Global Interdependence - Higher Level Option
What is Globalisation? What does Global Interdependence really mean?
According to one leading Geographer, Globalisation is "the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa". Anthony Giddens, 1960
According to one leading Geographer, Globalisation is "the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa". Anthony Giddens, 1960
Examine the extent to which actions or decisions taken in one area have impacted on other areas in relation to ONE named environmental issue you have studied.
Globalisation involves the diffusion of ideas, practices and technologies. Anthony Giddens, a leading sociologist in his field described globalisation as:
“The intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.” Global interdependence does not merely affect business and communications, but has powerful social, economic, political, cultural and environmental dimensions. In this essay I will discuss how global interdependence throws up MASSIVE environmental issues focusing. I will focus on Global Warming which is very much a global issue and will examine how Deforestation and Desertification are contributing to this global environmental issue. I will discuss the global conditions, extent, cause and effect and proposed solutions to this issue.
Deforestation- is leading to Global Warming!!!!!!! *MUST BE MENTIONED HERE
Desertification is leading to Global Warming!!!!!!! *MUST BE MENTIONED HERE
Clearance for roads/minerals/farming/PALM OIL***i.e. Amazonia/Indonesia/China
**Both Deforestation and Global warming are leading to Global Warming!!!!!!!
Global Warming
****Diagram??
Conclusion
It is clear from this essay how global interdependence throws up MASSIVE environmental issues. Although people may not think of desertification and deforestation as a “global issue” this essay proves how both may lead to Global Warming which effects people around the world. Without a truly global attempt to act on this issue, the environmental impacts will be catastrophic for our world and this is an issue we cannot ignore. We must use the compass rose framework of the post-modernisation theory and ensure that advances in human development focus on sustainability. Human development should therefore not only look at economic and social development but also needs to focus on preserving our environment to ensure future generation can thrive also.
“The intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.” Global interdependence does not merely affect business and communications, but has powerful social, economic, political, cultural and environmental dimensions. In this essay I will discuss how global interdependence throws up MASSIVE environmental issues focusing. I will focus on Global Warming which is very much a global issue and will examine how Deforestation and Desertification are contributing to this global environmental issue. I will discuss the global conditions, extent, cause and effect and proposed solutions to this issue.
Deforestation- is leading to Global Warming!!!!!!! *MUST BE MENTIONED HERE
- Definition- Large scale removal/clearance of native forests for commercial reasons
- *Discuss the global conditions/extent/causes/ effects and solutions
- Extent- Deforestation is occurring across millions of sq. kilometers/ separated sufficiently justifying that is a GLOBAL issue
- Causes- Fuel/heat, shelter, charcoal, space- settlement, farming, ACCESS ..minerals, roads, infrastructure, shifting tillage (q. slow), lumbering industry, i.e. Sahel, Indonesia, Brazil, China = GLOBAL!!
- i.e. Equatorial forests i.e BRAZIL, Indonesia RAPID!! By 2007 40% gone!
- Global Markets- Biggest Buyers Are:
- EU of Timber/ Soya 50%, Beef 33%, China Soya 25%, Russia, 20%, USA also huge consumersTimber, Soya, Beef
- MNCS sell seeds, fertilizer machines
- BRAZILIAN Forests cleared for:
- MINING i.e. iron ore, bauxite (makes alluminium), gold, oil (esp during economic crisis)
- TIMBER hardwoods, processed timer (commercial use)1 tree worth €15,000-25,000
- FARMLAND beef cattle 60% in 2008-NO. 1 in world exports, soya (2nd- in world export)
- INFRA-STRUCTURE-HEP ,roads, trans-Amazon highway(access) breaks biome of the forest edge bits die H2O supply cutoff
- SETTLEMENT-from Sao Paolo slums (favelas)
- Indonesian forests cleared for:
- MINING, TIMBER (Japan nearby..lrg consumer of plywood), FARMING *Palm Oil, 40% of Forest now cleared
- Probs!-Smoke,’ Dayak’ native people of Indonesia are displaced, mechanization (faster), violence
- Effects- Boro 6m people lived in ¼ min Amazonia (huge genocide) due to disease, farmland, H2O poisoned (arcinic –gold), flora and fauna destroyed (symbiotic relationship with biome). Also Dayak people in Indonesia. Increased likelihood of desertification..1/2 rain comes from rainforest (transpiration) ‘Lungs of The Earth’
- I species of flora/fauna goes extinct p/day (millions still not even known-cures)
- ¼ of all living species in rainforest
- Carbon Sinks..vital in combatting global warming
- Solutions- 1.Set aside land for native pop (25% of Amazon not enough. Done in Amazon but not enforced-threats to officials/rangers. 2. Forest Parks (OZ model in Queensland) run as economic units, locals given jobs as rangers. 3. Further development of sustainable tourism i.e. Costa Rica, Brazil, skywalks, eco camps, 4. Forest Management, 5. Economic Assistance, more REP schemes-(Rural Environment Protection), debt remission to relieve pressure to sell off forests, 6. Replacement of hard woods by other materials, grow and treat softwoods to give same affect.
