Essay Plan: Impact of Globalisation - A Level and IB Economics

Summary

This video provides a detailed walk-through of a 25-mark economics essay plan on the impact of globalization, especially focusing on its benefits for developed versus developing nations. The discussion highlights how transnational corporations (TNCs) and global trade structures often favor high-income countries while addressing counterarguments that some emerging economies, like Vietnam, have significantly benefited. Key themes include tax avoidance by TNCs, poverty reduction through export-led growth, and the uneven distribution of globalization's gains, with references to current global challenges like COVID-19 and vaccine inequity.

Takeaways

• 🌍 Globalization is a key topic in Year 13 economics, offering students opportunities to explore the economic impacts on different countries.
• 📚 Contextual knowledge of specific countries can help students analyze the effects of globalization more effectively.
• 💡 Globalization has led to deeper integration between countries through trade, capital flows, technology, and the movement of people.
• 🏢 Transnational corporations (TNCs) like Nike, Apple, and Google have benefitted from globalization, often at the expense of developing nations through tax avoidance strategies.
• 📉 Tax avoidance by TNCs limits the ability of developing nations to fund public services like healthcare and education, exacerbating poverty.
• 📈 On the other hand, globalization has helped lower import tariffs and improved access to international markets, boosting export-led growth in countries like Vietnam, India, and South Korea.
• 🌱 Some developing countries, particularly in East Asia, have seen significant reductions in poverty due to globalization, but many nations in Sub-Saharan Africa still struggle.
• 🏭 Success in globalization often depends on economic diversification, infrastructure development, and government support, which many low-income countries lack.
• 💉 The COVID-19 pandemic halted progress in poverty reduction, with low-income countries facing significant challenges due to vaccine inequity and economic shocks.
• 📊 Globalization's benefits are uneven, and it may lead to regionalization or protectionism as countries respond to unequal gains and growing inequalities.

Q & A

What is globalization, according to the video?

Globalization involves deeper integration between countries through networks of trade in goods and services, capital flows, transfer of ideas and technologies, and the movement of people.

How have transnational corporations (TNCs) contributed to the impact of globalization on high-income countries?

Transnational corporations (TNCs), such as Nike, Apple, Google, and Samsung, have become dominant players in globalization. Their global presence and strategies, such as tax avoidance through transfer pricing and profit shifting, have allowed them to benefit significantly, often at the expense of developing countries.

What are some criticisms of TNCs mentioned in the video?

TNCs have been criticized for their tax avoidance strategies, including transfer pricing and shifting profits to countries with lower taxes. This behavior reduces the tax revenues of developing nations, limiting their ability to fund essential public services like education and healthcare.

What are some arguments in favor of globalization benefiting developing countries?

Globalization has led to a reduction in average import tariffs, improving access for lower-income countries to high-income markets. Countries like South Korea, India, and Vietnam have utilized export-led growth to reduce extreme poverty and have developed competitive advantages in global markets.

What is one of the main challenges that low-income countries face in benefiting from globalization?

Low-income countries often have economies that rely heavily on the export of primary commodities and tourism, making them vulnerable to changes in world prices and economic shocks. Additionally, they often lack the necessary infrastructure and have lower tax revenues, which makes it difficult for them to invest in development and benefit from globalization.

How has the COVID-19 pandemic impacted poverty levels according to the video?

The COVID-19 pandemic has halted progress in reducing extreme poverty, pushing over 100 million people back into extreme poverty, particularly in developing countries that lack the resources to absorb economic shocks.

How does the example of Vietnam illustrate the benefits of globalization for some countries?

Vietnam has successfully transitioned to a market economy and attracted significant foreign investment from companies like LG and Samsung. Its low labor costs, better infrastructure, and strong human capital have enabled it to move from a low-income to a lower-middle-income country, demonstrating how globalization can lead to economic growth and development.

What is the significance of the African Continental Free Trade Area (ACFTA) in the context of globalization?

The African Continental Free Trade Area (ACFTA) aims to increase intra-regional trade, lift investment, and enable African businesses to achieve economies of scale, helping them compete better against Western transnational corporations and reduce dependency on developed countries.

What is the video’s evaluation of globalization's impact on inequality?

The video argues that the benefits of globalization are not equitably distributed, with high-income countries often benefiting more than developing nations. This inequality risks leading to increased protectionism and economic nationalism, which could threaten the progress of globalization.

What factors determine a country's ability to succeed in the globalizing world according to the video?

Countries that succeed in the globalizing world typically have diversified economies, a flexible workforce, and governments with the fiscal resources to handle external shocks. In contrast, poorer countries often rely on a limited range of exports, have inadequate infrastructure, and lack the fiscal capacity to deal with economic disruptions.