globalisation pros and cons
1.) increased trade
Globalisation has resulted in increased trade among countries. This has led to an increase in economic growth and development, as countries can specialize in producing goods that they are more efficient at producing
increased interdependance
most LEDC focus on imports not exports
exports are key for economic development
case study: USA and CHINA
The United States and China are the two largest economies in the world, and they have become increasingly interconnected over the past few decades. Both countries engage in a significant amount of trade with each other, with China being the largest exporter of goods to the United States and the United States being the second-largest exporter of goods to China.
This trade relationship has resulted in significant economic benefits for both countries. China has been able to grow its economy rapidly by exporting goods to the United States, while the United States has been able to benefit from lower-cost goods and access to China's growing consumer market.
Overall, the trade relationship between the United States and China has played a significant role in the economic development of both countries.
2.) increased effeciency
Globalization allows companies to specialize in producing certain goods or services that they can produce more efficiently than others.
Specialization means that companies can focus on producing what they are good at, while other companies focus on producing other goods and services
Globalization allows companies to access resources from different parts of the world. For example, a company in a developed country can access raw materials from a developing country, where the cost of production is lower. This can lead to cost savings and increased efficiency.
Adam Smith's theory of specialization in trade is based on the idea that individuals and countries should specialize in producing goods or services that they can produce most efficiently. this is exactly what countries are doing now and due to that this will lead to an increase in productivity, which ultimately leads to economic growth and wealth creation.
case study: the iPhone
Apple, the company that produces the iPhone, relies on a complex global supply chain
simplified overview of how the iPhone is produced:
Research and Development: Apple's engineers and designers develop the specifications for the iPhone.
Component Manufacturing: Specialized suppliers in countries such as Japan, South Korea, and Taiwan produce components such as the screen, camera, processor, and memory.
Assembly: The components are shipped to China, where they are assembled into the final product by Foxconn, a specialized manufacturing company.
Distribution: The finished iPhones are shipped to various countries around the world for sale to consumers.
By relying on specialized suppliers and manufacturers, Apple is able to produce iPhones more efficiently and cost-effectively than if it tried to produce everything in-house. For example, the specialized suppliers in Japan, South Korea, and Taiwan are able to produce high-quality components at lower costs than Apple could produce them in-house.
Similarly, Foxconn is a specialized manufacturer with expertise in mass production and assembly, which allows it to produce iPhones at a lower cost than Apple could produce them in-house.
Overall, the production of the iPhone involves a high degree of specialization in trade, with each country and company contributing their unique skills and expertise to produce a final product that is efficient, high-quality, and cost-effective.
3.) increased competition: access to new markets
Globalization has led to an increase in trade between countries, which has created new opportunities for companies to access markets and customers in other countries.
This has increased competition by allowing companies to compete with other companies from around the world.
Globalization has also led to lower production costs, which has made it easier for companies to enter new markets and compete with other companies. Lower costs have been made possible by increased access to cheaper raw materials, labor, and technology from around the world.
case study: increase in competition in the automation industry due to globalization
Here are some examples of increased competition in the automotive industry:
Electric Vehicles: The rise of electric vehicles (EVs) has brought new players into the automotive industry, with companies like Tesla, Rivian, and Lucid Motors challenging established automakers with their innovative and sustainable EV offerings.
Autonomous Vehicles: The development of autonomous driving technology has also brought new players into the automotive industry, with companies like Waymo, Cruise, and Uber investing heavily in self-driving cars. Competition- More investment
Ride-sharing: The emergence of ride-sharing services like Uber and Lyft has disrupted the traditional automotive market, with consumers increasingly relying on these services for transportation instead of purchasing their own vehicles.
This has ultimately led to a greater variety of offerings for consumers, and the potential for more affordable and sustainable transportation options in the future.
4.) more job opportunities
increased demand for goods and services, which in turn has led to the creation of new jobs in areas such as manufacturing, distribution, and sales.
case study: nike
the brand nike produces their shoes in China, Vietnam and Indonesia
apparel in Sri Lanka, Vietnam and Mexico
In Vietnam, where Nike has established a large production base, the company has created thousands of jobs in areas such as manufacturing, research and development, and marketing. According to a report by the International Labour Organization (ILO), Nike's supply chain in Vietnam alone supports an estimated 200,000 jobs.
case study 2: the technology company Microsoft employs over 175,000 people globally, with operations in over 100 countries. Microsoft's global operations have created jobs in areas such as software development, marketing, and customer service.
5.) foreign investment
Globalization has also led to an increase in foreign direct investment, where companies invest in other countries to establish new operations or acquire existing ones. This has led to the creation of new jobs in areas such as manufacturing, research and development, and services.
case study 1 continued: nike
nike has also invested in initiatives to promote job creation and economic development in countries such as China and Indonesia, including a program in Indonesia to train women in entrepreneurship and small business management.
case study 2: toyota invests in china
Toyota has been investing in China for several decades, with the goal of expanding its operations in one of the world's largest automotive markets
Toyota has established several manufacturing facilities in China, including joint ventures with Chinese partners such as FAW Group and Guangzhou Automobile Group.