Desertification is leading to Global Warming!!!!!!! *MUST BE MENTIONED HERE
- Definition-The rapid and extensive spread of arid conditions to previously productive regions (ag/rainforest)
- *Discuss the global conditions/extent/causes/ effects and solutions
- Extent- Desertification is occurring across millions of sq. kilometers/ separated sufficiently justifying that is a GLOBAL issue i.e. Sahel, India, China, Sahara (5-10km p/yr), Amazonia, Central Australia etc
- Causes- Natural- Climatic Cycles –vary over yrs, recently droughts are lasting longer.
- Also Red Centre-Australia
Clearance for roads/minerals/farming/PALM OIL***i.e. Amazonia/Indonesia/China
- Effects-Sahel-firewood cooking/warmth/charcoal/cash also Cash Crops Rajasthan, India tea/rice/tobacco Shops place increased pressure for cheaper goods..env destroyed/ weaker land used for food to pay debts/ desert takes over.
- Over population/overcropping/over grazing/monoculture/nomadic herders..goats/sheep stripping land/ Water table drops poverty/ no irrigation/ few wells
- Solutions- Soil conservation. State lines often built along contours. Strip farming, gully plugging (use stones to halt spread), Contours (bass soil erosion, planting (shelter/timber) Terracing (halts downslope movement) Better quality stock(Masi) Goats&Sheep better than cattle(use scrub land)
**Both Deforestation and Global warming are leading to Global Warming!!!!!!!
Global Warming
- Earth’s temperature has risen 0.7 degrees celcius in last century. 2000-2010 warmest ever decade recorded. Greatest crisis of our time.
- *Discuss the global conditions/extent/causes/ effects and solutions
- Extent- Desertification, Deforestation, Bush fires, flooding, melting ice-caps, carbon footprint justifying that is a GLOBAL issue
- Causes- Natural- Sun heats Eath by solar/ shortwave radiation in…longwave back
****Diagram??
- Greenhouse gages are trapping heat, earth cant cool itself down. Fossil fuels i.e. coal, economies expand, pop grows, living standards rise (bigger houses/cars)..burn, burn, burn. Who?? USA produce ¼ of global gases but only 1/20 of world pop MASSIVE carbon footprint. China in 2003 building 1 coal-fired station p/wk buying one coal mine per month in Oz. Also thermal power stations, factories, farms (methane from cows), transport, city pollution, domestic etc. Deforestation/ carbon sinks being reduced
- Effects-UN 2007 Climate Report Forecast:
- Eu North-storms/flooding and South desertification/ mass migration Spain, Itlay, Greece, Balkins
- Africa-hotter, famine, war (Sudan)
- Australia-Red Centre will become Dead Centre
- Asia-lowland floods/glacier melting i.e. Bangladesh
- America-droughts, floods, storms
- Melting Ice Caps-soil exposed across North Pole in 10-15yrs definitely in Summer within 10yrs..sea to rise 6metres in Artic/ 70 metres in Antartic (As far inland as Athlone) Also thermal expansion (Warm H2O expands)
- MAJOR PROB!! As majority of global pop live in Coastal Cities, HK, Sydney, New York, Dublin etc
- Solutions- Response/Awareness i.e. Kyoto Protocol 1997. (p.25) (USA objecting, also China and India) EU in 2007 agree new targets. Carbon Emission Credit system (can be traded)..slow progress. Clean Development Mechanisms-rich pay for clean energy in dev countries. Also:
- Energy Conservation (power of one campaign)
- More Efficient Energies
- Public Transport
- Carbon Tax (substitution, quotas, reduction, neutral)
- Clean Energy- wind, water, biomass, thermal
- NUCLEAR??
- Now or Never!! i.e. Tuvalu Island off coast of Oz now ½ under sea
Conclusion
It is clear from this essay how global interdependence throws up MASSIVE environmental issues. Although people may not think of desertification and deforestation as a “global issue” this essay proves how both may lead to Global Warming which effects people around the world. Without a truly global attempt to act on this issue, the environmental impacts will be catastrophic for our world and this is an issue we cannot ignore. We must use the compass rose framework of the post-modernisation theory and ensure that advances in human development focus on sustainability. Human development should therefore not only look at economic and social development but also needs to focus on preserving our environment to ensure future generation can thrive also.
