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Today in class we were discussing the forces of globalisation, and some of the discussion took us down the following route:
Globalisation is defined in many different ways – there is no textbook definition - but economic globalisation is usually characterised by some of the following features:
- An increasing interdependence between economies and an erosion of national boundaries
- Increased cross-border activity from MNCs
- Increased cross-border flow of trade in goods and services, movement of people, flows of financial assets, hot money, and FDI flows
- The growth of labour migration and outsourcing and global supply chains
The OECD’s definition is: “The geographic dispersion of industrial and service activities, for example research and development, sourcing of inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets”
One index that attempts to quantify and measure globalisation is called the KOF index.
-The KOF Index of Globalization measures the three main dimensions of globalization:
Economic, Social and Political.
We are exceptionally grateful to Bob Hindle for making available the notes and presentation from a superb talk given by Roopa Purushothaman from Everstone Capital at the Oberoi International School, 3rd September 2013. This is a fantastic resource for students and teachers who are focusing on India as part of their work on growth, development and macro polices to manage the economy. Check below for full details.read more...»
Since the appalling fire a few months back at the Rana Plaza complex that cost the lives of more than 1100 people, there has been intense interest and scrutiny of working and living conditions of thousands employed in Bangladeshi clothing factories.
On Monday night the BBC programme Panorama broadcast an investigation into this and the findings were compelling and deeply disturbing.
In "Dying for a Bargain" Panorama discovered there have been at least 50 fires in Bangladeshi clothing factories in the last 10 months. Clothing factory workers filmed by
#BBCPanorama were released at 2:30 am, 19 hours after they started. They were due back at 7am. You can see a clip of this here. Events uncovered at the Ha Meem Sportswear factory will no doubt have left executives at Lidl scrambling to find out the truth about what is happening at one of their major clothing suppliers.
As soon as students encounter the idea of GDP they are guided towards thinking about the possible drawbacks to growth, especially for the environment.read more...»
The race seems to be on (Penny got ahead of me on this) to find ways to gauge the level of economic activity. The most obvious start point is to use a tool like the BBC's Economy tracker which includes the clear favourite of GDP, inflation and unemployment. But as the graph I've used to illustrate this blog shows, there are plenty more beside.read more...»
In the whole of the 20th century, only a few countries managed to transform themselves and join the club of rich economies. Japan is the most prominent example. The key question for the first half of the 21st century is whether or not China will manage to do the same. It is a difficult and elusive feat, and the number of failures, of countries who nearly made it but then fell back, is as great as the successes.read more...»
The Ethiopian government is ploughing up to 15% of her GDP into large-scale infrastructure development projects - will this kick start a renewed period of fast growth and development? The Grand Ethiopian Renaissance Dam will be the largest hydroelectric power plant in Africa when completed, delivering 6,000MW. The cost and the potential impact of diverting the Blue Nile have created controversy in the region. This FT video looks at some of the issues. This BBC news resource is also useful: The dam that divides Ethiopiansread more...»
Economist Anthony Beaumont considers how the deeper economic integration within the ASEAN single market can act as a stimulant to economic growth and development for member nationsread more...»
Few places come close to matching the revenues from gambling generated by casino-led Macau as this Economist graphic illustrates! Macau is a special administrative region of China on the other side of the Pearl River Delta from Hong Kong. Jobs in casinos are easy to come by and unemployment is said to be little more than 2% of the labour force. But what are the economic risks and social costs of having a local economy chronically dependent on gambling for the bulk of jobs and incomes?read more...»
ASEAN is a trade bloc of 10 nations with an aggregate economic size of $2.3 trillion. Their aim is to establish a fully-fledged economic community (AEC) by the end of 2015. The trading bloc’s diversity – ranging from advanced economies like Singapore to developing countries like Myanmar is an interesting feature – who will be the winners and losers from deeper economic integration in the region?read more...»
Our friends over at Marginal Revolution are starting a new short course in international trade.
- Why do countries trade? And how do they decide what to trade?
- What are the effects of trade on wages, prices, welfare, and economic development?
- What is protectionism, and how should we analyze tariffs and quotas in in a supply-and-demand framework?
As an introduction to trade theory I am looking at data on the pattern of exports for different countries drawing on 2010 data from the Observatory of Economic Complexity at MIT. The task for students is to match the country with their pattern of exports (% by value) for the year 2010. There are ten countries - who can get all ten right? Download the resource below - in pdf format and also the charts in a powerpoint formatread more...»
This blog brings together study resources on growth and development issues for the emerging Vietnamese economy. After many years of rapid growth, the socialist-oriented transition economy is entering a slowdown phase with growth of less than 5% in part because the boom in cheap low-value added manufacturing built on low wages is hard to sustain. Other economists point to endemic inefficiency among state-owned enterprises as a key factor holding back potential growth in a country once described as "little China".
One bright spot is that Vietnam has surpassed Brazil to become the largest coffee exporter in the world.read more...»
Here is a lesson activity that you could use when teaching economic development. In this version of Trapdoor, students are presented with 16 countries. Their challenge is to identify those countries that have a mean life expectancy of 80 years and over. Get the answer wrong and the student falls through the Trapdoor...