Toyota has also invested in research and development (R&D) facilities in China, with the goal of developing new technologies and products that are tailored to the Chinese market.
a research center in Changshu that focuses on advanced technologies such as fuel cells, autonomous driving, and artificial intelligence.
a research center in Changshu that focuses on advanced technologies such as fuel cells, autonomous driving, and artificial intelligence.
case study: infrastructure investment
belt and road initiative
China's Belt and Road Initiative, which is a massive infrastructure and economic development project that aims to connect Asia, Europe, and Africa through a network of roads, railways, ports, and other infrastructure projects. The initiative was launched in 2013 by the Chinese government, and has since attracted billions of dollars in investment from China and other countries.
roads and railways: better transportation for better connectivity
China is investing in the construction of a high-speed railway between Jakarta and Bandung in Indonesia.
ports and airports: China has invested in the construction of the Gwadar port in Pakistan, which is strategically located on the Arabian Sea.
energy and telecommunications: such as power plants and transmission lines, as well as telecommunications infrastructure such as fiber optic networks.
By improving access to basic services and supporting economic activity, infrastructure investment can help to reduce poverty, create jobs, and improve quality of life for people in many countries.
how does china benefit?
increased trade and investment opportunities for Chinese companies.
By expanding its access to new markets, China could boost its economic growth and strengthen its position as a global economic power.
China's geopolitical influence, by building strong economic and political ties with other countries.
By improving access to strategic resources, China could strengthen its energy security and reduce its dependence on foreign suppliers.
by increasing demand for Chinese goods and services and encouraging investment in Chinese companies. This could help to support economic growth and stability in China, and improve the standard of living for Chinese citizens.
6.) technological transfer
Technology transfer is the process by which knowledge, skills, and technologies are shared between countries or regions. Globalization has greatly facilitated technology transfer by increasing the flow of goods, services, people, and ideas across borders
Migration of skilled workers has also contributed to the transfer of technology between countries. Skilled workers who move to other countries bring with them knowledge, skills, and expertise that can help improve the productivity and efficiency of the receiving country's economy.
Globalization has also led to the development of open innovation models, where companies collaborate with partners and stakeholders to develop new products and technologies. Through these collaborations, firms can access new ideas and technologies from outside their own organization.
case study: toyota and michigan uni
The partnership between Toyota and the University of Michigan is an example of how international cooperation and partnerships can lead to technology transfer and economic development. Through this collaboration, Toyota has been able to access the expertise and knowledge of researchers and scientists from the University of Michigan, while the university has benefited from the financial and technical resources of Toyota. The partnership has led to the development of new technologies and business models, which have helped to improve the competitiveness of Toyota's vehicles and contribute to the economic growth of the region.
7.) cultural exchange
globalization has led to increased cultural exchange by making it easier for people to travel, communicate, migrate, share cultural products, and learn from each other. This has helped to break down barriers between cultures and promote greater understanding and appreciation of different ways of life.
promote greater understanding and tolerance between people from different cultures, which can help to reduce prejudice and discrimination.
promote diversity and the preservation of cultural heritage. This can help to ensure that cultural traditions and practices are passed on to future generations.
Cultural exchange can also have economic benefits, as it can help to promote tourism, trade, and investment. This can help to create jobs and increase economic growth.
Cultural exchange can also contribute to peace and security by promoting cross-cultural understanding and cooperation. This can help to reduce conflict and promote stability in regions that are prone to tension or instability.
case study: cultural fusion between USA and JAPAN
benefits of cultural exchange due to globalization can be seen in the case of the United States and Japan. In the post-World War II era, the two countries established a strong economic and cultural relationship.
many aspects of Japanese culture, such as sushi, anime, and martial arts, have become popular in the United States, and many Americans have developed an appreciation for Japanese culture.
it has helped to promote cross-cultural understanding and tolerance between the two countries, and has contributed to the development of a strong economic relationship between them.
Japanese companies have invested heavily in the United States, creating jobs and contributing to economic growth. In addition, American companies have also been able to expand their business in Japan, which has helped to create more job opportunities and promote economic development.
Overall, the cultural exchange between the United States and Japan due to globalization has had many benefits, including promoting cross-cultural understanding and tolerance, creating new job opportunities, and contributing to economic growth and development.
8.) improved standard of living
economic growth, foreign investment, more job opportunities, better markets created, technology transfer, improved productivity all of these are factors that lead to improved living standards
disadvantages
1.) unequal distribution of benefits
The global economic policies that have been put in place by international organizations such as the International Monetary Fund (IMF) and the World Bank have favored the interests of developed countries over those of developing countries. This has led to unequal distribution of benefits, with developed countries benefiting more from globalization than developing countries.
Developed countries have greater access to technology than developing countries, which has given them an advantage in the global economy.
This has led to a situation where developed countries have more resources and are able to produce more goods and services than developing countries, leading to an unequal distribution of benefits.
case study: Structural adjustment programs (SAPs)
policies implemented by the IMF and the World Bank in the 1980s and 1990s in developing countries that were experiencing economic crises.
These programs required developing countries to implement economic reforms such as reducing government spending, deregulating markets, and opening up their economies to foreign investment in exchange for financial aid from these organizations.
Critics argue that SAPs favored the interests of developed countries and multinational corporations over those of developing countries. For example, SAPs often required developing countries to privatize their state-owned enterprises, which were then sold to foreign investors at low prices, resulting in a loss of state revenue and control over key industries
SAPs also required developing countries to open up their markets to foreign competition, which put local businesses at a disadvantage and resulted in job losses
SAPs often required developing countries to focus on exports rather than developing their own domestic industries, which resulted in an overreliance on exporting raw materials and a lack of economic diversification.
SAPs contributed to the widening gap between developed and developing countries and that these policies were designed to benefit developed countries and multinational corporations at the expense of developing countries.
example of a country where SAP was applied: ghana, nigeria, uganda, peru, phillipines, ecuador and more
2.) job losses: job displacement
Many multinational corporations have moved their production to developing countries where labor is cheaper. This has led to job losses in developed countries and exploitation of workers in developing countries who often work in poor conditions and receive low wages.
case study: IBM in India
IBM began outsourcing its back-office operations to India, which involved transferring jobs from the United States to India. While this led to the creation of new jobs in India, it also resulted in job losses in the United States.