Discuss critically the “First World/ Third World” or “North/South” model of world economic development. (80 marks)
OR
"Models of Development reflect the society and time in which they were developed." Critically discuss this statement. (80marks)
Human development is about creating an environment in which people can develop to their full potential and lead productive, creative lives. It is not just about economic growth, although economic growth, stability and freedom are key elements of development. This essay will discuss the concept of the First World/ Third World and will examine earlier models of development critically assessing the role of theory in human development, outlining its merits and criticisms. It will also discuss the concept of Eurocentrism and how this has influenced the language and imagery of human development over the past 150 years.
First World/ Third World
- The First World was a term first used in the 1950s to describe the economic progression of Western Europe and North America, following World War II.
- It identified countries that had high standards of living, long life expectancy and high levels of literacy such as the UK and USA. It considered these countries to be the most technologically advanced and ranked them as First in the world.
- The model not only looked at contemporary levels of development, but identified different stages of development, which ‘Western’ countries had already passed through and less developed countries such as India and Ethiopia could eventually aspire to.
- The Second World included the then communist countries of USSR, Cuba and China which were under communist rule and followed the economic teachings of Marx and Lenin. These countries had rejected private property ownership and capitalism.
- In many of these countries, the governing party’s realm of influence extended to religious worship and the censorship of mass media. It recognised some level of development, but communism was feared by many “western countries” and so, these countries were ranked secondary to the majority of Western Europe, the USA, Canada and Australia.
- The Third World loosely referred to the former European colonies, particularly those in South East Asia, South America and Africa and included countries such as India, Brazil and Ethiopia.
- As with other models, the First World/ Third World model presented the ideas and values that were important to society at the time.
- The First World/ Third World Model has been widely criticised in recent years for being too simplistic. Like some of the models that have gone before it (and after it), it fails to look at the complexities of the countries it strives to classify.
- If anything it shows us that Human Development cannot be simply categorised. It is too complex an issue, with far too many varying factors, to be simply boxed up and put on a shelf. It also fails to take into account a country’s ability to alter its’ own level of development.
- It was also accused of being another very Eurocentric model and it is primarily for this reason, that we no longer use the terminology today. Indeed, it is now seen as quite un-politically correct to say First World or Third World today.
Eurocentrism
- Eurocentrism or Eurocentric thinking, is a view of the world which places Europe at its centre. It dates back to the ‘Age of Exploration’ where maps of the world began to emerge with Europe firmly placed at the centre.
- As the colonial powers grew in power and continued to “discover” the “New World,” the global map grew in size, extending outwards from Europe. The circumnavigation of Africa, development of shipping routes to the riches of the East and the “discovery of the Americas” by Christopher Columbus, were all subsequently plotted on a global map; but Europe’s stronghold as the centre of the Earth never changed.
- This Eurocentric way of thinking has influenced news, radio/TV programmes, weather maps and travel information. The global time zone system even reflects this, as the British time zone (GMT) acts as the starting point for the world clock.
- The term “western values” is a good example of this way of thinking and in terms of human development; it implies that human rights, democracy and freedom are integral to human development.
- Whilst these values do have their merits, some argue that they discount other cultures and cement the moral superiority of “The West”. As a result, some Europeans judge other cultures such as Asian or Islamic or even the culture of Cuba, as being anti-Western or anti-democratic. Eurocentrism can also be seen in other earlier models of Human Development.
Environmental Determinism
- Was an earlier model of development that was first introduced in the late 18th early 19th century by Geographers such as Carl Ritter. It too became outdated and was not only considered inaccurate, but was also attacked for justifying colonialism.
- The theory of Environmental Determinism related solely to the development of resources and suggested that physical geography, particularly the climate; was a key influence on the temperament of people and so, their ability to become developed.
- It dealt, almost exclusively with Europe and at the time considered that Europe’s level of development was as a result of scientific development and exploration which had led to the discovery and exploitation of its natural resources. It concentrated on economic development and the exploitation of natural resources.
- However, as with other models it became outdated, especially during the 1920s and 30s when many western societies were beginning to develop a more moral conscience, especially in relation to colonialism.
- It was widely criticised and similarities were drawn between Environmental Determinism and Darwinism which identified evolution as “survival of the fittest”. Environmental Determinism seemed to suggest that because Europe had developed methods to exploit its own natural resources; it therefore had to the right to exploit the resources of the colonies they had taken power of, as the natives in those countries were just not developed enough to take them for themselves. An example of this is Belgium’s exploitation of resources in the Congo.
- Its focus on resources also failed to look at the wider social and environmental factors of Human Development and so; it was criticised for being too simplistic at best, and downright racist at its worst.
