7.1 - Globalisation

International trade gives rise to a '........' in which prices, supply and demand are affected by global events. Trade has grown enormously since the Second World War; in manufactured goods alone it has grown from around ............. in ...... to .......in ..... Globalisation, however, is not just an increase in trade.

'world economy', US$100 billion in 1956 to $19 trillion in 2013

Factor of globalisation - trade agreements: Since the ...., trade agreements have been formed by countries joining together to form trade blocs in order to stimulate trade between themselves and to gain economic benefits from co=operation. There are various forms that trade groupings might take, including free trade areas, ......, .... and economic or monetary unions such as the EU. The UK is currently a member of the EU economically and politically, but not a member of its monetary union, known as the '.........' where there is a common currency - ......... NAFTA, AFTA (.........), and .......... examples. These unions or groups of countries usually allow free trade between group members in a free trade area; trade barriers are eliminated among the participating states. However, common external tariffs or trade restrictions will exist around the group member states. Not all trade agreements are regionally based. For example, the ............. (OPEC) is made up of members mainly from the .......... but also from South America and Africa. Its focus is on the trade of oil globally, which is the single most important traded ............ Other groupings are most loose knit and contain members with an interest in co-operation and development of trade, but no formal trade agreement. There are a number of advantages to nations which group together as trading entities: on a global scale: to improve ................. to increase ........... to help members develop their economies and standard of living. Regionally (within each group): to compete on a global level with other trading entities to have a bigger representation in world affairs to allow .............. to allow people seeking work to ............ to negotiate trade advantages asa group with other groups the possibility of developing a common currency to prevent currency fluctuations and simplify transactions to raise standards in ............... to support particular sectors of a national economy (e.g. ........) to spread democracy, human rights and possible political and legal integration As many trade agreements may lead to more economic, social and political integration, such as in the EU, a number of possible disadvantages can arise, including: some loss of ....... - decisions are ... by what some see as an .......... some loss financial controls to a central authority such as a bank (e.g. the .........) certain economic sectors are damaged by having to share resources (e.g. the UK sharing its ...... with other EU nations Trade deals can be assessed by looking at how successful they are in reducing barriers such as tariffs. In ....., the rich OPEC group studied ........ to discover if barriers to agricultural produce were lowered: deals between rich and emerging economies had lifted the number of goods that are traded duty-free from .... to ... over the previous ..... in duty-free deals between emerging economies, the proportion had advanced from ... to .. which demonstrates that regional trade agreements can lower these barriers.

1950s, customs unions, common markets, 'Eurozone', the Euro, Asian Free Trade Area, MERCOSUR, Organisation of Petroleum Exporting Counties, Middle East, commodity, global peace and security, to improve global trade and co-operation, freedom off movement of trade, move between countries move easily, education and healthcare, agriculture within the EU, sovereignty, centralised, undemocratic bureaucracy, European Central Bank, traditional fishing grounds with other EU nations, 2011, 55 regional trade agreements, 68 to 87% in last ...., 28% to 92%

Patters of production: In ........, around .... of manufacturing was concentrated in the industrialised economies of Western Europe, North America and Japan. The products were largely consumed in the country of origin. Over time, decentralisation has occurred, largely as a result of FDI by TNCs into those developing countries able to take on manufacturing tasks at a competitive price. Lower land and labour costs, as well as ................ have encouraged many TNCs to relocate the ....... of their business abroad. This filtering down of manufacturing industry from developed countries to lower wage economies is known as .......... The ....... made by TNCs has enabled countries in the developing world to increase their productivity, without raising their wages to the same levels as developed countries. One of the consequences of global shift has been ...... in the richer countries and a loss od jobs in the manufacturing sector. For example, employment in manufacturing in the Uk fell by around ... int he 30 years from ... to ...., though decline has now steadied and productivity is rising again. More than .... of all manufacturing jobs are located in the developed world and over ...... of exports from these countries to the developed world are of manufactured goods. Global shift is not the only factor that caused the decline in manufacturing in developed countries. .............., products at the end of their ..... and poor management have all contributed to the decline in manufacturing in these regions. Reversal of this trend has been prompted by foreign TNCs investing in deindustrialised regions. Manufacturing transfers around the world with great ease and not only because of lower costs. Other factors affecting the location choice of entrepreneurs of some of the largest manufacturing companies include: the availability of a skilled and educated workforce the opportunity to build new plant with the latest and most productive technology Government incentives in the form of ....... or ... ........... Access to ....... without tariff barriers, enabled through trade agreements