IBM has also been criticized for its practices in India. In 2019, IBM announced that it would be laying off thousands of employees in India, which caused controversy and concern. The layoffs were part of a global restructuring plan that aimed to streamline the company's operations and cut costs.
3.) environmental damage
increase in demand for natural resources such as water, land, and energy. This demand can lead to overuse and depletion of these resources, causing environmental damage.
increase in transportation of goods and people across the world, which has led to increased use of fossil fuels and greenhouse gas emissions.
expansion of industries, particularly in developing countries where environmental regulations may be less stringent. These industries may pollute the air, water, and soil, leading to environmental damage and health problems for local communities.
Globalisation has led to the production of more waste, particularly electronic waste, which can be difficult to dispose of safely
case study: ENVIRONMENT IMPACT
Air pollution:
The manufacturing processes used by Toyota, Volkswagon, and Ford Motor including paint spraying and welding, can release pollutants into the air. This can contribute to local air pollution, which can have negative impacts on public health and the environment.
Water pollution:
Toyota's operations may generate wastewater that contains pollutants such as heavy metals and chemicals. If not properly treated, this wastewater can enter local waterways and contribute to water pollution.
Land use:
MNC factories of Toyota and other facilities may require large amounts of land for their operations. This can lead to deforestation or other changes in land use, which can have negative impacts on local ecosystems and biodiversity.
ExxonMobil: The American oil and gas company has refineries and production facilities in several countries. These facilities can cover hundreds of acres and require large amounts of land for oil storage tanks, pipelines, and other infrastructure.
Samsung: The South Korean electronics giant has factories that produce a wide range of products, including smartphones, TVs, and semiconductors. Many of these factories are large and require significant amounts of land for production.
Resource use:
Toyota's operations may require significant amounts of resources such as energy, water, and raw materials. If not managed responsibly, this can lead to resource depletion and contribute to climate change and other environmental problems
Nestle: The Swiss food and beverage company is one of the largest in the world, and its products require significant amounts of resources such as water, cocoa, and coffee beans
case study: Coca cola in El salvador
Water depletion and contamination: Coca-Cola is known for using a large amount of water in its production process, which has led to concerns about the depletion of local water sources. Additionally, there have been reports of Coca-Cola plants polluting local water sources with waste and chemicals.
Plastic pollution: Coca-Cola is a major contributor to plastic waste, which is a significant environmental problem in El Salvador and around the world. Coca-Cola has been criticized for not doing enough to reduce its plastic use and for not adequately addressing the plastic waste generated by its products.
Deforestation: Coca-Cola sources sugar from El Salvador, and there have been concerns about deforestation in sugar cane growing regions as a result of Coca-Cola's demand for sugar.
Greenhouse gas emissions: Coca-Cola's production and transportation processes contribute to greenhouse gas emissions, which are a major contributor to climate change.
Coca-Cola has responded to these concerns by implementing various environmental initiatives in El Salvador. For example, the company has committed to reducing its water usage and improving water efficiency in its bottling operations. It has also implemented recycling programs and invested in research and development of sustainable packaging solutions.
However, critics argue that more needs to be done to address the underlying issues of water depletion, pollution, and plastic waste in the company's operations in El Salvador. There have been calls for greater transparency and accountability from Coca-Cola regarding its environmental practices, as well as increased regulation and oversight from government agencies.
4.) loss of sovereignty
sovereignty: power a country has over it’s own government
more dependent on international organizations such as the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank. These institutions have significant influence over economic policies, and nations may need to comply with their rules and regulations to participate in the global economy.
globalisation has lead to reduction of trade barriers which has made it easier for foreign companies to compete with domestic companies. As a result, countries may have less control over their own economies and industries.
increase in foreign investment flows into countries, which may lead to foreign ownership of key industries and assets. This can reduce a country's control over its own economic development.
increase in foreign investment flows into countries, which may lead to foreign ownership of key industries and assets. This can reduce a country's control over its own economic development.
case study 1: when mexico joined NAFTA, NAFTA required Mexico to remove trade barriers and open up its economy to foreign investment, which some critics argue led to a loss of sovereignty for Mexico.
case study 2: hina has been criticized for allowing foreign companies to invest in strategic industries such as technology and telecommunications, which could give these companies significant economic and political power in China.
case study 3:a multinational corporation that has been accused of lobbying governments to weaken environmental regulations is the oil company Chevron. In 2019, a report by the advocacy group Global Witness alleged that Chevron had lobbied the U.S. government to pressure the Ecuadorian government to drop a $9.5 billion environmental lawsuit against the company. The lawsuit was related to allegations that Chevron had caused widespread pollution in the Amazon rainforest through its oil drilling activities.
5.) cultural erosion
Cultural homogenisation: Globalisation has led to the spread of Western culture and values, which has resulted in the erosion of traditional cultures in many parts of the world. The rise of Western pop culture, fashion, and music has made them more accessible to people around the world, leading to a loss of diversity in cultural expression.
Cultural imperialism: The dominance of Western culture has also led to the imposition of Western values and beliefs on other cultures, which can result in the erosion of local customs and traditions. For example, the spread of American fast food chains and fashion brands in other countries has led to the displacement of local food and fashion industries.
