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Globalisation & The EU. What is Globalisation?. The increasing interconnectedness of the world economically, culturally and politically. The current phase developing out of internationalisation.
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The increasing interconnectedness of the world economically, culturally and politically. The current phase developing out of internationalisation. • Globalisation as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole. (Robertson 92) • A social process in which the constraints of geography on economic and cultural arrangements recede, in which people become increasingly aware that they are receding and in which people act accordingly. (Waters)
General Economic evidence • *Wimbledon tennis ball – product of materials and labour from at least 10 different countries. Factory in the Philippines, rubber from Malaysia, Tin from Indonesia. • *McDonalds – 31,000 restaurants, in 121 countries, with 46mn customers a day. Annual revenues = $40bn. 1 in 8 Americans has worked in McDonalds, Third of US cows are used for the burgers and 8% of the US potato crops are used for the chips. • *Wal-Mart – Profits in 2002 +$8bn. 3,200 stores in the US and 1,100 abroad. Has bought Germany’s Wertkauf, UK’s ASDA and 34% of Japan’s Seiyu. Will create 800,000 jobs in the US (2003-8) and employs 1.3mn worldwide.
The emergence of hubs • Trade globalisation favours the appearance of impulse centres where controlling functions, banks and stock exchanges, company head offices, R&D are concentrated. • The best example of this is the TRIAD (the 3 main economic hubs and great political centres: North America, Western Europe, the Far East with Japan. • Note not all spaces belonging to the Triad are dynamic. All the powers belong to only a few big megalopolises (NY, Tokyo, London, Paris, The Rhine-Ruhr). Minor centres make the hierarchy complete ( American sun-belt, Randstad-Holland, Singapore)
How does this source also show the EU’s role in Globalisation?
Trade Blocs • An important feature of world trade has been the emergence of trading blocs, i.e. countries which choose to trade together as a group e.g. EU, NAFTA, ASEAN. • The advantages are that countries may trade freely without paying duties, or tariffs, on goods produced with the same bloc. To countries outside the bloc there may be tariffs to pay on imported goods. • The EU goes further and permits the free movement of people within the countries & it also has its own currency.
European Union 28% Global Manufacturing 39% Global exports The Global Triad $170,140m $128,110m $179,710m $148,110m $171,090m $286,240m NAFTA 29% global manufacturing 18% global exports APEC 30% Global manufacturing 23% Global exports
Trade Friction • Bananas – EU vs USA EU favours buying bananas from former colonies rather than from cheapest source. The WTO has upheld USA complaint and sanctions have been placed on EU goods. This means some goods going into the USA from the EU are subject to 100% duties. • Airbus/ Boeing EU vs USA
‘China & the EU can strike a bargain’ Peter Mandelson July 2006
The Common Agricultural Policy • In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods. • CAP OBJECTIVES • To increase productivity • To ensure fair living standards for the agricultural community • To stabilise markets • To ensure availability of food • To provide food at reasonable prices • The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level. • This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of "mountains" and "lakes" of surplus food and drink. • The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world.
Impact on Kenya • Africa is not too globalised it is too marginalised. • *Import duties keep globalisation at bay. Even if they get rid of the barriers at home, there is still a problem of foreign tariffs. • *The flower industry is only booming, because the EU has removed their tariffs on flowers. If it reverses this decision the farms will perish. • *The EU also subsidies its exports – farmers cannot compete with wheat prices and are thus struggling to survive. • *Half of the EU budget goes on farming. Each EU cow could fly around the world once each year with all their subsidies.