1954, 95%, Western Europe, North America and Japan, government incentives, the production side, global shift, transfer of technology, deindustrialisation, 50%, 1983 to 2013, 50% in developing world, 60% of exports to developed work are manufactured goods, outmoded production methods, life cycles, tax breaks and enterprise zones to entice companies, large markets

In the late ......, ................... predicted the advent of a '...............' - a '..........' where ............ This would be reflected by the increasingly international manner in which organisations would operate: by thinking globally (not within national boundaries), by acting globally (being present in many countries), and by making 'planet-wide' decisions.

1960s, Canadian philosopher Marshall McLuhan, 'global village', 'flat world', free rein is given to economic and information flows

The notion of the global village is perhaps exaggerated even with regard to the movement of goods. Many obstacles to trade remain and in some sectors globalisation has barely begun. The ......... has slowed the process of globalisation down, albeit temporarily. Recovery from this crisis has also been hit by setbacks such as ............... Progress has been made with international trade and access to markets but the world is not 'flat'.

2008 financial crisis, international conflicts

Flows of capital: for the purpose of understanding 'international capital flows', capital includes all money that moves between countries which is used for investment, trade or production. In the late ........., ......... meant that the activities of financial institutions such as banks, insurance companies and investment companies were no longer confined within national boundaries. There is a distinguishment between a '..... area' and a '.......' based on ................... This assumed that ............................... Periphery countries were seen as those that are less developed and have been exploited and have suffered from a lack of investment, ............ (refers to a loss of income from an economic system - mostly referring to the profits sent back to their base country by TNCs, also known as ...........................) and out-migration. This concept is largely ................. because rapid growth of .......... economies such as the ...... (........, ......, ......., .... - whose economies have advanced rapidly since the .....), and the more recently emerging .... countries (....., ........, ...... and ......) means there is now a ......... of development, so many regions of the world might be ..................

20th century, deregulation of world financial market, 'core', 'periphery', Frank and Wallerstein's core-periphery model, global power is concentrated in the hands of a relatively small group of developed nations which they called the 'core', leakages, repatriation of profits, outdated, large middle-income countries, BRIC countries (Brazil, Russia, India and China), 1990s, MINT countries (Mexico, Indonesia, Nigeria and Turkey), continuum of development, envisaged as 'core'

Flow of capital - Remittance payments: these are transfers of money made by foreign workers to family in their home country. Remittances have become the ..................., above .......... >..... receives more remittance parents from their .......(a large group of people with a similar heritage or homeland who have moved and settled in places all over the world) than any other country

2nd most importance source of income in developing countries, above international aid, India, diaspora

Factor of globalisation - financial: In the past trade was hindered by problems in exhaling finance for goods and exchange rate concerns. ....... allowed arrangements for the removal or relaxing by governments of barriers to movements of finance. Communications technology has also removed these concerns and made international trading easier and faster, even for smaller enterprises. .......... and global exchange connectivity mean that financial transactions between importers and exporters can be completed quickly and securely.

Deregulation of financial markets, high-speed electronic trading systems

Patterns of distribution+consumption: Product consumption still leis predominantly in the richer countries of the developed world. Products being manufactured in emerging NIC economies are largely exported and sold to countries in Europe, North America and Japan. For example, ....., a UK-based vacuum cleaner manufactured, moved the manufacture and assembly of its products to ... but still sells the bulk of its vacuum cleaners in the ...... However, the pattern is changing. As emerging NICs develop, their populations are become more affluent and starting to demand similar consumer products to those being exported from their own countries. Different patterns for distribution and consumption are likely to appear in the future with a definite shift from west to east as the centre of gravity of economic activity (consumption and production). Forecasts suggest that: consumption will drive trade patterns more than production location decisions and so the fastest growing trade route will be between India and China As Asia becomes more competitive a growing share of the region's exports will be to other countries in Asia Western companies specialising in finance have enormous potential to benefit from the expansion of trade in financial services in the Asia-Pacific region.