- Environmental Determinism also failed to provide an explanation for economic development in countries which were not inherently rich in natural resources, yet had (by its own standards) achieved a high level of development such, as Japan and Israel.
Modernisation Theory of Development
- This Socio-Economic theory was proposed by Walt Rostow in 1960s Europe at the same time as the First World/ Third World terminology was beginning to circulate.
- Rostow believed his model was a much more wholesome model which not only looked at the economic development of the Western World, but also identified the need for developed countries to help improve underdeveloped countries.
- He used the idea of an Aeroplane taking off to show the factors needed for economic development. A country’s Gross National Profit (GNP) was a major measure in this model of development.
- There are many similarities between Rostow’s 5 stages of development and the Demographic Transition Model (DTM) which continues to be used today in population studies.
- Put simply, the 5 stages included:
- Zero State of Development- Here bartering is the main form of trade and the economy is dominated by subsistence farming. As a result, people are at risk of drought, crop failure and famine and so, are unlikely to achieve any real development. Examples of this include Britain during the middle ages and countries like Sudan, today.
- Preconditions for Take-Off- Here farmers begin to specialise, making them more productive. Surplus food can be sold and additional money can be saved. Entrepreneurs begin to emerge and small scale industrialisation is more likely. Transport infrastructure improves.
- Take-Off- Here Industrialisation takes place as increased productivity frees up workers for the factories. Growth is concentrated in a few urban areas and investment reaches 10% of GNP.
- Drive to Maturity- The economy is now producing wide range of goods and services and is less reliant on imports. Technology innovation provides greater investment opportunities.
- The Age of Mass Consumption- Society now consumes a wide variety of goods and the services sector is becoming increasingly dominant. There is a high level of purchasing power.
- Although a big improvement on Environmental Determinism, Rostow’s theory was also criticised for being too Eurocentric. The idea of some countries being “behind” and needing to “catch up,” cements Europe as the front-runners in human development.
- Again, it is too focused on resources and only looks at countries that have the right resources at the right time in history. For example, Britain had an abundance of coal during the Industrial Revolution which facilitated its economic boom at that time. One could question how relevant this is today to countries such as Sudan or Ethiopia.
- And finally, it only focuses on economic development and does not address the wider social and environmental aspects of human development.
Conclusion
- So what is the solution to the Human Development question? Well, perhaps there is none. Although there is a Post-Modernisation Theory of Development, will it too become outdated in years to come? Perhaps we cannot create one single model and apply it to a world that is as diverse as ours.
- That said there are certainly elements of this theory that are useful today. Its emphasis on sustainability is most definitely crucial to the survival of the human race.
- But perhaps, more importantly it is the Development Compass Rose which provides us with the most useful framework for the 21st Century.
- North for Nature/ South for Social/Cultural and East for Economy shows us that Human Development should be a careful balancing act between a variety of factors, thus ensuring that the needs of people today are being met, without jeopardising the needs of future generations.
- But perhaps the most important element of this framework is the W for West. This W stands for Who. Who decides? Who benefits? We cannot enforce our view of development on other parts of the world. We cannot tell people who experience the world differently to us, how they should experience it.
- Ultimately, human development is about freedom. Freedom of choice. Freedom of thought. Freedom for freedom's sake.
Q. Discuss the idea that fair trade is the best way to tackle economic inequality.
or
Q. Empowering people is a way of linking economic growth with human development.’ Discuss this statement with reference to aid programmes.
or
Q. Discuss factors that prevent economic development.
or
Q. Discuss the arguments for and against international aid.
or
Q. Examine 2 of the major issues arising from the international aid debate.
There are many factors that influence economic development. In this essay, I will look at some of these factors. It is agreed amongst most experts that EMPOWERMENT is the most important factor in reducing economic inequality. Aid is one way of empowering people.
Paragraph 1: Aid
Paragraph 2: Breaking the Cycle of Poverty
Empowerment can be very effective in breaking the cycle of poverty.
Paragraph 1: Aid
- International aid is the transfer of wealth from rich countries to poor countries. Unlike debt, it doesn’t need to be repaid. Can be long-term/ emergency or tied.
- OECD (Organisation for Economic Co-operation and Development) is made up of 34 countries. Estimated that the top 24 of these countries gave $127 billion in 2010.
- EU is the largest single donor in the world-€53.8 billion in 2010.
- NGOs- independently gave $22 billion in 2010. (depend on donations/ fundraising eg Trocaire fast/ NOT the Government)
- Although vital- there is an AID debate!
- ALL types of aid can EMPOWER people-give them choice on how they live.
