Globalisation

Meaning of Globalisation The degree of interdependence that goes far beyond simple expansion of international trade. The main indication of the internationalisation of the economy.

Meaning of Globalisation Includes integration of production across national boundaries. Significant increases in international investment by multi-national enterprises (MNE’s)

The Rise of Corporate Power Of the largest economies in the world: 51 are corporations 49 are countries Wal-Mart Supermarket of USA is bigger than 161 countries Boeing aircraft manufacturing company is bigger than Czech Rep. New Zealand and Hungary General Electrics is bigger than Pakistan, Norway, Venezuela and the Philipines.

The Rise of Corporate Power 70% of world trade are transactions within the top 500 multinational companies ½ of all cross border transactions are routed through tax havens 1/3 of all assets of the global rich are held in offshore structures It is estimated that billions of revenue are lost from corporations tax evasion every year

Corporate Agenda ½ of all cross border transactions are routed through tax havens It is estimated that billons of revenue are lost from corporate tax evasion every year For third world countries, it is estimated to be in the region of 255 Billion US$ per year

Example Production of automobiles which for nearly century was concentrated geographically and at national level, is now done at a global level, with cars being assembled from component parts that are produced by large numbers of supplier companies in dozens of countries.

General Motors In 2003, global presence in more than 190 countries manufacturing operations in 32 countries and tens of thousands of supplier companies world wide, in total employing 340,000 people.

Components of Globalisation Extensive and complex network of suppliers that often exists. Leads to situations where a company is sometimes no longer able to trace the product it sells, or parts of it, back to its origins.

Components of Globalisation Growth and importance of foreign direct investment (FDI) Internationalisation of financial markets Development and diffussion of communication technology de-regulation and liberalisation Privatisation of the public sector

Components of Globalisation Unprecedented rapid movement of financial capital. This interdependence is facilitated and accelerated by new technology, particularly information technology.

Components of Globalisation Increased co-ordination role of the international finance institutions such as the world bank and the IMF, World Trade Organisation (WTO) on governance policies

Corporate Agenda De-regulate Privatise Downsize Outsource Low wages Create flexible markets with low job security Attack workers rights and trade unions.

Implications for workers The rootless character of MNE has introduced new management methods termed ‘’best practices’’. Threats to relocate to countries with lower social and environmental standards and no independent trade unions. New forms of work organisation established and changed employment relationships.

Corporate Agenda Sacrifice everything in order to increase and maximise profits. Threaten workers to accept lower terms in order to keep work

Corporate Agenda Contract labour Child labour Forced labour

Corporate Social Responsibility Latest fashion by employers Competitiveness and flexibility are still the main objectives for most of the MNE’s in the global environment.

Race to the Bottom We have to work the way they work in China if we have to keep the foreign owned mines or assembly plant Workers are increasingly put into fierce competition with each other. Pressure put on social safety nets effectively undermining workers rights that were won through many years of struggle. (The downward spiral)

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