Dyson, Malaysia, UK and other parts of Europe

Factors of production: The roots of globalisation lie in international trade and the increasing accessibility of markets, which open up to the wider global community. This means that goods and services have to be produced that can be traded. A number of productive resources have to be combined in order to provide these goods and services; economists call these the 'factors of production'. They are: ....... - all natural resources provided by the earth includes ........., ...., ..... etc. ..... - the human resource available in any economy. The quantity and quality of the workforce are key considerations to any producer of goods and services. ..... - in economic terms this refers to any physical resources that can be regarded as a man-made aid for production. 'Capital flows' can involve the transfer of these physical resources from one place to another. However, in reality it usually refers to the flow of investment finance used to provide this capital. ...... - this is a very particular form of human capital describing those who take the risk of establishing businesses and organising the production of goods or provision of services. The increased international flows of capital, labour and enterprise have been both a cause and an ongoing consequence of the globalisation process.

Land, water, minerals, forests, Labour, Capital, Enterprise

Flow of capital - foreign direct investment (FDI): this is investment made mainly by ........ (occasionally by governments) based in one country, into the ....................... The investing company may make its overseas investment in a number of ways. For example, by setting up a ........., by acquiring shares or through merger or ..................

TNCs, physical capital or assets of foreign enterprises, subsidiary company, joint venture.

Form of globalisation: Economic - process caused by: increase in free trade, growth of ......, faster, cheaper ........., .................. Characterised by: long distance flows of goods, capital and services as well as information and market exchanges. Cultural/social - process caused by: ......., global communication networks, impacts of ....... through media, sport and celebrity. Characterised by: spread of ideas, information and images. Political - process caused by: growth of ..... and their influence on poorer countries, decline of centralised (.......) economies. Characterised by: the ....... go government policy and development of ......... in ...............

TNCs, transport, global marketing, migration, western culture through media, sport, celebrity, western democracies, communist, diffusion, market economies in former communist states

Factor of globalisation - government support: One of the economic objectives of most government is to increase exports from their country. Governments at national level will have trade departments whose function will be to ease and facilitate exports. For example, the UK government have the ...... (UKTI) department. They offer support and advice on all aspect of trade to encourage businesses, especially first-time exporters, to trade their goods overseas. In some larger developing countries with less developed infrastructure, such as ......., exporters are encouraged by government to use ......, located inland and nearer to their business. Dry ports save the exporter time and transport costs as all shipment arrangements customs documentation are completed locally before the goods are shipped to a seaport such as .......

UK Trade and Investment (UKTI), Pakistan, dry ports, Karachi

MINI CASE-STUDY: NAFTA NAFTA was signed by the ..., .... and ... in ... The main driver for this agreement was the challenge presented by trade blocks from other parts of the world, particularly ......... Mexico has got into ... in the .... and hope that economic growth and higher employment would result from joining NAFTA. NAFTA's main aims are: ..... of all trade barriers, promotion go economic completion between members, increasing investment opportunities, generally improved ................. Supports of the NAFTA have pointed out that: trade between member countries ............ Manufacturing grew in America, with increased employment Mexico recieve............. (as foreign TNCS established plants in the country in order to gain access to Mexico's NAFTA trading partners' markets) Opponents of NAFTA have pointed out that: some ...... have closed because of completion form ...... some US firms have moved to .... and American jobs have been lost the growth of US-owned, labour-intensive, export-orientated companies ( ........) on the Mexico border keeps wage rates down

USA, Canada and Mexico in 1994, Europe, debt in the 1970s and 1980s, gradual elimination, co-operation between the 3 countries, tripled between 1993 and 2007, increased foreign investment, Canadian companies, lower-cost US firms, Mexico, maquiladoras

MINI CASE-STUDY: The remittance dilemma in Somalia, 2012: Some of the last develop countries rely more heavily on remittance than other sources of capital. According to the ......, .............. rely on remittances to meet their basic needs. In Somalia, they play an important role in supporting economic development and people's livelihoods, accounting for ........ of .... and ....... of all investment in the country. In ...., concern that some of the money was falling in the hands of ...... led to many ............ and money transfer agencies withdrawing the service. The effects in Somalia were devastating and protests were organised by human right groups supporting Somalians. The concerns of US and UK financial institutions are based on conditions in Somalia, including: its ......., with little ......., the lack of ............. and the fact that some remittances may end in the hands of terrorist group ....... which receives donations from domestic and foreign sympathisers