Download Economics Trapdoor - Life Expectancy [8MB download]
An intriguing take here on relative real wages in a range of developed and developing economies - using that staple resource to help teach PPP: the price of Big Macs!read more...»
For years, a mystery has baffled visitors to developing countries: Coca-Cola is everywhere, but basic medicines are not. This year, Zambia has become the first African country to embrace a trial of the ColaLife concept. ColaLife aims to use Coca-Cola’s distribution model to deliver life-saving medicines to far-flung, rural communitiesread more...»
What is it like to live in extreme poverty? Could you budget only one dollar a day to survive? Four friends from the United States spent their summer living in Guatemala on one dollar a day to try and understand the reality of poverty first hand. This is the official trailer of a new documentary being screened for the first time in August 2013 and comes from the Center for Global Developmentread more...»
“Give a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime”. This Chinese proverb has great sense and should be applied to foreign aid. Simply giving developing countries money does not benefit them in the long term, as this aid is finite. Inward investment gives them the skills to develop their own economies, whilst benefiting the aid-givers in the process. Bono is well known for his philanthropic work and he recently said: "In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure." So this really is a "rockstar" concept.read more...»
A new World Bank report says rising temperatures in the next few decades will cause food shortages and increased poverty in Africa. This short video provides some background on some of the key sustainability challenges facing the continent.read more...»
Here are some summary notes from a discussion between Danny Quah and Ha Joon Chang at a recent LSE panel discussion on the question "Is there a future for market-led development?"read more...»
We are now into the 3rd year of falling coffee prices in the world economy and the combination of weaker revenues and rising costs are causing big problems for some of the coffee suppliers in the poorest countries. This Financial Times news video provides some background on the industry. The price has fallen 60 per cent from its peak and the market seems saturated.read more...»
BBC news is producing a series of reports on the economic and social consequences of fast growth in the Philippines. We will link to these reports in this blog as it will be a useful resource for students wanting a case study on the economics of growth and developmentread more...»
This short video from the OECD looks at the importance of knowledge capital as a key driver of innovation and growth for businesses and economies across the world. Innovation -- building on human knowledge - is booming, changing the way business invests and grows. As coal drove the last industrial revolution, software, databases, research and development, designs, new business models and the skills people bring to an organisation are driving revolutionary changes today.read more...»
This new short video from the IMF takes a look at a group of fast-growing countries known as Frontier Asia. Asia's developing economies represent the region's economic frontier, emerging as a new source of economic dynamism. These countries aspire to climb the development ladder by addressing the challenges of infrastructure, technology and financing.read more...»
A short but useful infographic from the Economist - perhaps a resource when teaching aspects of globalisation. Foreign direct investment decisions show how the global economy is different since the financial crisis.read more...»
The struggle to achieve meaningful and significant reform of Europe's controversial and hugely expensive farm support system will probably go on for many years. The latest attempt at changing the basis for payments made by the Common Agricultural Policy (CAP) appears to have fallen foul of intensive lobbying by farm groups in some of Europe's largest and wealthiest countries.
In this BBC news video Roger Harribin reports on the watering down of reform proposals. The CAP began in 1962 as a way to increase food production. It costs around $75bn (£48.7bn) per year in subsidies to farmers, funded by taxpayers. The Commission wants farmers to earn some of their subsidies, for example by protecting the environment, but farm ministers are fighting back. The subsidies available to some of the largest farm businesses can top Euro 1 million each year and they seem set to stay.read more...»
KAL, The Economist's resident cartoonist and animator, explains global trade
Dr Linda Yueh gave a fantastic talk at the ETNC on the growth and development challenges facing China in the years ahead. Here is a shortened version of a recent talk given by her at the RSA in London in April 2013. We have also streamed the contents of the presentation for those who want to follow the talk in more detail.read more...»
Another great short animated video from the Economist - highly relevant to students looking at the economics of protectionism / import controls. KAL, The Economist's resident cartoonist and animator, explains what dumping means and why companines do it.read more...»
Currently, barriers of law and custom stop many women from getting
financing for business. Removing those barriers can help overcame the
gender gap, and unleash economic growth. This World Bank video looks at some of the evidence. Our Development Economics blog covers many articles relevant to students tackling this for Unit 4 - click here for the Development Economics Blog
Hundreds of millions of people around the world are escaping poverty and becoming middle class. The explosion of new consumers in China, India and other economic powerhouses is changing the global balance of power. The BBC website has a new series on exploring the effects of this shift in global economic power and influence - click here for further research and watch the video below
Every year billions of dollars in aid go to the world's poorest countries. But does it help these countries to grow out of poverty? The question is as old as foreign aid itself. In this RES short video, Michael Clemens of the Centre for Global Development presents award-winning research that offers a new way of answering this question
Another RES short video from Bob Denham at Econ Films. The size and location of cities follows a clear pattern -- you just need to look at them from far enough away. Wen-Tai Hsu of the National University of Singapore shows this with the help of economics. This research received the Austin Robinson Memorial Prize at the Royal Economic Society annual conference in April 2013. Some important themes mentioned here for students of economic geography.
