and highways

• Kenya, Ethiopia, Pakistan

→ expanding economic and political influences

Military power of china

• $300 billion per year spend - second largest

• Navy is the largest in the world by the number of ships

China political power

UN Security Council: permanent member with veto

Strong ties with Africa, latin America and asia

Cultural power China

Technology: Huawei, tik tok

Confucius institutes: 500 + worldwide

Global influence style

• USA: Military and cultural

• China: Economic and infrastructure

Economic impacts of superpowers

Positive

• increased global trade

• infrastructure developments (like the BRI in Africa)

• Job creation via TNC’s

Negative

• economic dependency of Lic’s and Nee’s

• debt burden from large scale loans

• trade imbalances and exploitation of cheap labor

Political impacts of superpowers

Positive

• global stability through alliances like NATO

• peacekeeping and international cooperation

• leadership and global institutions such as UN

Negative

• power imbalance in decision making

• marginalisation of smaller states

Cultural impacts of superpowers

Positive

• global culture exchange

• education opportunities

• shared language and values

Negative

• cultural homogenisation

• loss of local identities

• westernisation

Superpower power today

The world is more multipolaehence for example the dominance of the US I declining and powers are becoming more distributed

Powerful global organisation

G20

G20 key figures

• 20 member states

• represent 85% of global GDP

• 75% of global trade

• 60% of world population

• formed in 1999

• Response to the asian financial crisis

• its a platform for coordination between advanced and emerging countries

• 171 countries are not represented

G20 - 2008 global financial crisis

Actions:

• coordinated plans of spending and tax policies to boost the economy

• increased IMF lending capacity

• banking regulation reforms

G20 impacts

Positive:

• prevented global economic collapse

• improved coordination between north and south

Negative

• no enforcement power

• decisions favour large econmies

• LICs excluded

Powrful orginzation and global group

OECD (Organisation for Economic and Co-operation and Development)

OECD key figures

• 38 governemnts

• develop policies dor sustianable growth equality opportunities and well being

• 1960 formed

OECD policies

• Improving education systems though the Programmes for International Student Assesment

• Promoting local and regional development

• COmbating international tax avoidance bu multinational corporations

• Guiding economic reforms such as making telecommunications and broadband more competitive

Influences over energy policies

OPEC

OPEC key facts and figures

• founded in 1960

• goal is to control oil production and stabilise prices

• 13 member states - major members → Saudi, Iran, Iraq and UAE - russai second largest oil producer

• controls 55% of global oil supply

• holds 80% of proves oil reserves

• manages oild, stabilised the price and ensures profitability for member states

1973 OPEC Oil Embargo

Arab countries reduced or cut off oil exports to countries supporting Israel in Yom Kippur War - affected the USA, Western Europe and Japan

Immediate effects of the 1973 OPEC Oil Embargo

• global oil prices rose by 400% - from $3 per barrel to $12 per barrel

• severe fuel shortages in many countries

Economic impacts of OPEC Oil Embargo

• higher transport and production costs

• deficient in many countries

Political impacts of oil embargo

• shift in power towards oil producing coutnries

• strengthened bargaining power of the middle east

• increased focus on energy security

Environmental (long term ) impacts of opec

• Investment in nuclear energy and renewable energy

OPEC and control of oil production

• OPEC countries - not expensive to get oil as its close to surface In Saudi Arabia $5-8 per barrel

• In other countries the oil reserves are deep underground US - $40-60, Canada $60-80

• OPEC due to low costs of production even if prices fall still makes profit other countries make los

• OPEC controls production costa and uses them as a weapon as they can increase supply so proves fall and competitors suffer, or cut supply prices will rise and that will create a global impact

OPEC problem today

As prices rise those encourage US to produce more and investments in renewable energy - reducing demand for oil from OPEC

OPEC must - keep prices high enough to profit but not too high for competitors to grow