World Bank, 40% of Somalians rely on remittance to meet their basic needs, 50% of GNI and 80% of all investment in the country, 2012, terrorist groups, US and UK banks, informal economy with little government regulation, anti-money-laundering laws, Al-Shabaab

Flows of products: the international movement of products is facilitated especially for developing countries, by the reduction in costs of trade, which includes transaction, tariffs (a .......... placed ... with the intension of making them ........... so that they do not sell at a lower price than ........ - a strategy of .............. (a .......... to impose restrictions on trade in goods and services with other countries - usually done with the intention of ........................)) and transport+time costs. ....... have been reduced by the improvements in ......... and the ease with which capital can be transferred to pay for transactions. ...... have been reduced by the process of .......... (a system of standardised transport that uses .......... to transport goods) which has enabled ......., as does air transport which can speed delivery and reduce costs of more valuable or perishable cargo. The most obvious regulatory barriers to trade are ....., which with the encouragement of the ..... (WTO) have generally been reduced in global trade.

a tax placed on imported goods with the intention of making them more expensive to consumers so they do not sell at a lower price than home-based goods, (a strategy of protectionism- (a deliberate government policy to impose restrictions on trade in goods and services with other countries -usually done with the intention of protecting home-based industries from foreign competition)), Transaction costs, flows of data, Transport and time costs, containerisation (a system of standardised transport that uses large standard-size steel containers to transport goods), more complex and long distance flows of products, tariffs, World Trade Organisation (WTO)

Labour - factors prediction defined as the ........................................

aggregate of all human and physical effort used to create goods or provide services

Factor of globalisation - security: The trading community faces a number of security issues including supply chain security, crime and ..., food and ..., fiscal and anti-smuggling. A number of initiatives have been introduced to alleviate threats, such as the ...... (WCO) and more regionalised measures such as an ... to introduce a '......' quality label, award to operates meeting EU minimum standards of security. In response to terrorist incidents of recent years, governments feel that they cannot leave the trade 'stable door' open. These measures have tightened up security for the benefit of business and have in some ways facilitated trade. Arguably though, their piecemeal introduction and lack of cohesion have had the opposite effect, by increasing costs and cresting delays for the shipment of goods.

anti-terrorism, World Customs Organisation, EU initiative, 'secure operator'

Flows of labour: Labour markets ........... in the process of globalisation. People move less easily around the world than money because of .............. However, in recent years there has been a phenomenal rise in the number of migrants crossing international borders mainly to seek better employment opportunities. Much of the movement has been from developing countries in .........., ..... to the richer areas of ............. and ...... Another major destination for the movement of labour has been around the oil-run Gulf States of .........., .... and the ... where the construction boom has provided plentiful employment opportunities. Key facts: despite increases in cross-border movements, most migrants more over short distances within the same region or between neighbouring regions. North America, Europe and the Gulf countries attract migrants from further afield The bulk of ...... ................ are not the poorest but are those with some education and financial means. The largest regional flow of labour in the world is ....., Between ... and ..., around .... workers moved from .... to .... Over the past ....., more people have migrated from Asia to North American and Europe but at the same time both the Gulf states and the Tiger economies of south east Asia have become attractive destinations for those seeking employment.

aren't as free flowing as financial markets, restrictions on immigration, Africa and Latin America, Europe and North America, Kuwait, Qatar and the UAE, economic migrants moving between continents, Asia, 2005 and 2010, around 5 million workers moved from south Asia to west Asia, 25 years

Factors in globalisation: A number of influential factors have combined to increase the breadth and depth of links between nations and trading groups over the past 30 years Links between countries have grown significant since the development of ... and particular since the advent of the ........ which has enabled speedy and .......... The emergence of .... as the .......... has also eroded barriers. There are few borders or boundaries for the constant flow of data, so ours is a distinctly digital age which around ........... and nearly ......... A number of other technologies, systems and relationships have evolved to support globalisation and international trade.

digital computer technology, internet, 24/7 global communication, English as the accepted global language of business, 7 billion mobile phone subscriptions, nearly 3 billion internet users

