Impact of Globalisation in the UK

- intrinstic part of the globalisation process - The expansion of the EU in 2004 and the open-border policy of the UK led to a flood of immigrants from eastern Europe. - In 2006, 12.5% of the UK's workforce was foreign-born, compared to 7.4% 10 years earlier.

Benefit: International Migration

The transport revolution has had a major impact on the relative proximity of places. For example, Eurostar can take passengers 293 miles from London to Paris in 2 hours 15 minutes, an hour less than the journey to Carlisle. The geographical diffusion of British tourists has extended considerably in recent decades as has the origin of tourists coming to the UK.

Transport Revolution

1) Strong trading relationships with a large number of other countries brings political influence. 2) As a member of the EU, Britain can extend its influence to areas where it was not previously well represented.

Political Benefits

1) Voter apathy is linked to many people seeing a loss of political power to the EU and major TNCs. 2) International terrorism is a growing threat with increasing ethnic diversity, rapid transportation and more open borders.

Political Problems

1) Economic growth has facilitated high levels of spending on education and health in particular 2) Globalisation is a large factor in the increasingly cosmopolitan nature of UK society. 3) Transport and communications revolution has transformed lifestyles.

Social Benefits

1) A strong economy has attracted a very high level of immigration in recent years, with increasing concerns that this is unsustainable.

Social Problems

Europe and North America top the league of inward and outward foreign investment. At the national scale, the UK is the second most attractive country in the world for FDI. Most of this investment is by TNCs. This investment is particularly valuable because foreign TNCs are more productive and faster growing than domestic firms.

Benefit: FDI

Consumer choice in terms of primary products, manufactured goods and services has never been greater. However, there is growing concern about the impact of such choice on the environment. The issue of 'food miles' (the distance food is transported to reach markets) has been a major discussion point in the UK recently, with supermarkets being urged to stock more local produce.

Consumer choice

- Massive de-industrialisation in the 70s and 80s, as traditional heavy industries collapsed under foreign competition, led to vast swathes of inner-city and urban waterfront areas in the UK becoming derelict. - Massive environmental dereliction in areas like the Don Valley in Sheffield, London's Docklands and the Black Country in the west Midlands. Over the years, most of these sites have been reclaimed. However, the closure of a large manufacturing plant such as Ryton (2006) creates environmental and economic problems.

Cost: Environmental problems

- Globalisation has increased the mobility of workers and has stimulated international migration. Although this migration brings economic benefits, it can also create social problems. - This placed enormous strains on public services in some parts of the country especially in small towns and rural areas. - In Boston in Lincolnshire, one in five of the population is foreign born --> problems of social cohesion have also appeared in small market towns like Thetford in Norfolk which was absorbed a large number of Portuguese immigrants in recent years.

Cost: Immigration and social problems

- Business decisions on investment and disinvestment, affecting lives of 1000s UK citizens, increasingly take place outside the country. - British government has limited power to influence decisions made by foreign TNCs on relocation and offshoring, which often have adverse economic and social consequences. - 70s and 80s: Significant investment by Japanese, Korean and US TNCs in new manufacturing plants in northern England, Scotland and Wales. - These investments gave companies such as Nissan, Samsung and Sony a platform to access the UK and EU market. However, a common complaint was that this investment supported only low-skilled operations like assembly, while high-value and highly skilled jobs in research, development and design remained overseas. - Regions such as northeast England and south Wales, which received large investments in these so-called 'branch plants' were highly vulnerable to changes in costs are therefore to closure.

Cost: Loss of Control

1) High levels of FDI, leading to employment and GDP increases 2) High level of investment abroad by UK companies also increases national income 3) Financial deregulation has enhanced the position of the City as one of the world's top three financial centres. 4) Inflation has been kept low by low-cost manufactured products from China and elsewhere.

Econ Benefits

1) High job losses in traditional industries have resulted from global shift and deindustrialisation - geographically concentrated 2) TNCs can move investment away from the UK as quickly as they can bring it in, causing loss of jobs and corporation tax. 3) Speculative investment (e.g. hedge funds), causing economic uncertainty, has increased with financial deregulation. 4) Widening gap between the highest and lowest paid workers.