- Communities can raise standards of living-decide on goals for themselves eg health/housing/ sanitation. Eg. Solar disinfections water schemes in Kenya
- NGOs have 4 main areas of empowerment: Education/ Relief/ Development/ Justice
- Each NGO focuses on 1 eg Goal-saves lives/ Concern-education/awareness/ Bothar-provides livestock and training-EMPOWERING families to be self sufficient
- NGOs are welcome in areas of conflict as they are not tied to any Government (full access) eg Sudan. They can also criticise governments without being seen as biased.
- They can give “people to people” aid- no risk of corrupt governments stealing it.
- Education/ awareness- eg South Africa-47% deaths due to HIV/AIDs/ 63% of orphans lost parents to the virus. Children experience grief/ leave school/ are stigmatised. NGOs empower families by helping with prevention and treatment and by educating communities.
Paragraph 2: Breaking the Cycle of Poverty
Empowerment can be very effective in breaking the cycle of poverty.
Negatives: (Only include this in Aid essay)
Problems for NGOs: (Only include this in Aid essay)
However, there are many obstacles to empowerment/Development. These include:
For every €1 given to poor countries in aid/ €14 is lost due to unfair trade.
Causes-
Paragraph 4: Debt
Causes
Effects
Solutions-
Millennium Development Goals set by UN- agreed on by number of groups- The MDG had 8 main goals:
Perhaps these are the best way to tackle inequality on all levels.
In conclusion, although aid/ empowerment are important in reducing economic inequality, they cannot truly resolve the issue if unfair trade and debt continues. Although many people in the developed world donate to charities and “Western” governments pay large sums of money in aid each year, economic inequality will continue if LEDs are not given fair and equal access to global trade. Consumer economies such as Ireland, need to realise that we have a responsibility to those who are excluded due to neo-colonialism. We need to use our buying power to demand fair trade becomes part of all MNC practice. Giving a few euro during lent will never truly tackle the wider issues that hinder development in so many countries around the world.
Other methods of Empowerment: (That may come up!)
- However..AID does not always tackle economic inequality in an effective way.
- Tied Aid- gives aid on the condition that the receiver buys materials from the donor country.70% of global aid is bilateral aid. In 2011, 20% of this was tied-even though MEDs promised to stop this practice over 10years earlier. Eg America offered aid to Eritrea on the condition it used American engineers and consultants to build its railways.
- Aid can be ineffective-Cold War donations were given for political reasons NOT development eg USA gave to Zaire as it was anti-communist (now the DR of Congo)
- eg Before UK banned tied aid it was criticised for donating €269million to a Malaysian Dam project on the condition that the bought €1.1billion worth of weapons from UK.
- Wrong kind of Aid- 2004 Asian Tsunami Irish emergency donations included hats and scarves
- Long-term harm- eg Ghana- Akosombo Dam project funding by aid, to stop flooding. BUT destroyed valuable farmland, leaving farmers without an income.
- Cements negative images of poor countries. The “starving baby on the Trocaire box. ”Groups have been set up to combat this image in Ireland. eg “Africa Also Smiles”
- 2009 book “Dead Aid” by Dambisa Moyo looked at aid 2009-2014 in Africa. He argues that development aid has created further dependency, discouraged enterprise and allowed corruption to develop in Africa.
Problems for NGOs: (Only include this in Aid essay)
- NGOs face danger. Eg In 2012-167 NGO workers attacked. Mainly in Afghanistan and Sudan
- Neutrality questioned as accompanied by armed conveys
- Terrorism
- Dependent on donations. Donor fatigue is a problem. This can be caused by:
- Frustration with mismanaged charities eg. Central Redemial Clinic scandal. Irish people felt let down. 40% reduction in charity donations.
- Global Recession 2008-2013- people lost jobs eg Trocaire reported 10% decrease in donations
- Competition amongst NGOs- expensive advertising campaigns Trocaire/ Concern/Goal
- Seemingly constant disasters/ wars etc eg Syria refugee crisis/ “another dead body on a Mediterranean island”
- How much really gets there? eg €21million Afghanistan roof timber project for bombed villages- 60% went to foreign agencies admin/ transport costs
However, there are many obstacles to empowerment/Development. These include:
- Exploitation and Unfair Trade
- Debt
For every €1 given to poor countries in aid/ €14 is lost due to unfair trade.
Causes-
- Global trading patterns today, date back to the colonial Period. It was during this time that “consumer/producer economies” developed.
- The economic exploitation of colonies resulted in the forced removal of raw materials which were sent to Europe for manufacturing. This trend continues today. Eg. Ghana-cocoa beans-UK (Cadbury)
- Cash crops (cocoa-beans, tea, coffee) were grown. These crops continue to prevent economic development. This dependency on monoculture can be extremely dangerous for countries such as Sri Lanka (tea) if the crop fails or prices drop.