Flows of services: Services are ..............................., for example, financial or insurance services. They can also be sub-divided into: .......... - services to ..... such as ...., ..... and ...... ...... - services to ...... such as ....., ..... and ......... Services such as banking, insurance and advertising depend on communication and the ..... They are ...... and can locate anywhere and advancing technology means they can still serve the needs of customers worldwide. High-level services have increasingly been concentrated in cities in the more developed world, such as ....., ... and ...., which are the major centres of global industrial and financial control. Other cities have grown in importance such as ....., home to the ..... of the ...... With the empowerment of ...... economies, ......., ......., ....... and .... have also become major global financial centres. A growing number of transitional service ................. (a collection of .............. which may be involved in ....... but .................., most TNCs are conglomerates) have emerged, seeking to extend their influence on a global scale such as ...... in banking and financial services , ...... (..) in ..... and ........ (......) in ............ One trend has been the ....................... ......, for example, have moved from the ... to ..... where labour costs are generally ....... lower than in the UK.

economic activities that are traded without the production of material goods, high-level services such as finance, investment and advertising, low-level services such as banking, travel+tourism and customer call centres, transfer of information, footloose, London, New York and Tokyo, Frankfurt, European Central Bank of the EU, East Asian economies, Hong Kong, Singapore, Seoul and Shanghai, conglomerates, different companies or organisations which may be involved in different business activities but all report to one parent company), HSBC Holdings, Omnicom (US) in advertising, TUI Group (Germany) in travel+tourism, decentralisation of low-level services from the developed to the developing world, call centre operations, UK to India, where labour costs are generally 10-20% lower

Factor of globalisation - management and information systems: The evolution of transport and communication systems has led to a production revolution which has transformed how companies manufacture products and distribute them worldwide. New processes of high volume production enable substantial economies of scale (cost reductions) on a global level. To benefit from these cost advantages, globally minded companies have invested in: large production and assembly plants capable of exploiting technology's economies of scale (for example, robotics in the automotive industry) Global marketing and distribution networks to ensure that sales keep pace with the increase in production Globally capable management. These investments in international production, distribution and management are increasingly organised within ........, where the different stages of the production process are located across different countries. The ....... of any international organisation necessary to support worldwide flows of information, raw materials, components, sub-assembled parts and finished products. Corportiona in different industries and economy sectors organise their global production networks in different ways in order to gain and maintain a competitive edge. For example, the fast fashion industry is reliant on sufficiently fast transport from a cluster of suppliers (mainly in Asia) to enjoy the short lead times necessary to be present in geographically disparate markets. Computer manufactures such as ..... both co-rdonate a production network than span the Americas, Europe and Asia, and are reliant on outside suppliers for various components and peripherals. The management of such global production networks demands the remote management of production and distribution lines, which has been enabled by information techonolgy and the internet giving businesses: virtually free telecommunications integrated ICT management systems Similarly, '..........' (JIT) technology and lean production management means greater efficient in the supply chain for manufacturers, ensuring that the correct supply of components arrives when they are needed and costs are cut by reducing the quantities of goods and materials held in stock. The principle underlying JIT is that production is pulled through by specific customer orders, rather than pushed through to build up stock. Systems designed to enable remote management and increase cost efficiency have Led to a ..... between ............ (such as research and development, design and engineering, marketing) which are located at corporation HQ's and strategic hubs around the world and .......... (such as production and assembly) which are based at low production-cost locations or in proximity to large markets for the finished goods.

global value chains, global production network, Apple, 'just--in-time' (JIT), spatial separation between high-order business activities (such as RaD, marketing, advertising, design and engineering) which are located at corporation HQ's + strategic hubs and lower-order activities (such as production and assembly)

Flow of capital - repatriation of profits: TNCs investing in overseas production will normally take any profit made form that investment back to their ......................... This is sometimes called an ........... The majority of these flows return to companies based in richer countries

home-country HQ, economic leakage

Dimensions of globalisation: The term 'globalisation' was used to describe an unprecedented integration of world economies in the 1990s under the combined influence of the information technology revolution and the opening up of former Communist Bloc countries to the market economy. The focus of globalisation has been primarily on economic relationships such as international trade (the exchange of capital, goods and services across international borders. Inbound trade is defined as ........ and outbound trade as ...........), foreign direct investment (FDI) and international capital flows. Globalisation has since been expanded to encompass a wider range of dimensions including media, culture and social, political, environmental and even biological factors, for example the control of ..... or the .......... The process involves the spread of ideas and information across the world, but in doing so it creates a growing uniformity shared by very different places.