Econ Problems

- Globalisation has forced many firms to specialise in areas where they have a comparative advantage. In manufacturing this means specialist high-tech industries, pharmaceuticals, aircraft parts, scientific instruments and so on. - These industries rely on highly qualified workers, innovation, and world-class research and development. It is only in these manufacturing activities that UK and other MEDCs can out-compete the emerging economies of China and India.

Economic Restructuring - Benefit

- Increased openness of national economies to international trade and thus sharpening competition. - Restructure of B economy, with services becoming increasingly important, largely at the expense of manufacturing - Absolute employment in manufacturing has declined steeply and manufacturing's share of total economic output has declined. Low-wage economies such as China and India, and advances in communication and transport technology, have been major drivers of change.

Economic Restructuring - Benefit

- Many British manufacturing firms exploited advantages of globalisation by transferring production offshore (focus on higher value and high-skilled activities such as research, product design, product development and marketing - areas where emerging economies are less competitive). - Apart from lower costs, offshoring gives access to larger markets and provides higher productivity and higher value chains

Economic Restructuring - Benefit

1) Creates economic problems when firms (both British and non-British) close production and disinvest in the UK (Tata Steel). This process creates direct job losses, which often has knock-on effects on local businesses. The problems are most acute in areas which depend heavily on just one or two major employers. 2) Offshoring also affects service industries. Recent examples include the transfer of many back-office and customer-service jobs to India by leading UK companies such as Norwich Union, Tesco, British Airways and Abbey.

Economic problems

1) De-industrialisation has improved environmental conditions in many areas. 2) Increasing international cooperation to solve cross-border environmental issues gives a better chance of such problems being addressed.

Environmental Benefits

1) Population growth impacts on the environment with the increasing demand for land, water and other resources. 2) Increasing wealth has resulted in higher levels of transportation, particularly car ownership and air travel, leading to rising level of pollution. 3) Rapid industrial growth in China and elsewhere impacts on the global environment, including the UK.

Environmental Problems

In 2004 the enlargement of the EU brought an unexpectedly large influx of migrants from Poland and from other east European states to the UK. - Unofficial figures suggest that around 600,000 people migrated to the UK.

How many people (estimated) came to the UK from eastern Europe between 2004-2006 alone?

1/3

How much do financial and business services alone account for in UK exports

- 25% of the world's financial services exports - 14% of computer services exports - This success has only been made possible by advances in communications technology. The contribution of knowledge intensive services such as financial and legal services to the UK economy is greater than in any other country apart from the USA.

In 2006 what % of the worlds financial services exports and computer services exports was the UK responsible for?

- International trading links have spread and become more complex - one of leading countries in attracting FDI but it is also one of the largest investors in other countries. - Globalisation has extended the nature and scope of FDI both into and out of the UK. - Major factor in the changing nature of employment, speeding up the filter down of traditional manufacturing industries to NICs and LEDCs. (Deindustrialisation) which has seen considerable job losses in the traditional industrial areas. Only 15% employment remains in manufacturing although output has increased by 13 per cent since the 1990s.

Introduction

- The business and financial sector of the economy has benefited hugely from the deregulation of global financial markets. This has enhanced London's position as a global city in economic terms. The success of the business and financial sector ahs resulted in very significant increases in wages at the 'top end'. - HOWEVER in contrast, with high immigration and a resultant large pool of unskilled and semi-skilled labour, wages at the 'bottom end; have been kept down, resulting in widening social division. - UK become a global hub for migration (significant social and cultural change)

Introduction

- UK has had to concentrate its efforts of the service sector and specialised high-value manufacturing to maintain a strong economy. Economic activity and the valuable employment can now be moved around the world v quickly. The government is trying to ensure population has the skills to meet this challenge as competition intensifies.

Introduction

Jan 2016: - Plans to cut 1,050 jobs in the UK, including 750 at Port Talbot, the UK's biggest steelworks - Due to falling European steel prices caused by a flood of cheap imports especially from China Tata steel is the Indian conglomerate that also owns Jaguar Land Rover and Tetley Tea. Scunthorpe employs 3,000 (1,200 of whom will lose jobs)

Tata Steel Mini CS:

1) they reduce the costs of low-skilled labour 2) they provide additional higher skills (large proportion are of working age so contribute to GDP, increases attractiveness of the UK as an investment location)

What 2 advantages to Migrants have to the economy

Comparative advantage is the ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.

What is comparative advantage?

The practice of basing some of a company's processes or services overseas, so as to take advantage of lower costs.

What is offshoring?