It influences global oil prices by supply control

Global lending institutions

IMF in Ghana

IMF what is it

global organisation of 191 countries working to ensure the stability of the financial system

fpunded in 1945

190 member countries

takes quota depending on size of country

main function: make loans to counreis that are facing economic trouble to prevent or lessen a financial crisis

Support of IMF in Ghana

In 1970 Ghana experienced a severe economic crisis

→ Cocoa provided 60% of Ghanas export earnings and those prices collaped

→ rising oil prices after 1973 crisis

→ political instability

→ poor economic management

By 1983

• GDP falling

• Inflation over 100%

• sever food shortages

• unemployment

SAP in Ghana

SAP- loan given with strict conditions - to restructure a country’s economic to ensure long term stability

Conditions on Ghana

1. Currency devaluation → the currency was devaluated by over 100% to make exports cheaper, increase competitiveness and reduce trade deficit → exports increased but imports became much more expensive

2. Reduction in government spending → cuts to education, healthcare and food subsidies → Impacts: reduced budget deficit but increased poverty and inequality

3. Privitasation of state-owned enterprises → over 300 state-owned enterprises were sold to increase efficient and reduce government debt, Impacts: large scale unemployment due to job losses but some efficiency gaina

4. Trade liberalisation → removal of tariffs and import controls and opening Ghana to global markets → impacts: Inc raise foreign investment however local industries struggled to complete with cheap imports

Positive Impacts of IMF in Ghana

• GDP growth recovered to 5% per year by late 1980s

• Inflation reduced significantly

• cocoa production incraesed

• improved balance of payments

Negative social impacts of IMF in Ghana

• increased unemployment

• reduced access to healthcare and education

• rising poverty → especially rural areas

• urban rural inequality

Long term development issues in Ghana

• Continued reliance on primary exports

• vulnerability to global price fluctuations

• debt remained high despite reforms

Impacts at different scales of IMF in Ghana

Local scale:

• families faced higher food and transportation processing costs

• reduced access to public services

National scale

• stability improved

• increased social inequality

Global scale

• Ghana more integrated into global economy

• increased dependence on international financial institutions

Strengths and limitations of IMF in Ghana

strengths:

• prevented economic collapse

• stabilised inflation

• encouraged export growth

Limitations:

• social costs were severe

• development focused on repayment not welfare

• reinforced dependency on global institutions

Criticism of IMF

IMF imposed condions on countreis when giving loans including:

• telling a country how to run its economy

• making payback a priority on the loan

• forcing financial concerns ahead of social care

• opening economy to FDI and free trafe

International aid case study

Somalia and UNHCR

Why Somalia needs international aid

Long term humanitarian crisis due to:

Political causes:

• collapse of central government In 1991

• decades of civil war

• weak governance

• presence of armed groups (Al-Shabaab)

Environmental causes:

• recurrent droughts

• climate change causes rainfall variability

• desertification and food insecurity

Social and economic causes

• extreme poverty

• limited healthcare and education

• dependence on aid

Key figures in Somalia

• 6.5 million people need humanitarian assistance

• 3.8 million internally displaced people

• Over 1 million refugees in neighbouring countries

Role of UNHCR in Somalia

UNHCR - focuses on forced displacement

Types of aid:

• energy shelters

• clean water and sanitation

• healthcare services

• protection of vulnerable groups

• education access

• supports milions of people annually

Positive impacts of UNHCR in Somalia (short term)

Social impacts

• reduced mortality

• I,rpoved access to clean water

• shelter prevents deaths

• protection for women and children in camps

Political impacts:

• provides stability in area with noe effective government

Negative impacts of UNHCR in Somalia

• Dependency → long term reliance on aid and limited incentives for economic development

• Access and security: aid restricted by conflict, armed groups limit access to people

• Sustainability: focus on emergency relief not long term development

Somalia impacts different scales

Local scale

• camps improve survival

• poor sanitation still causes disease

National scale:

• aid fills government agp

• weakens pressure for state led reform

Global scale

• large financial burden on done countries

Debt relief in somalia

• In 2020 Somalia reached HIPC decision point

• $4.5 billion debt relief

• Led by IMF and World Bank

• reduced debt repayments

Foreign direct investment case study

China FDI in Africa

FDI meaning

FDI

→ investment directly in another country

→ builds infrastructure, factories or mines

→ maintains long term control over operations

Causes of China investing in Africa

Economic causes:

• Africa has large reserves of oil, copper , cobalt and iron ore and rapidly growing markets

• China needs raw materials to sustain: manufacturing, infrastructure growth and export led economy

Political causes

• strengthen diplomatic ties with africa

• gain political support

• expand influence of China as global power

Strategic causes:

• part of belt and road initiative

• secure trade routes and supply chains

China FDI facts and figures

• Chinese FDi stock in Africa $40 billion

• annual chinesse investment flows: $4-6 billion

• China is Africas largest trading partner

• trade value: $250 billion per yea

• over 10 000 chinesse firms operating in Africa

Sectors and countries of investment

Sectors:

• infrastructure: road, railways and ports

• Energy: oil pipelines

• Mining: copper and cobals

• Manufacturing: factories

• Ethiopia: railways and industrial parks

• Kenya: Standard Gauge Railway

• Zambia: copper mining

• Nigeria and Angola: oil investment

Positive impact of Chinese FDI in AFRICA

Economic impacts

Infrastructure developments:

• roads, ports and railways to reduce transport costs

• improved connectivity boosts trade

• Addis Ababa - Djibouti always reduced travel time from days to hours

Employment:

• Millions of jobs creates

• skills transfer in construction and manufacturing

Economic growth

• Incraesee GDP growth in recipient coutnries

• Improved electricity and transport

Social impacts

• improved access to srrviescs

• urban development

Negative impacts of FDI

Economic impacts

→ Dependency

• African economies remain dependent on exporting raw material and Chinese demand and finance

→ Debt accumulation:

• many fyi projects are linked to Chinese loans

• rip of debt distress if project doesn’t generate revenue

Environmental impacts

→ deforestation

→ pollution

Social impacts:

→ poor labour conditions in some projects

→ limited local worker advancement into management

Strenghts and limitations of FDI

Strengths:

• eastern delivery of infrastructure

• tangible projects created

Limitations:

• unequal power relationship

• benefits often flow back to china

• sustainability concerns

TNC’s

Apple and McDonalds

Apple Info

• Founded in 1976

• Headquarters: California USA

• Revenue: $383 billion

• Profit: $97 billion

• Employees: 161 000 worldwide

• Operations in 100+ countries

• Apples supply chain in China crittised for human rights abuse and ethical issues

Global organisation and supply chain of Apple

• design: USA

• manufacturing Turing mostly in china some in India and Vietnam

• Raw materials: cobalt - drc. rare earth metals - china

• Over 530 stores globally

• 90% of apple products assembled in china highlighting reliance of emerging economies for cheap flexible labour

Economic impacts of Apple

Positive :

• contributes billion in tax revenue globally

• 1.5 million jobs created in China

• 100 000 jobs in India from manufacturing

Negative:

• profit shifting through low tax countries

• local businesses struggle with apples dominance

Social impacts of Apple

Positive:

• high skill employment in countries

• technology in LICS

Negative

• excessive working hours - 15 hours

• one day off every 14 days

• low wages - $100 per month

• mandatory overime

• workplace bullying and harassment

• recruitment discrimintaion based on ethnicity, religion and gender

Environmental impacts of Apple

By 2030 global for whole production to be carbon neutral

• each iPhone produced 70 kg of C02

• a lot of e waste less than 20% recycled

Globalisation and apple

• global flows of capital labour and goods

• interdependence of HIcs and NEEs

• shows the unequal power relation between host country and TNC

McDonalds facts

• founded in 1940

• Headuqartes: Chicago

• Revenue: $35 billion

• direct employees: 150 000

• countries: 100+

• restaurants: 41 000

Global strategy and franchising of McDonalds

• 95% of restaurants are franchised reducing cost and risk for company

• Countries provide adaptations of menus : India no beef, Japan teriyaki burger, Poland wies mak

