Sustaining Economic Development in a Globalizing World

Drivers of globalization

Drivers of Globalisation

Developments in transportation and communications

Transporting products, people, materials and information from one place to another

Drivers of Globalisation

Transportation
Made the world smaller Use of steam engines, jet aircraft, vessels, containerisation Airports, seaports, railways and highways Efficient network and movement

Drivers of Globalisation

Communications
Use of telephone, emails, fax, video conferencing, satelite technology, optical fibre, internet Fast transfer of information Quick access to information about new products and places Better coordination and control to worldwide activities

Drivers of Globalisation

Transnational Corporations (TNCs)

Microsoft Corporation, Toyota Motor Source for bigger market, lower costs Source for components around the world

Sustaining Economic Development in a Globalizing World

Impact of Globalisation

Impacts of Globalisation

Economic Impact
Improve standard of living Increased competition among nations

Impacts of Globalisation

Social Impact
Increased awareness of foreign culture Loss of local culture

Impacts of Globalisation

Environmental Impact
Environmental degradation
Deforestation Global warming

Impacts of Globalisation

Economic Impact
Improve standard of living

Increased income levels

Yr 2000, $4940 Yr 2004, $5170 Yr 2005, $5400

Increased revenue from foreign investment = improved education, health, defense, housing and transportation Varieties of foreign goods = quality life

Impacts of Globalisation

Economic Impact
Increased competition among nations

TNCs looking for more attractive* ctries for investment

Impacts of Globalisation

Economic Impact
Increased competition among nations

TNCs looking for more attractive* ctries for investment Eg. Dalian, in China (see pg 52) Eg. Danish Maersk Sealand shifting transhipment hub from Singapore to Malaysias Tanjung Pelepas, Johor Eg. Bangkoks airport beating HK and Spore

*attractive = well developed infrastructure, sound financial institutions, political stability, accessible transportation routes, low tax rate, encourages R&D, support use of IT and high tech industries

Impacts of Globalisation

Economic Impact
Talent
Find employment in other ctries 2.5% of worlds population live outside their birth ctry Brain drain problem

Impacts of Globalisation

Economic Impact
Widening income gap btw rich and poor
Developed ctries experience rapid growth by drawing TNCs and talents from poor areas Developing ctries faced trade restrictions, have lowly skilled workers, labour intensive industries, poorly paid by TNCs

Impacts of Globalisation

Social Impact
Increased awareness of foreign culture

through travelling, surfing the internet, watching foreign films

Impacts of Globalisation

Social Impact
Loss of local culture
Global brands create homogeneous culture Pop culture penetrates to many people

Impacts of Globalisation

Environmental Impact
TNCs set up factories, pollute the air, caused environmental degradation

Impacts of Globalisation

Environmental Impact
Environmental degradation

Deforestation
Forest cut down to make way for development Eg. Brazils success as a beef exporter Eg. Indonesias forests cleared for cash crops and development projects Eg. Chinas Three gorges project Soil erosion, extinction of flora and fauna, flooding, water pollution, haze

Impacts of Globalisation

Environmental Impact
Environmental degradation

Global warming
Production of greenhouse gases into the atmosphere Increased global temperature

Impacts of Globalisation

Environmental Impact
Increase in an awareness of Environmental management
Want to ensure sustainable development through the preservation of resources Eg. Conserving energy, use of alternative energy sources (wind, solar and geothermal power)

Three Gorges Project building a dam to generate power for industrialisation

Impacts of Globalisation

Environmental Impact
Increase in an awareness of Environmental management
Want to ensure sustainable development through the preservation of resources Eg. Conserving energy, use of alternative energy sources (wind, solar and geothermal power)

Three Gorges Project building a dam to generate power for industrialization

Sustaining Economic Development in a Globalizing World

Case Study: Singapore

Case Study: Singapore

Challenges in Singapore
Transnational terrorism Ageing population Rise of China and India as competitors Outbreak of diseases Economic slowdown in other countries Maturing domestic economy

Case Study: Singapore

Strategies to overcome challenges

Diversifying the Economy to reduce dependency on a single industry/ market Nurturing growth of SMEs to provide jobs and support operations of TNCs

Case Study: Singapore

Strategies to overcome challenges

Diversifying the economy

Venture into Life Sciences

A*STAR to manage R & D aspects Set up bio-medical research institution, IMCB (Institute of Molecular and Cell Biology) Eg. Diagnostic testkit for SARS antibodies

Case Study: Singapore

Strategies to overcome challenges

Diversifying the economy

Attracting TNCs
Generate jobs Affirms Singapores position Eg. Seagates manufacturing activities in Singapore

Case Study: Singapore

Strategies to overcome challenges

Diversifying the Economy

Attracting TNCs
Generate jobs Affirms Singapores position Eg. Seagates manufacturing activities in Singapore

Case Study: Singapore

Strategies to overcome challenges

Diversifying the Economy

Focus on service industry education

Regional hub for education through the set up of branches of international universities to attract talents Eg. University of Pennsylvania's Wharton School of Business, University of Chicago Graduate School of Business, Shanghai Jiao Tong University, Stanford University

Case Study: Singapore

Strategies to overcome challenges

Diversifying the Economy

Focus on service industry tourism

Need for Singapore to be innovative in offering man-made tourist attractions Compete with other countries with natural attractions and man-made attractions Eg. IRs (Integrated Resorts in Marina Bay and Sentosa) to generate revenue and create jobs

Case Study: Singapore

Strategies to overcome challenges

Nurturing growth of Small and Medium Enterprises (SMEs)

What are SMEs role?