- Such a dependency on exports of raw materials can have a huge impact in producer economies, as was the case in Zambia in 1975 when the price of copper fell drastically. 85% of the government’s revenue came from Copper exports.
- Today, the Global Triad (USA/EU/Japan) continue to control the global economy.
- “Neo-colonialism” means that producer economies (LEDS) such as Ghana are prevented from manufacturing their produce and are forced to export their raw materials. Wealthy countries do this by placing tariffs on manufactured goods from developing countries. *Look at the jar of coffee ratios in the image below!!
- This allows MNCs like Kraft, Nestle to reap all the benefits and keeps LEDs under the thumb! Foreign Direct investment (FDI) by MNCs is very limited in less developed countries.
- Fluctuating prices is also a big problem for LED/ producer economies. Coffee is a good example of a crop that is now grown all over the world, from Kenya to Brazil. However, there is only a certain demand which means MNCs can play countries against each other so they drop their prices.
- Eg. Coffee bean prices have dropped from $2.40-50c recently. This is the lowest price in 30yrs. –so much does the poor labourer get??
- If trade was organised in a fairer way, the need for development aid would be reduced.
- Fair Trade systems ensure- a fair price is paid for the goods
- Guarantees a liveable income for the producers
- Protects these workers under law/ provides security
- Contributes to community projects
- €2.8billion sales in 2009- 58 developing countries/ 6 million poor people benefited
- BUT- not a solution on its own- only 1% of global coffee carries ”Fairtrade” label
- Consumers need to demand more!!
Paragraph 4: Debt
Causes
- Debt is another obstacle to development. (Link with Unfair Trade/ Aid) It shows how economic decisions made by the North/ MEDs in past continues to hinder the South/ LEDs chance of development.
- Debt is a result of loans given to the “south” in the past (1960s/70s-Europe and USA feel guilty) which they have struggled to payback ever since. These repayments mean there is little left for investment in education, healthcare, infrastructure.
- Global Oil Crisis in 1970s led to rising interest rates and many LED’s defaulted on their loans.
- Struggling farmers also take out loans
Effects
- €397billion loaned/ €405billion paid back BUT! Still owe €385 because of interest rates
- Most of what was borrowed was squandered. Corruption/ dictatorships/ spent on weapons etc. Eg. Apartheid regime, South Africa
- In 2002-Zambia’s repayments were 4 x times greater than healthcare spending
- Cycle of Poverty
Solutions-
- Jubilee Debt Campaign- calls to end unfair debt eg. Tanzania-debt forgiveness leads to increase of 66% in primary education/ Uganda-debt forgiveness allows 2.2 million people to access water
- But Heavily Indebted Poor Country system (HIPC) encourages poor countries to sell off assets in exchange for debt forgiveness- this effects their ability to be self-sufficient in the future.
Millennium Development Goals set by UN- agreed on by number of groups- The MDG had 8 main goals:
- Eradicate extreme poverty and hunger
- Universal primary education
- Promote gender equality and empower women
- Reduce child mortality rates
- Improve maternal health
- Combat HIV/AIDs and malaria
- Environmental sustainability
- Develop global partnership for dev
Perhaps these are the best way to tackle inequality on all levels.
In conclusion, although aid/ empowerment are important in reducing economic inequality, they cannot truly resolve the issue if unfair trade and debt continues. Although many people in the developed world donate to charities and “Western” governments pay large sums of money in aid each year, economic inequality will continue if LEDs are not given fair and equal access to global trade. Consumer economies such as Ireland, need to realise that we have a responsibility to those who are excluded due to neo-colonialism. We need to use our buying power to demand fair trade becomes part of all MNC practice. Giving a few euro during lent will never truly tackle the wider issues that hinder development in so many countries around the world.
Other methods of Empowerment: (That may come up!)
- Land Ownership
- (If a farmer owns his land, he can feed his family and pay for education and health from crop sales.) YOU CAN WRITE POVERTY CYCLE HERE
- In Brazil, land ownership systems affect development- eg 2% of landlords own 60% of land
- Tenant farmers lack security/ no incentive to try new farming methods
- 25k bonded labourers in Brazil- taken to remote parts of Brazil and have to pay back cost.
Discuss how the operations of MNCs may contribute to the widening economic gap between developing and developed countries. (80 marks)
or
Examine the impact of global trading patterns in relation to both consumer and producer regions, with reference to a MNC that you have studied.