imports, exports, pandemics, impacts of climate change

Capital flows - the movement of ................................

money for the purpose of investment

MINI CASE-STUDY: Ebbs and flows in car production Ebbs and flows in manufacturing are exemplified by the ......, the ...... For example, since .... the US vehicle giants .... and ...... have relocate much of their .... to ....... plants in ..... to take advantage of the ........ and the ...... that are part of ....... (North American Free Trade Agreement). They input materials for assembly and then export the final product without any trade barriers. At the same time, the US care duster has been revitalised by invesmen tin new plant and techonogly by foreign vehicle manufactures such as ........... The UK ost most of its domestic car industry as part of ................ However, as a result of investment by the ............. at factories in .., ..... and ...... respectively, the UK is now one of the most productive care manufacturing in Europe. These plants give the Japanese TNCs accessories to the .........., underlining the importance of free trade agreements as one of the factors in deterring the location of production. UK vehicle manufacture has been further boosted by investment by TNCs from BRIC economies, especially by .......... who bought Jaguar Land Rover from Ford in .....

motor vehicle industry, the most global manufacturing industry, 1994, Ford and General Motors, component assembly, maquiladora, Mexico, cheaper production costs, non-tariff borders, NAFTA, Toyota. deindustrialisation in the 1980s, Japanese companies Honda, Nissan and Toyota, Swindon, Sunderland and Derby, large and lucrative EU market, Indian conglomerate Tata, 2008

Flow of capital - Aid: this is an important source of financial support for poor countries. It can take many forms and can be provided through the UN (.......) from contributions made by a number of richer countries (sometimes known as ........... (ODA)). It can also be provided ........ from one government to another, usually with mutual co-operation conditions applied. (Aid can be supplied in the form of technology and expertise via NGOs or as food and relief at times of disaster).

multilateral, Official Development Assistance

Flow of capital - Migration: the majority of .......................... takes places from .............. This will ........ as the less developed nations lose their ......., who will pay ..... and spend much of their earnings in their destination country (although they can habitually send ..... back to their country of origin).

out-migration of labour, poorer to richer countries, exacerbate disparities, most skilled and talented labour, taxes, remittances

Global marketing: marketing is the process of ....., ..... and selling products or services. When a company becomes a global marketeer, it views the world a one single market and creates products that fit the various regional marketplaces. It will usually develop a recognisable '.....' and employ one marketing strategy to advertise the product to customers all over the world. The ultimate goal is to sell the same product, the same way, elsewhere. Having one marketing campaign on a global scale like this generates ....................... (the ................ that result from the larger size, output or scale of an operation as savings are made by spreading the costs of by .................) for the organisation, which reduces their costs. ...... is an example of a company with a single product; only minor elements are tweaked for different markets. The company used the same formulas (one with sugar, the other with ......) for all its markets. The bottle design is recognisable in every country but the size of bottles and cans conforms to each country's standard sizing.

promoting, advertising, 'brand', economies of scale, Coca-Cola, corn syrup

Factor of globalisation - transport: Products and commodities can be shipped more quickly and in larger quantities as a result of integrating the following technologies, which have all contributed to easing international trade: increased ........., integrated air traffic networks Growth of ......... and are freight companies The use of ............. Handling and distribution efficiencies Computerised logistics systems .............

size of aircraft, integrated air traffic networks, growth of low-cost airlines, use of standardised containers, high-speed rail networks

Flow of information: Information flows are governed by the movement of people through migration and by the ........... and ...... Both are responsible for the transfer of ...., ..... , industrial technology, design and business management support. ..... and ... have transformed these flows of information, which re now supported by: improvement to ......., making communication cheaper and easier, mobile telecommunication technology, .... and the ..., which enable large amounts of information to be exchange instantly across the globe, ...... available on a global scale because of satellite technology. The importance of information flows should not be underestimated because of their contribution to the expansion of .............. Such goods and services include those which have an intensive research and development (...) component and use highly skilled and educated labour. They include high-tech products such as semi-conductors, ......................., computer technology and business services such as international law, accounting and engineering. These industries need the exchange of ideas and lows of expertise to flourish.

speed of data, communication transfers, cultural ideas, language, digitisation and satellite technology, global telephone networks, email and the internet, live media coverage, knowledge-intensive goods and services, RaD, pharmaceuticals