Consumerism: Globalisation has also led to the rise of consumerism, where people value material goods and consumption over traditional values and social connections. This can lead to the erosion of traditional social and cultural practices, such as family values, community traditions, and religious practices.
case study: MNCs like mc donalds
The spread of American fast food chains like McDonald's and KFC in countries around the world has led to the displacement of local food industries and traditional food cultures. For example, in Japan, the rise of fast food chains has led to a decline in traditional Japanese food culture, with some young people preferring to eat at American-style restaurants instead of local Japanese ones.
case study: in countries like India, the popularity of Western-style clothing and music has led to a decline in traditional clothing styles and classical music.
case study 3: the use of Native American headdresses as fashion accessories or the adoption of Maori tribal tattoos by non-Maori individuals without understanding their cultural significance.
important point: Cultural homogenization refers to the process by which cultural differences between societies are eroded, leading to a more uniform and standardized global culture. However, Cultural heterogenization refers to the process by which different cultures interact and exchange ideas, leading to an increase in cultural diversity and heterogeneity.
It is important to note that cultural heterogenization and cultural homogenization are not mutually exclusive, and both can coexist in different contexts.
6.) inequalities
Globalization can increase inequality within and between countries, as companies and workers in developed countries may benefit from globalization, while those in developing countries may experience job losses and wage stagnation.
case study: Formation of Monopolies- Microsoft- ex
The impact of Microsoft's monopoly on LEDCs and MEDCs was similar in many respects, but there were also some important differences.
In LEDCs, the high cost of Microsoft's products and licensing fees limited access to essential software and computing resources, which could have a significant impact on education, healthcare, and other critical sectors. For example, in many African countries, the cost of Microsoft software licenses can be prohibitively expensive for schools and other public institutions, limiting access to educational resources and other tools that could be used to improve the lives of local communities.
In MEDCs, the impact of Microsoft's monopoly was more complex. While consumers in these countries also faced higher prices and limited access to competing products, there was also a significant amount of innovation and investment in the software and computing industries that was driven by Microsoft's dominance. For example, the development of the internet and the growth of the technology sector in the 1990s and 2000s were fueled in part by Microsoft's innovations and investments.
However, the impact of Microsoft's monopoly was not universally positive in MEDCs either. Some firms and developers complained that Microsoft's dominance stifled innovation and limited their ability to develop and market competing products. Additionally, consumers and businesses faced higher prices and limited choices in software and computing products, which could limit economic growth and innovation in the long run
LEDCs:
India: Microsoft's monopoly has led to high prices of its software, making it difficult for many people in India to access technology and educational resources.
Brazil: The Brazilian government has accused Microsoft of engaging in anti-competitive practices, which has hurt local software companies and contributed to a lack of technological development in the country.
MEDCs:
United States: Microsoft's monopoly led to a long legal battle with the US government, which accused the company of anti-competitive practices and violating antitrust laws. The case resulted in a settlement that required Microsoft to change some of its business practices.
European Union: The EU has also taken legal action against Microsoft, accusing the company of engaging in anti-competitive behavior and imposing fines for not complying with regulations. The EU has been concerned about the impact of Microsoft's monopoly on innovation and competition in the technology sector.
politcal tensions
see all case studies on trade disputes and how globalisation while increasing international trade has also caused conflict in the past
important case study 1 to connect all disadvantages: Bangladesh
case of the garment industry in Bangladesh. Many multinational corporations have moved their production to Bangladesh, where labor is cheaper. This has led to job losses in developed countries, such as the United States, while creating job opportunities in Bangladesh.
However, the working conditions in many garment factories in Bangladesh are poor, with workers often working long hours in dangerous and unhealthy conditions. The wages paid to these workers are also very low, and many workers struggle to make ends meet.
In addition, the environmental impact of the garment industry in Bangladesh has been significant, with factories dumping toxic waste into rivers and polluting the air. This has led to health problems for local communities and has contributed to environmental degradation.
While the garment industry has brought some benefits to Bangladesh, such as job opportunities and economic growth, the benefits have been unevenly distributed. Workers in Bangladesh have been exploited, while multinational corporations have profited from the cheap labor. At the same time, the environmental impact of the industry has been borne by the local communities, who have not benefited from the economic growth
important case study 2: the digital divide
developed countries have greater access to technology than developing countries is the digital divide
The digital divide refers to the gap between those who have access to digital technologies, such as computers and the internet, and those who do not.
Developed countries have a much higher rate of access to digital technologies than developing countries. For example, according to a report by the International Telecommunication Union (ITU), in 2020, over 80% of households in developed countries had access to the internet, while in developing countries the figure was only 47%.
This digital divide has given developed countries an advantage in the global economy. Companies in developed countries have greater access to digital technologies, which has allowed them to innovate and be more productive.
They can also reach a larger market through the internet, giving them a global reach.
companies in developing countries often struggle to access digital technologies, which limits their ability to innovate and be productive.
This puts them at a disadvantage in the global economy, as they are unable to compete with companies in developed countries.
important case study 3: amazon
Amazon is both a contributor to and a solution to the digital divide.
amazon is a digital platform that requires access to the internet to use. Therefore, those without access to the internet, such as many people in developing countries or in rural areas of developed countries, are unable to fully benefit from Amazon's services.
Amazon has taken steps to help bridge the digital divide. For example, Amazon Web Services (AWS) provides cloud computing services that can help small and medium-sized businesses in developing countries access computing resources that they might not have been able to afford otherwise.
additionally, Amazon has invested in initiatives aimed at increasing access to the internet in remote areas, such as Project Kuiper, which aims to provide satellite-based internet services.