I'm introducing my year 12 classes to poverty and income inequality next week, and this worksheet should test out their ability to draw a Lorenz curve from data.
A new analysis of the allocation of carbon emissions between developed and emerging economies
The rapid growth and development of economic activity in Dubai has put enormous pressure on the water and sewage infrastructure available in the Emirate. Six years ago there was only one sewage works open there but big investment in new plant has increased the capacity and reduced externalities from a sewage system working at full tilt. As this short BBC video shows, there have been some profitable by-products from investment and innovation in state of the art sewage treatment plants.read more...»
In May 2013, the Brazilian government announced that it plans to cancel or restructure almost $900m in debt owed by African countries. The move is designed mainly to expand Brazil's economic ties with Africa and fast forward the growth of trade and investment between emerging countries and regions. In the aftermath of this move, Brazil’s future aid assistance is likely to target infrastructure, agriculture and social programmes. Among the 12 countries set to benefit are Tanzania, oil-producing Republic of Congo and copper-rich Zambia. The Southern Silk Road continues to develop as new models of aid and trade are forged between the emerging fast growing countries of the world.
I have to come clean as a self-confessed container nerd (geek alert: follow the world’s containers using this amazing tool). Not only are the ships hugely impressive from an engineering perspective, but they are a gift for an Economics or Business enthusiast. You might want to be thinking about economies of scale, or the negative externalities associated with transport – or perhaps discuss supply side issues and infrastructure. Container ships cover the lot.
A while ago I argued that container shipping is the greatest of all 20th century innovations, and this week The Economist has reported that the container has been a greater driver of globalisation than all trade agreements in the past 50 years taken together.read more...»
Here is a video report from the fast-growing country of Indonesia where infrastructure deficiencies threaten their sustainable growth rate.read more...»
In the wake of the terrible disaster in which the collapse of a factory building caused more than a thousand deaths, the Founder of the Grameen Bank Mohammad Yunus argues here the case for an international minimum wage in the garment industry and a small price premium to establish a Garment Workers Welfare Trust in Bangladesh.
"I propose that foreign buyers jointly fix a minimum international wage for the industry. This might be about 50 cents an hour, twice the level typically found in Bangladesh. This minimum wage would be an integral part of reforming the industry, which would help to prevent future tragedies. We have to make international companies understand that while the workers are physically in Bangladesh, they are contributing their labour to the businesses: they are stakeholders. Physical separation should not be grounds to ignore the wellbeing of this labour."
There is of micro and macroeconomics in this piece not least the question of price sensitivity of consumers in rich nations.
The BBC's Chief Business Correspondent Linda Yueh @lindayueh has new page on developments in global economy http://www.bbc.co.uk/news/correspondents/lindayueh/ - definitely one for students and teachers to follow. The opening article focuses on a concept that we have been pushing in our own macro coverage in recent times, namely the emergence of a multi-polar world economy with growth coming from a bigger number of countries / regions and less dependent on the advanced western economies. Read the article here
This presentation looks at three evaluation questions in A2 macro and suggests an approach to scoring high marks for evaluation.
Here are some notes taken from a talk given by Linda Yueh on the Chinese economy at the RSA in London on the 18th April, 2013read more...»
The latest edition of African Pulse published by the World Bank focuses on growth and development prospects in Sub-Saharan Africa and the overall sentiment is that the region is set to continue with a strong growth performance.read more...»
Fantastic interactive website here lets you check out migration flows both inward and outward from any country you care to look at.
The LSE’s Jason Hickel writes, narrates and directs this short video looking at the extreme truth of how wealth is divided globally.
A newly constructed Social Progress Index has been unveiled for the first time with the hope that over time, it might become as widely quoted and recognised as the Global Competitiveness Index as a benchmark of progress made by individual countries in achieving sustainable, balanced and inclusive growth and development. In the 2013 rankings, Sweden comes first and the United Kingdom is second.read more...»
The annual NORFACE migration conference at University College London this week has generated plenty of new research papers on the economics of international migration, a topic that of growing significance for students of globalisation, competitiveness, innovation and growth. Some of the key findings are summarised below together with external links to relevant articles and news reportsread more...»
A recent World Bank report asked ‘Where is the Wealth of Nations?’ Calculations presented at the Economic History Society’s 2013 annual conference show that for Britain, the answer is undoubtedly in its people.
Dr Jan Kunnas and his colleagues calculate that Britain’s ‘human capital’ has grown by a multiple of 123 over the past 250 years. The main drivers of this phenomenal growth have been the growth in the workforce and the growth in wages.
The researchers define human capital as the knowledge and skills embodied in individuals – and they measure it by the discounted earnings the population is expected to earn during their time in the labour force.We have an extended revision note on human capital and economic growth - read it here
The Changing Wealth of Nations - World Bank reports can be accessed here
New figures from the OECD find that overseas development aid fell by 4% in real terms in 2012, following a 2% fall in 2011. Aid payments have dropped in large party because many governments of developed countries are embroiled in fiscal austerity and choosing to cut aid as a result. The OECD data shows too that there is also a shift in aid allocations away from the poorest countries and towards middle-income countries.