SS Sec 4 CH9 - Economic Impacts of Globalisation

Chapter 9

Economic Impacts of globalization

• Positive Impacts

• Negative Impacts

Scope

• Impacts on Countries

• Impacts on Individuals

• Impacts on Individuals

Multiple Select

Globalisation is a process where countries become ______________ and _____________. (2 answers)

• interconnected

• disconnected

• interdependent

• independent

1. Impacts on Countries

Increased trade with other countries

-> Increased tax revenue

-> Increased employment

-> Greater variety of goods for consumption

​

Positive Impacts on Countries

Economic Impacts

Positive and negative impacts

Explain based on the benefits / problems brough about by increased globalisation

Give specific examples

(+) Economic Impacts

1 Higher Tax Revenue

Globalisation -> Increased trade with other countries, selling foreign products in Singapore (cause)

-> Import taxes collected

-> Government tax revenue increases

-> more funds to spend on improving the country (benefit)

​Singapore's Tax Revenue

(+) Economic Impacts

2 Increased employment opportunities

Globalisation -> MNCs locate in Singapore

-> MNCs provides jobs by hiring local manpower (cause)

-> More jobs - lower unemployment

-> People are able to earn a living and less unemployment (benefit)

​Singapore's Best Employers

Ranking list for 2022

How many are MNCs?

(+) Economic Impacts

3 Economic Survival (Singapore)

• Global Economy vital for Singapore's survival

  • Limited natural resources / Limited Manpower / Small market

  • Dependance on MNCs and global trade

  • https://www.youtube.com/watch?v=cRDgnLa42PQ

Singapore has a small market --> Needs to tap the global economy for trade for economic growth

FDI = Foreign Direct Investment

Singapore is seen as a safe investment destination​

Global Trade

FTA = Free Trade Agreements

-> Treaties to establish free trade areas where trade can be conducted without tariffs / hinderances across borders

This reduces the cost of doing business in another

country

https://www.temasek.com.sg/en/news-and-resources/stories/future/free-trade-impact-singapore

Global Trade

​Latest FTA signed : RCEP (2021)

USA - Singapore FTA

(USSFTA)

​

FTAs signed by Singapore

Japan - Singapore FTA
(JSEPA)

​Japan–Singapore Economic Agreement for a New Age Partnership

FTAs signed by Singapore

Test Yourself...

Multiple Choice

Which is NOT an economic benefit of globalisation?

• Increased trade

• Better communications

• Increased employment

• More variety of goods

Better communications is a driver of globalisation, not a benefit

Foreign Direct Investment

Multiple Choice

Singapore's top trading partner is...

• Malaysia

• China

• USA

• Europe

Multiple Choice

Which country is Singapore's largest source of FDI?

• China

• UK

• USA

• Japan

Multiple Choice

RCEP stands for

• Regional Comprehensive Economic Partnership

• Regional Centered Economic Plan

• Regional Centre for Economic Partnership

• Regional Competitive Economic Plan

Economic downturn in one country can affect other countries

Recession = Serious economic downturn --> Companies close and people lose jobs

​

Negative Impacts on Countries

(-) Economic Impacts

Global Financial Crisis

Downturn in one country can spread to another country

As economies are now interconnected and interdependent

In a recession, countries may:

• Withdraw its investments

• Reduce its demand for goods and services from other countries
  

(-) Economic Impacts

Global Financial Crisis

In 2008 Financial Crisis,

Housing crisis in the USA caused their banks to fail

Financial problems spread to other countries as US banks could not repay European Banks etc

Led to unemployment of 50 million people

https://www.youtube.com/watch?v=yM0uonkloXY

(-) Economic Impacts

Global Financial Crisis

Impacted Singapore's economy as well, was the worst economic downturn until the Coronavirus recession

https://www.youtube.com/watch?v=-fpcBg9jZFs

Open Ended

In your own words, how did the Financial Crisis start and how did globalization cause countries like SIngapore to become affected?

2. Impacts on Companies

Due to better transport and communications, companies can

• Expand production

• Widen market reach

  Thus making increased profits

​

Positive Impacts on companies

Most MNCs earn higher profits by setting up locations in different countries

More people to sell to

(Expanded market share)

Lower business costs

(Cheaper workers / resources)

​

Higher Profits

American companies have dominated by leveraging opportunities arising from a global economy

​

Higher Profits

Singapore companies have also gained higher profits from expanding overseas

Help from the government given to companies

​

Higher Profits

Affordable cost beverage products company

Sold in Malaysia, Indonesia, Vietnam etc

​

Higher Profits - Singapore

But companies also face increased competition from other global companies

May lose profits / market share

​

Lower Profits

Smaller local companies face challenges competing with global MNCs

Must continually innovate to remain relevant

Examples?

​

Lower Profits

SME = Small and Medium Sized Companies

• Important to Singapore as they employ 70% of SIngaporeans

​

SMEs

Unable to compete with larger MNCs offering the same products / services

​

Problems of SMEs

​Some SMEs are successful as they understand local conditions / culture better

Products appeal to locals

Some MNCs may also fail in Singapore as they may not be relevant / competitive

https://goodyfeed.com/10-internationally-successful-brands-that-failed-in-spore/

​

MNCs fail also

SBQ Investigation

Refer to Pg 290 of your Course Book

3. Impacts on Individuals

Study the following sources. What do they tell you about how globalisation has impacted them? What are the similarities?

​Ease of movement (through globalization) can result in increased income from working overseas.

But some workers may not benefit from globalisation

​1. HIGHER INCOME

2.Lower Income

Globalisation also leads to companies having access to foreign markets offering lower labour costs. Workers may have to settle with lower wages or risk being replaced by foreigners.

Loss of Jobs

Jobs can be lost when MNCs shut down to shift to another location.

In the USA, many companies shut down operations to move to India or China where labour costs were much lower.

Lack of Skills

Some workers lose jobs as their skills become outdated / less relevant in a new economy

​The need to reskill Singaporeans

Singapore workers

Singapore cannot compete with countries like China and India on low costs of workers.

We have to compete based on value and skills.

Unable to compete with foreign talent

Lower costs of labour in other countries

Loss of Income

Higher salaries overseas

MNCs provide jobs in Singapore for higher salaries

Higher Income

Economic Impact on Individuals