(refer to amazon’s impact on india to understand this in more depth)
1.) increased trade
Globalisation has resulted in increased trade among countries. This has led to an increase in economic growth and development, as countries can specialize in producing goods that they are more efficient at producing
increased interdependance
most LEDC focus on imports not exports
exports are key for economic development
case study: USA and CHINA
The United States and China are the two largest economies in the world, and they have become increasingly interconnected over the past few decades. Both countries engage in a significant amount of trade with each other, with China being the largest exporter of goods to the United States and the United States being the second-largest exporter of goods to China.
This trade relationship has resulted in significant economic benefits for both countries. China has been able to grow its economy rapidly by exporting goods to the United States, while the United States has been able to benefit from lower-cost goods and access to China's growing consumer market.
Overall, the trade relationship between the United States and China has played a significant role in the economic development of both countries.
2.) increased effeciency
Globalization allows companies to specialize in producing certain goods or services that they can produce more efficiently than others.
Specialization means that companies can focus on producing what they are good at, while other companies focus on producing other goods and services
Globalization allows companies to access resources from different parts of the world. For example, a company in a developed country can access raw materials from a developing country, where the cost of production is lower. This can lead to cost savings and increased efficiency.
Adam Smith's theory of specialization in trade is based on the idea that individuals and countries should specialize in producing goods or services that they can produce most efficiently. this is exactly what countries are doing now and due to that this will lead to an increase in productivity, which ultimately leads to economic growth and wealth creation.
case study: the iPhone
Apple, the company that produces the iPhone, relies on a complex global supply chain
simplified overview of how the iPhone is produced:
Research and Development: Apple's engineers and designers develop the specifications for the iPhone.
Component Manufacturing: Specialized suppliers in countries such as Japan, South Korea, and Taiwan produce components such as the screen, camera, processor, and memory.
Assembly: The components are shipped to China, where they are assembled into the final product by Foxconn, a specialized manufacturing company.
Distribution: The finished iPhones are shipped to various countries around the world for sale to consumers.
By relying on specialized suppliers and manufacturers, Apple is able to produce iPhones more efficiently and cost-effectively than if it tried to produce everything in-house. For example, the specialized suppliers in Japan, South Korea, and Taiwan are able to produce high-quality components at lower costs than Apple could produce them in-house.
Similarly, Foxconn is a specialized manufacturer with expertise in mass production and assembly, which allows it to produce iPhones at a lower cost than Apple could produce them in-house.
Overall, the production of the iPhone involves a high degree of specialization in trade, with each country and company contributing their unique skills and expertise to produce a final product that is efficient, high-quality, and cost-effective.
3.) increased competition: access to new markets
Globalization has led to an increase in trade between countries, which has created new opportunities for companies to access markets and customers in other countries.
This has increased competition by allowing companies to compete with other companies from around the world.
Globalization has also led to lower production costs, which has made it easier for companies to enter new markets and compete with other companies. Lower costs have been made possible by increased access to cheaper raw materials, labor, and technology from around the world.
case study: increase in competition in the automation industry due to globalization
Here are some examples of increased competition in the automotive industry:
Electric Vehicles: The rise of electric vehicles (EVs) has brought new players into the automotive industry, with companies like Tesla, Rivian, and Lucid Motors challenging established automakers with their innovative and sustainable EV offerings.
Autonomous Vehicles: The development of autonomous driving technology has also brought new players into the automotive industry, with companies like Waymo, Cruise, and Uber investing heavily in self-driving cars. Competition- More investment
Ride-sharing: The emergence of ride-sharing services like Uber and Lyft has disrupted the traditional automotive market, with consumers increasingly relying on these services for transportation instead of purchasing their own vehicles.
This has ultimately led to a greater variety of offerings for consumers, and the potential for more affordable and sustainable transportation options in the future.
4.) more job opportunities
increased demand for goods and services, which in turn has led to the creation of new jobs in areas such as manufacturing, distribution, and sales.
case study: nike
the brand nike produces their shoes in China, Vietnam and Indonesia
apparel in Sri Lanka, Vietnam and Mexico
In Vietnam, where Nike has established a large production base, the company has created thousands of jobs in areas such as manufacturing, research and development, and marketing. According to a report by the International Labour Organization (ILO), Nike's supply chain in Vietnam alone supports an estimated 200,000 jobs.
case study 2: the technology company Microsoft employs over 175,000 people globally, with operations in over 100 countries. Microsoft's global operations have created jobs in areas such as software development, marketing, and customer service.
5.) foreign investment
Globalization has also led to an increase in foreign direct investment, where companies invest in other countries to establish new operations or acquire existing ones. This has led to the creation of new jobs in areas such as manufacturing, research and development, and services.
case study 1 continued: nike
nike has also invested in initiatives to promote job creation and economic development in countries such as China and Indonesia, including a program in Indonesia to train women in entrepreneurship and small business management.
case study 2: toyota invests in china
Toyota has been investing in China for several decades, with the goal of expanding its operations in one of the world's largest automotive markets
Toyota has established several manufacturing facilities in China, including joint ventures with Chinese partners such as FAW Group and Guangzhou Automobile Group.