Today, communications, information, products, money and services flow around the world faster than ever. This essay will discuss how the operation of Multi-National Companies (MNCs) may contribute to the widening gap between developing countries such as Ghana, newly industrialised countries/ rapidly developing countries such as India, Mexico, China and Brazil and developed countries such as Ireland. Developed countries can also be referred to as consumer economies as they consume the majority of manufactured goods. Whilst developing countries are usually referred to as producer economies. This essay will look at the economic power held by MNCs and the unfair trade patterns that develop globally as a result of this power. It will examine the tendency amongst MNCs to exploit natural resources and labourers in less economically developed countries (LEDs) and will discuss how a vicious cycle of poverty and dependency will continue in these countries if MNCs are not made accountable for their actions.
Economic Power
Unfair Trade Patterns
Exploitation of Labour
Exploitation of Natural Resources
In conclusion, it is clear that many Multi-National Companies are abusing their position of power with little or no regard for the people in the branch plant countries, from which they operate. Blatant exploitation of the environment by MNCs also continues to be a key concern, as destruction of vital ecosystems such as the Amazonian Rainforest, has such a significant impact on the environment, that it has global ramifications. It is clear that the experience of periperal, producer economies is very different to that of the consumer economies. If people living in developed countries continue to turn a blind eye and don’t use their purchasing power to speak out for those who can’t, finally making MNCs answerable for their actions, then many developing economies will remain trapped in a vicious cycle of poverty and dependency on MNCs will continue.
Economic Power
- A Multinational company (MNC) is an enterprise that operates in more than one country. MNCs are the main drivers of global trade, production and employment and have a huge influence on the economy of countries such as Ireland and India.
- Some large MNCs have more capital and higher sales figures than individual developing countries’ GNP. Example: 51 of the top 100 largest economies in the world are MNCs (only 49 are actual countries)
- The most important US MNCs are Walmart, Ford Motors, Coca-Cola and Microsoft.
- MNCs have a three-tier organisational structure (global, regional and branch plant). The location of different tiers based on product cycle requirements allows them to take advantage of both core (Ireland) and peripheral (Mexico) regions.
- MNCs locate branch plant production line manufacturing activities in peripheral or developing economies because labour is cheaper, environmental standards are lower and they may offer financial incentives by destination governments.
- However, the economic power of MNCs means that the MNC reaps the rewards of expansion of the secondary sector rather than the destination economy. Destination economies may find that the key attraction for the MNC is access to cheap labour and raw materials and that key economic decisions are taken by the MNC rather than the national governments.
- The branch plants of MNCs are not tied to any particular location and they can relocate when economic circumstances change. Many developing economies are over-dependent on MNCs and this represents a significant economic and political risk.
Unfair Trade Patterns
- MNCs allow for the movement of large amounts of capital on a global scale in the form of foreign direct investment (FDI) and their organisational structure allows the development of a global system of production and marketing.
- However trade policies agreed between nations generally favour the developed world and this economic situation is referred to as neo-colonialism.
- The initial manufacture of products is undertaken in the developing world and once this is successfully completed the goods are transported to the core markets where final manufacturing and packaging is carried out. The goods are then sold on the global market.Under global free trade, the advantages reside with the developed world which provides final manufactured output (Kenco coffee, Cadbury chocolate), while the developing world remains the main producer of primary products (coffee beans in Brazil, cocoa beans in Ghana).
- FDI is very important to many countries, but this FDI has very different impacts in consumer and producer economies despite products being manufactured in both. Ireland is a wealthy consumer economy. 13 of top 15 pharmaceutical companies in the world have substantial operations here where employees reap many of the benefits of living in a consumer economy.
- Many MNCs use the developing world as a source of cheap raw materials, energy and labour. Producer economies such as India, China, Brazil and Ghana have a very different experience of MNCs than Ireland.
- MNCs use of labour and raw materials means that developing economies are unable to use them for their own benefit. Manufactured goods are often sold back to the branch plant economy at a much higher cost than the cost of production. So it is a double hit! They loose out on the big money made from producing the finished product and they also have to buy back the finished product, paying a high cost. **Example: Coffee Bean Profits
- Thus the power of the MNCs to control manufacturing output in developing economies and to control global trade patterns may result in the continued underdevelopment of poorer countries. Unfair trading patterns ensure that economic power resides with the developed world; the developing economies resources are used for the ultimate benefit of core economies.
Exploitation of Labour
- A key reason for the location of MNCs’ activities in the developing/ producer countries is the access to cheap and relaxed worker protection laws. By using a branch plant system, MNCs can locate the basic manufacturing tasks in areas where there is a plentiful supply of cheap labour.