• - showcasing globalisation and adaptation to culture

Economic impacts of McDonalds

Positive

• generates low skill employment

• uses natural local resources

• produces taxes

negative:

• low wages

• some profit goes back to us

• closing of local businesses

Social and cultural impacts

Positive:

• affordable and accessible

• hygienic food

Negative:

• rising obesity

• type 2 diabetes

• homogenisation

Environmental impact of McDonalds

• 1 beef burger - 2400 lites of water

• plastic waste

• food packaging

Improvements:

• some places 100% renewable electricity

• paper straws

McDonalds and globalisation

spreads western consumer culture and reinforces business model where decisions made in HIC’s

Multigovernmental organisation

European Union

European Union facts

• 1993

• 27 coutnries

• GDP: $16.6 trilion

EU role as a free trade zone

• No tarrifs

• Free movement of capital goods and labour

• 70% of EU trade happens in the EU

EU as an MGO

→ shared decision making

• European commission -proposes laws

• European parliament - law making body

• european council- heads of states

Economic impacts of EU

Positive:

• increased FDI

• stronger bargaining power globally

• GDP of EU rose by 8-9% from integration

• creation of millions of jobs

Negative:

uenven development → core regions benefit more from, periphery rely on EU aid

EU social impacts

Positive

• freedom of movement - 17 million people live outside their cuntry

• cultural diversity and integration

• new skills developed

Negative

• easter Europe looses skilled workers to western europe

• drainage on housing

Environmental role of EU

Set same targets

-emiison and plastic band

Carbon neutrality by 2050

EU political and economic challanges

loss of national sovereignty

diagram nets amount migration and budget contributions

EU and globalisation

Sharing of power

capital flows, labour migration and trade network

EU strengths and limitations

Strenths

• reduces trade barriers

• strong global influence

• economic growth

Limitations:

• unequal benefits

• complex decision making

• political tensions in decision making

Managment of migration

US and Mexico

Migration Mexico to US facts

• Between 1900 and 1920, 24 million new arrival were registeres

• Now restrictions introduced with the US Green Card becoming harder to obtain

• Now 40 million non US born citizines many undocumented and illegal

• Now there has been more emmigration back to mexico than to the US due to increased immigration enforcemnet and strenghtening of Mexican economy

Gains for mexico

• remittances sent home → cam suuport a better standard of living for those left behind

• builds better housing, healthcare and educaton

• less competition for jobs and housing in Mexico

• Returning migrants bring back skills, education, knowledge

Losses for Mexico

• large scale depopulation of towns and villages

• many men migrate leaving women behind who need to take care of children by themselves

• migration can break up families

• young peole tend to migrate leaving old and very young dependents behind

• rural areas od Mexico have shortages of economically active peole and lack key workers (doctors, teachers, etc)

Gains for USA

• Source of cheap labour for businesses → generate more profit

• Mexicans do many jobs americans dont want to, such as fruit picking or factory work

• Mexixans bring food and culturew with thgem making it very popular for example in California

• More competition for jobs and hourisng benefiting landlors and businessess

• Mexican immigrants contribute to approximately 4$ of USA’s GDP

Losses for USA

• harder for american unskilled workers to find jobs as they want higher wages than the mexican workers

• wages are kept low affecting all workers

• incraesed cultural and racial tensions

• Illegal migration seen as a drain of american economy: border patrol costs, hodling centres, prisons, transports costs for repatraition, healtchar etc

• USA spent $4.2 billion on US/Mexico border security in 2020

Barriers on interactions due to geographical isolation and resource availability

DRC and Australia

DRC key facts

• Holds 70% of global cobalt reserves

• Mining attributes to 25% of GDP

• GDP per capita: $600-700

• Large deposits of coltan, copper, diamonds, gold

DRC physcial geography significance

• dense tropical rainforest → difficult infrastructure development

• Poor transport networks (few paved roads, limited railways)

• landlocked interior regions → high export costs