Toyota has also invested in research and development (R&D) facilities in China, with the goal of developing new technologies and products that are tailored to the Chinese market.
a research center in Changshu that focuses on advanced technologies such as fuel cells, autonomous driving, and artificial intelligence.
a research center in Changshu that focuses on advanced technologies such as fuel cells, autonomous driving, and artificial intelligence.
case study: infrastructure investment
belt and road initiative
China's Belt and Road Initiative, which is a massive infrastructure and economic development project that aims to connect Asia, Europe, and Africa through a network of roads, railways, ports, and other infrastructure projects. The initiative was launched in 2013 by the Chinese government, and has since attracted billions of dollars in investment from China and other countries.
roads and railways: better transportation for better connectivity
China is investing in the construction of a high-speed railway between Jakarta and Bandung in Indonesia.
ports and airports: China has invested in the construction of the Gwadar port in Pakistan, which is strategically located on the Arabian Sea.
energy and telecommunications: such as power plants and transmission lines, as well as telecommunications infrastructure such as fiber optic networks.
By improving access to basic services and supporting economic activity, infrastructure investment can help to reduce poverty, create jobs, and improve quality of life for people in many countries.
how does china benefit?
increased trade and investment opportunities for Chinese companies.
By expanding its access to new markets, China could boost its economic growth and strengthen its position as a global economic power.
China's geopolitical influence, by building strong economic and political ties with other countries.
By improving access to strategic resources, China could strengthen its energy security and reduce its dependence on foreign suppliers.
by increasing demand for Chinese goods and services and encouraging investment in Chinese companies. This could help to support economic growth and stability in China, and improve the standard of living for Chinese citizens.
6.) technological transfer
Technology transfer is the process by which knowledge, skills, and technologies are shared between countries or regions. Globalization has greatly facilitated technology transfer by increasing the flow of goods, services, people, and ideas across borders
Migration of skilled workers has also contributed to the transfer of technology between countries. Skilled workers who move to other countries bring with them knowledge, skills, and expertise that can help improve the productivity and efficiency of the receiving country's economy.
Globalization has also led to the development of open innovation models, where companies collaborate with partners and stakeholders to develop new products and technologies. Through these collaborations, firms can access new ideas and technologies from outside their own organization.
case study: toyota and michigan uni
The partnership between Toyota and the University of Michigan is an example of how international cooperation and partnerships can lead to technology transfer and economic development. Through this collaboration, Toyota has been able to access the expertise and knowledge of researchers and scientists from the University of Michigan, while the university has benefited from the financial and technical resources of Toyota. The partnership has led to the development of new technologies and business models, which have helped to improve the competitiveness of Toyota's vehicles and contribute to the economic growth of the region.
7.) cultural exchange
globalization has led to increased cultural exchange by making it easier for people to travel, communicate, migrate, share cultural products, and learn from each other. This has helped to break down barriers between cultures and promote greater understanding and appreciation of different ways of life.
promote greater understanding and tolerance between people from different cultures, which can help to reduce prejudice and discrimination.
promote diversity and the preservation of cultural heritage. This can help to ensure that cultural traditions and practices are passed on to future generations.
Cultural exchange can also have economic benefits, as it can help to promote tourism, trade, and investment. This can help to create jobs and increase economic growth.
Cultural exchange can also contribute to peace and security by promoting cross-cultural understanding and cooperation. This can help to reduce conflict and promote stability in regions that are prone to tension or instability.
case study: cultural fusion between USA and JAPAN
benefits of cultural exchange due to globalization can be seen in the case of the United States and Japan. In the post-World War II era, the two countries established a strong economic and cultural relationship.
many aspects of Japanese culture, such as sushi, anime, and martial arts, have become popular in the United States, and many Americans have developed an appreciation for Japanese culture.
it has helped to promote cross-cultural understanding and tolerance between the two countries, and has contributed to the development of a strong economic relationship between them.
Japanese companies have invested heavily in the United States, creating jobs and contributing to economic growth. In addition, American companies have also been able to expand their business in Japan, which has helped to create more job opportunities and promote economic development.
Overall, the cultural exchange between the United States and Japan due to globalization has had many benefits, including promoting cross-cultural understanding and tolerance, creating new job opportunities, and contributing to economic growth and development.
8.) improved standard of living
economic growth, foreign investment, more job opportunities, better markets created, technology transfer, improved productivity all of these are factors that lead to improved living standards
disadvantages
1.) unequal distribution of benefits
The global economic policies that have been put in place by international organizations such as the International Monetary Fund (IMF) and the World Bank have favored the interests of developed countries over those of developing countries. This has led to unequal distribution of benefits, with developed countries benefiting more from globalization than developing countries.
Developed countries have greater access to technology than developing countries, which has given them an advantage in the global economy.
This has led to a situation where developed countries have more resources and are able to produce more goods and services than developing countries, leading to an unequal distribution of benefits.
case study: Structural adjustment programs (SAPs)
policies implemented by the IMF and the World Bank in the 1980s and 1990s in developing countries that were experiencing economic crises.
These programs required developing countries to implement economic reforms such as reducing government spending, deregulating markets, and opening up their economies to foreign investment in exchange for financial aid from these organizations.
Critics argue that SAPs favored the interests of developed countries and multinational corporations over those of developing countries. For example, SAPs often required developing countries to privatize their state-owned enterprises, which were then sold to foreign investors at low prices, resulting in a loss of state revenue and control over key industries
SAPs also required developing countries to open up their markets to foreign competition, which put local businesses at a disadvantage and resulted in job losses
SAPs often required developing countries to focus on exports rather than developing their own domestic industries, which resulted in an overreliance on exporting raw materials and a lack of economic diversification.
SAPs contributed to the widening gap between developed and developing countries and that these policies were designed to benefit developed countries and multinational corporations at the expense of developing countries.
example of a country where SAP was applied: ghana, nigeria, uganda, peru, phillipines, ecuador and more
2.) job losses: job displacement
Many multinational corporations have moved their production to developing countries where labor is cheaper. This has led to job losses in developed countries and exploitation of workers in developing countries who often work in poor conditions and receive low wages.
case study: IBM in India
IBM began outsourcing its back-office operations to India, which involved transferring jobs from the United States to India. While this led to the creation of new jobs in India, it also resulted in job losses in the United States.