- Example: US company Johnson & Johnson (Band Aid/ Baby Powder etc) has 200 companies worldwide and operates in 54 countries. It has 4 manufacturing sites just South of the USA border in Mexico city. Workers are paid Mexican minimum wage (€13.25 per day) but it is difficult to survive on, as Mexican border towns are 30% more expensive than South Mexico. Most do not know about trade unions or worker’s rights
- Johnson & Johnson also have companies in developed core countries such as Ireland. In contrast, the Limerick and Cork plants employ highly skilled, educated workers. They manufacture pharmaceuticals and medicines using biotechnology. 2 global sales offices are also based in Dublin. In Ireland, Johnson & Johnson workers benefit from high wages, attractive pensions and excellent healthcare programmes.
- The 2000 people employed by Johnson & Johnson in Ireland also has important spin off effects for the local economy as wages paid by the company circulate back into the local shops and businesses.
- The global production of footwear and textiles is concentrated to a very large degree in peripheral, developing economies including Thailand, India and China. Branch plant production is based on the economic principle of mass production, which involves repetitive tasks requiring limited skills.
- Under these conditions, the only benefit to the host economy is the creation of employment opportunities, but in many cases the wages are very low and working conditions difficult. Some MNCs, including Apple and Nike have been accused of exploiting labour in peripheral economies and of providing wages and working conditions that are well below acceptable standards.
- Gender exploitation of labour is also an issue in many developing economies, where women enter the labour force in greater numbers. However, competition for jobs is high and MNCs can exploit this situation by reducing wages. EXAMPLE: 60% of assembly plant workforce in Mexico are women. It is legal to work aged 16 but many get fake documents so they can begin working as young as 12.
- Example: Example: Toy giant Mattel (Barbie) make 65% of their toys in China. Largest toy factory in the world is in Guangdong Province, China. The staff is mostly young and female, migrant workers who typically leave home for three or four year stints in factories after high school. Many of them say they work 10 hours a day, six days a week, for about $175 a month, typical for this region.
- The exploitation of labour places workers in a vicious cycle of dependence on the MNCs and does nothing to encourage the economic development of LEDs. The difference in conditions for MNC workers in Mexico and Ireland, highlights the widening gap between developed and developing countries.
Exploitation of Natural Resources
- The natural resources of many developing countries are exploited by MNCs: This is very different to the experience of consumer economies which tend have very strict laws on pollution and sustainability policies.
- The deforestation of the tropical rainforests in the Amazon region has been driven by profit-hungry domestic and MNCs keen to exploit the region’s hardwood timber and mining resources.
- MNCs have been encouraged by successive Brazilian governments for the sake of short-term economic gain; but the long-term consequences are to exacerbate underdevelopment and to over-exploit natural resources. Example: The Brazilian government used their portion of the profits of timber sales to pay off international debt. Although a new, more forward-thinking government banned all exports in 2001, illegal timber is still estimated to account for 80% of all timber produced in the Brazilian Amazon; with one mature, mahogany tree estimated to be worth €15,000-€25,000.
- MNC and national governments reap the profits, but local populations rarely benefit. MNCs are also involved in large scale cattle ranching in newly cleared areas and many of these ranches are run in an unsustainable manner, resulting in soil degradation and erosion, which in turn damages the country’s economic potential. Example: 60% of Deforestation in the Amazon is to make space for cattle ranches/ soya plantations.
- In many developing, producer countries, large-scale production of cash crops such as rubber, sugar and coffee is controlled by MNCs, while domestic agricultural activities are confined to more unproductive crops. Example: 60% of African workers are employed in the agricultural sector, although many survive off subsistence farming on narrow patches of land on the outskirts of the large MNC plantations. The recent surge in the growth of Jatropha curcas, a non-food cash crop grown for biofuel production in Africa has led to worldwide criticism, as food shortages are common in many countries in the Sahel region of Africa.
- The global demand for cash crops encourages intensive large-scale agricultural activities which may result in the removal of local populations and the overuse of fragile soils which may eventually lead to soil exhaustion and erosion. Example: Deforestation and soil erosion is leading to extreme environmental changes in Northern Africa as desertification of the land surrounding the Sahara is occurring at a rate of 15km per year. This has many global implications as there is a direct correlation between deforestation, desertification and global warming.
In conclusion, it is clear that many Multi-National Companies are abusing their position of power with little or no regard for the people in the branch plant countries, from which they operate. Blatant exploitation of the environment by MNCs also continues to be a key concern, as destruction of vital ecosystems such as the Amazonian Rainforest, has such a significant impact on the environment, that it has global ramifications. It is clear that the experience of periperal, producer economies is very different to that of the consumer economies. If people living in developed countries continue to turn a blind eye and don’t use their purchasing power to speak out for those who can’t, finally making MNCs answerable for their actions, then many developing economies will remain trapped in a vicious cycle of poverty and dependency on MNCs will continue.
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