contributions to gloalisation

• what has contributed to the spread of globalisation


  special economic zones

  govornment subsidies

  attitudes to FDI
• where have attitudes to FDI changed


  in developing and emerging countries
• why have attitudes to FDI changed

  originally:

  during decolonisation period between 50s-70s many newly independent countries saw international trade/TNC's as exploitative + prefered to keep foreign firms out and be self-sufficient through import substitution

  
  

  some asian countries instead chose to open up to FDI
• what is import substitution

  a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market
• what 4 asian countries opened up to FDI/ export led growth


  singapore, taiwan, south korea, hong kong
• what are 'asian tiger economies'


  the 4 asian countries which experienced much faster economic growth by choosing export led growth than countries which chose import subsitution
• by the 1980s what happened to FDI attitudes


  it was no longer viewed as exploitative
• how did people think FDI was exploitative


  low prices for rescources

  low wages to workers

  demanding low taxes

  bad for environment
• how is FDI viewed as positive


  creates new jobs

  better paying than existing alternatives eg subsidence farming

  reliable wages

  new technologies

  reliable tax contributors
• what are BRICs


  brazil, russia, india and china - 4 large emerging countries which embraced globalisation and FDI
• what are subsidies


  payments by the govornment to a company to promote a particular activity
• why may govornments provide subsidies


  to attract FDI

  - eg a subsidy to cover relocation costs of moving a factory to a diff country for their benefit
• why does the WTO usually prohibit subsidies

  to act as a trade barrier to domestic firms as the govornment can pay to allow firms to accept a lower market price which will undercut the price of imports
• why does the WTO sometimes allow subsidies


  sometimes allowed for FDI as it promotes trade
• what are special economic zones


  are enclaves which are used to encourage FDI and promote export-oreinted industry

  through

  - subsidies

  -special tax

  -regulatory incentives
• why are SEZ's used to attract FDI

  they can spread globalisation to new regions
• what does a sucessful SEZ need


  good infrastructure

  close proximity to trade routes/markets

  minimum rule of law eg minimal corruption and freedom from crime and violence
• example of a SEZ


  jakarta export zone

  -created by pres suharto of indonesia

  -designed in consultation with US and european TNC's

  -world bank funded infrastructure
• how did china economically liberalise

  chinas 1978 open door policy
• what is chinas 1978 open door policy


  under chairman mao ze dong china was communist and 'switched off' from the global economy and most people in rural areas lived in poverty

  
  

  in 1978, deng xiaoping introduced the 'open door policy' which introduced economic liberalisation and opening up to FDI whilst remaining a one party political system

  
  

  SEZs were created on the coast, attracting a rapid inflow of FDI
• example of a coastal SEZ in china


  shenzhen economic zone in the pearl river delta, shanghai
• impacts of chinas open door policy


  exports soared from $2b in 1980 to 200bn in 2000

  china joined the WTO in 2001 which guarenteed other countries would lower tarrifs on exports from china
• how much FDI did china get a year in 2006

  60bn
• how many people were lifted from poverty in china since 1990s

  400m
• impacts of china joining WTO


  removed export restrictions on rare earth minerals

  china is now a major FDI source in other countries
• negative impacts of chinas open door policy


  cultural erosion

  FDI is restricted in some areas/sectors such as coca-colas attempted aquisition of hiuyan juice in 2008 was blocked