IBM has also been criticized for its practices in India. In 2019, IBM announced that it would be laying off thousands of employees in India, which caused controversy and concern. The layoffs were part of a global restructuring plan that aimed to streamline the company's operations and cut costs.
3.) environmental damage
increase in demand for natural resources such as water, land, and energy. This demand can lead to overuse and depletion of these resources, causing environmental damage.
increase in transportation of goods and people across the world, which has led to increased use of fossil fuels and greenhouse gas emissions.
expansion of industries, particularly in developing countries where environmental regulations may be less stringent. These industries may pollute the air, water, and soil, leading to environmental damage and health problems for local communities.
Globalisation has led to the production of more waste, particularly electronic waste, which can be difficult to dispose of safely
case study: ENVIRONMENT IMPACT
Air pollution:
The manufacturing processes used by Toyota, Volkswagon, and Ford Motor including paint spraying and welding, can release pollutants into the air. This can contribute to local air pollution, which can have negative impacts on public health and the environment.
Water pollution:
Toyota's operations may generate wastewater that contains pollutants such as heavy metals and chemicals. If not properly treated, this wastewater can enter local waterways and contribute to water pollution.
Land use:
MNC factories of Toyota and other facilities may require large amounts of land for their operations. This can lead to deforestation or other changes in land use, which can have negative impacts on local ecosystems and biodiversity.
ExxonMobil: The American oil and gas company has refineries and production facilities in several countries. These facilities can cover hundreds of acres and require large amounts of land for oil storage tanks, pipelines, and other infrastructure.
Samsung: The South Korean electronics giant has factories that produce a wide range of products, including smartphones, TVs, and semiconductors. Many of these factories are large and require significant amounts of land for production.
Resource use:
Toyota's operations may require significant amounts of resources such as energy, water, and raw materials. If not managed responsibly, this can lead to resource depletion and contribute to climate change and other environmental problems
Nestle: The Swiss food and beverage company is one of the largest in the world, and its products require significant amounts of resources such as water, cocoa, and coffee beans
case study: Coca cola in El salvador
Water depletion and contamination: Coca-Cola is known for using a large amount of water in its production process, which has led to concerns about the depletion of local water sources. Additionally, there have been reports of Coca-Cola plants polluting local water sources with waste and chemicals.
Plastic pollution: Coca-Cola is a major contributor to plastic waste, which is a significant environmental problem in El Salvador and around the world. Coca-Cola has been criticized for not doing enough to reduce its plastic use and for not adequately addressing the plastic waste generated by its products.
Deforestation: Coca-Cola sources sugar from El Salvador, and there have been concerns about deforestation in sugar cane growing regions as a result of Coca-Cola's demand for sugar.
Greenhouse gas emissions: Coca-Cola's production and transportation processes contribute to greenhouse gas emissions, which are a major contributor to climate change.
Coca-Cola has responded to these concerns by implementing various environmental initiatives in El Salvador. For example, the company has committed to reducing its water usage and improving water efficiency in its bottling operations. It has also implemented recycling programs and invested in research and development of sustainable packaging solutions.
However, critics argue that more needs to be done to address the underlying issues of water depletion, pollution, and plastic waste in the company's operations in El Salvador. There have been calls for greater transparency and accountability from Coca-Cola regarding its environmental practices, as well as increased regulation and oversight from government agencies.
4.) loss of sovereignty
sovereignty: power a country has over it’s own government
more dependent on international organizations such as the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank. These institutions have significant influence over economic policies, and nations may need to comply with their rules and regulations to participate in the global economy.
globalisation has lead to reduction of trade barriers which has made it easier for foreign companies to compete with domestic companies. As a result, countries may have less control over their own economies and industries.
increase in foreign investment flows into countries, which may lead to foreign ownership of key industries and assets. This can reduce a country's control over its own economic development.
increase in foreign investment flows into countries, which may lead to foreign ownership of key industries and assets. This can reduce a country's control over its own economic development.
case study 1: when mexico joined NAFTA, NAFTA required Mexico to remove trade barriers and open up its economy to foreign investment, which some critics argue led to a loss of sovereignty for Mexico.
case study 2: hina has been criticized for allowing foreign companies to invest in strategic industries such as technology and telecommunications, which could give these companies significant economic and political power in China.
case study 3:a multinational corporation that has been accused of lobbying governments to weaken environmental regulations is the oil company Chevron. In 2019, a report by the advocacy group Global Witness alleged that Chevron had lobbied the U.S. government to pressure the Ecuadorian government to drop a $9.5 billion environmental lawsuit against the company. The lawsuit was related to allegations that Chevron had caused widespread pollution in the Amazon rainforest through its oil drilling activities.
5.) cultural erosion
Cultural homogenisation: Globalisation has led to the spread of Western culture and values, which has resulted in the erosion of traditional cultures in many parts of the world. The rise of Western pop culture, fashion, and music has made them more accessible to people around the world, leading to a loss of diversity in cultural expression.
Cultural imperialism: The dominance of Western culture has also led to the imposition of Western values and beliefs on other cultures, which can result in the erosion of local customs and traditions. For example, the spread of American fast food chains and fashion brands in other countries has led to the displacement of local food and fashion industries.