Providers of jobs Support operations of the TNCs Enhance Singapores attractiveness Eg. Polar Caf a successful SME

Case Study: Singapore

Strategies to overcome challenges

Nurturing growth of Small and Medium Enterprises (SMEs)

Shortcomings of the SMEs

Lack of resources Lack of expertise in using advanced technology Lack of skilled professionals to manage company more family-run Lack of capital to venture to overseas market

Case Study: Singapore

Strategies to overcome challenges

Nurturing growth of Small and Medium Enterprises (SMEs)

Governments role in supporting SMEs

Loan schemes from banks ASME (Association of Small and Medium Enterprises) to provide assistance Tax exemption up to three years

Case Study: Singapore

Strategies to overcome challenges

Venturing abroad - regionalization
Investing in countries with abundant land, lower labour costs and new market Provide expertise and capital to develop industrial parks in return for land and labour for Singapore companies

Case Study: Singapore

Strategies to overcome challenges

Venturing abroad regionalization
Ensures Singapores economic growth is maintained Investment opportunities are spread

Investing in countries with abundant land, lower labour costs and new market Provide expertise and capital to develop industrial parks in return for land and labour for Singapore companies

Case Study: Singapore

Strategies to overcome challenges

Venturing abroad - regionalization

Examples
Suzhou Industrial Park = collaboration between China and Singapore Singapore Tech Park = collaboration between India and Singapore SingTel has investments over 20 countries Singapore government invests in new markets such as Middle East, Latin America and Central and Eastern Europe

Case Study: Singapore

Strategies to overcome challenges

Venturing abroad - regionalization

Shortcomings
Less attached to Singapore Brain drain

Case Study: Singapore

Strategies to overcome challenges

Expanding market through economic cooperation

Problem
Small domestic market

Case Study: Singapore

Strategies to overcome challenges

Expanding market through economic cooperation

Solution
Sell products to bigger market

Case Study: Singapore

Strategies to overcome challenges

Expanding market through economic cooperation

How to do it?
FTAs (Free Trade Agreements) ASEAN, NZ, Australia, USA, India, Jordon and South Korea SEZ (Special Economic Zones) Less stringent economic laws Tax and business incentives Revitalise the islands of Batam, Bintan and Karimun

Case Study: Singapore

Strategies to overcome challenges

Managing resources efficiently

Develop people by
Promoting local entrepreneurship and technopreneurship Willing to take risks Coming up with new products Amending bankruptcy laws Giving recognition to outstanding local entrepreneurs Eg. Kenny Yap of Qian Hu Fish Farm

Case Study: Singapore

Strategies to overcome challenges

Managing resources efficiently

Promoting continuous learning among workforce

WDA (Workforce Development Agency) to ensure workforce remains competitive Skills upgrading ESS (Employability Skills Systems) to help workers adapt to new jobs SDF (Skills Development Fund) provides financial assistance for skills upgrading

Case Study: Singapore

Strategies to overcome challenges

Managing resources efficiently

Attracting Foreign Talent

To meet manpower needs Bring in overseas contacts More business opportunities, create more jobs Diversify cultural landscape of Spore Eg. Engineers, Doctors, Craftsmen, artists, chefs etc.

Case Study: Singapore

Strategies to overcome challenges

Managing the Environment - land

To sustain growth and enjoy good quality of life

Eg. Marina Bay will be integrated as a financial hub with quality housing, recreational and leisure facilities Eg. Jurong Island is a chemical hub Eg. Sungei Buloh Wetland Reserve, Chek Jawa are preserved nature sites Eg. Pulau Semakau used for waste disposal

Case Study: Singapore

Strategies to overcome challenges

Managing the Environment Cooperation with organizations

To sustain growth and enjoy good quality of life

Eg. Cooperation with ASEAN to fight haze Eg. Signed international agreement that restricts the use of harmful ozone depleting substances (eg. CFCs)

Case Study: Singapore

Strategies to overcome challenges

Managing the Environment Public Education

To sustain growth and enjoy good quality of life

Recycling in schools Clean and Green Week Exhibitions, seminar, workshops Beach cleaning Planting of trees Bring Your Own Bag day at supermarkets