Consumerism: Globalisation has also led to the rise of consumerism, where people value material goods and consumption over traditional values and social connections. This can lead to the erosion of traditional social and cultural practices, such as family values, community traditions, and religious practices.
case study: MNCs like mc donalds
The spread of American fast food chains like McDonald's and KFC in countries around the world has led to the displacement of local food industries and traditional food cultures. For example, in Japan, the rise of fast food chains has led to a decline in traditional Japanese food culture, with some young people preferring to eat at American-style restaurants instead of local Japanese ones.
case study: in countries like India, the popularity of Western-style clothing and music has led to a decline in traditional clothing styles and classical music.
case study 3: the use of Native American headdresses as fashion accessories or the adoption of Maori tribal tattoos by non-Maori individuals without understanding their cultural significance.
important point: Cultural homogenization refers to the process by which cultural differences between societies are eroded, leading to a more uniform and standardized global culture. However, Cultural heterogenization refers to the process by which different cultures interact and exchange ideas, leading to an increase in cultural diversity and heterogeneity.
It is important to note that cultural heterogenization and cultural homogenization are not mutually exclusive, and both can coexist in different contexts.
6.) inequalities
Globalization can increase inequality within and between countries, as companies and workers in developed countries may benefit from globalization, while those in developing countries may experience job losses and wage stagnation.
case study: Formation of Monopolies- Microsoft- ex
The impact of Microsoft's monopoly on LEDCs and MEDCs was similar in many respects, but there were also some important differences.
In LEDCs, the high cost of Microsoft's products and licensing fees limited access to essential software and computing resources, which could have a significant impact on education, healthcare, and other critical sectors. For example, in many African countries, the cost of Microsoft software licenses can be prohibitively expensive for schools and other public institutions, limiting access to educational resources and other tools that could be used to improve the lives of local communities.
In MEDCs, the impact of Microsoft's monopoly was more complex. While consumers in these countries also faced higher prices and limited access to competing products, there was also a significant amount of innovation and investment in the software and computing industries that was driven by Microsoft's dominance. For example, the development of the internet and the growth of the technology sector in the 1990s and 2000s were fueled in part by Microsoft's innovations and investments.
However, the impact of Microsoft's monopoly was not universally positive in MEDCs either. Some firms and developers complained that Microsoft's dominance stifled innovation and limited their ability to develop and market competing products. Additionally, consumers and businesses faced higher prices and limited choices in software and computing products, which could limit economic growth and innovation in the long run
LEDCs:
India: Microsoft's monopoly has led to high prices of its software, making it difficult for many people in India to access technology and educational resources.
Brazil: The Brazilian government has accused Microsoft of engaging in anti-competitive practices, which has hurt local software companies and contributed to a lack of technological development in the country.
MEDCs:
United States: Microsoft's monopoly led to a long legal battle with the US government, which accused the company of anti-competitive practices and violating antitrust laws. The case resulted in a settlement that required Microsoft to change some of its business practices.
European Union: The EU has also taken legal action against Microsoft, accusing the company of engaging in anti-competitive behavior and imposing fines for not complying with regulations. The EU has been concerned about the impact of Microsoft's monopoly on innovation and competition in the technology sector.
politcal tensions
see all case studies on trade disputes and how globalisation while increasing international trade has also caused conflict in the past
important case study 1 to connect all disadvantages: Bangladesh
case of the garment industry in Bangladesh. Many multinational corporations have moved their production to Bangladesh, where labor is cheaper. This has led to job losses in developed countries, such as the United States, while creating job opportunities in Bangladesh.
However, the working conditions in many garment factories in Bangladesh are poor, with workers often working long hours in dangerous and unhealthy conditions. The wages paid to these workers are also very low, and many workers struggle to make ends meet.
In addition, the environmental impact of the garment industry in Bangladesh has been significant, with factories dumping toxic waste into rivers and polluting the air. This has led to health problems for local communities and has contributed to environmental degradation.
While the garment industry has brought some benefits to Bangladesh, such as job opportunities and economic growth, the benefits have been unevenly distributed. Workers in Bangladesh have been exploited, while multinational corporations have profited from the cheap labor. At the same time, the environmental impact of the industry has been borne by the local communities, who have not benefited from the economic growth
important case study 2: the digital divide
developed countries have greater access to technology than developing countries is the digital divide
The digital divide refers to the gap between those who have access to digital technologies, such as computers and the internet, and those who do not.
Developed countries have a much higher rate of access to digital technologies than developing countries. For example, according to a report by the International Telecommunication Union (ITU), in 2020, over 80% of households in developed countries had access to the internet, while in developing countries the figure was only 47%.
This digital divide has given developed countries an advantage in the global economy. Companies in developed countries have greater access to digital technologies, which has allowed them to innovate and be more productive.
They can also reach a larger market through the internet, giving them a global reach.
companies in developing countries often struggle to access digital technologies, which limits their ability to innovate and be productive.
This puts them at a disadvantage in the global economy, as they are unable to compete with companies in developed countries.
important case study 3: amazon
Amazon is both a contributor to and a solution to the digital divide.
amazon is a digital platform that requires access to the internet to use. Therefore, those without access to the internet, such as many people in developing countries or in rural areas of developed countries, are unable to fully benefit from Amazon's services.
Amazon has taken steps to help bridge the digital divide. For example, Amazon Web Services (AWS) provides cloud computing services that can help small and medium-sized businesses in developing countries access computing resources that they might not have been able to afford otherwise.
additionally, Amazon has invested in initiatives aimed at increasing access to the internet in remote areas, such as Project Kuiper, which aims to provide satellite-based internet services.
(refer to amazon’s impact on india to understand this in more depth)
