Sustaining Economic Development in a Globalising World

What is Globalisation?
Process by which people, their ideas and their activities in different parts of the world become
interconnected or integrated
Key Driving Forces of Globalisation
Developments in Transportation and Communications
TRANSPORTATION
In 19th century: widespread use of steam engines
In 20th century: ocean-going vessels, commercial jet aircrafts, containerization
Significance: greatly increased the movement of goods and people from one place to
another
Efficient and integrated transportation infrastructure to facilitate movement:
airports, seaports, railways, highways
COMMUNICATION
Faster and more convenient communication via: telephone, electronic mail, fax, video
conferencing
Satellite technology: allows for simultaneous transmitting and receiving of information
Optical Fibre systems: transmit large capacity of information at very high speed
Internet: consumers can access information more conveniently and efficiently
Significance of advances in communication technology: Transnational Corporations (TNCs) can
easily coordinate and control their worldwide activities
Transnational Corporations (TNCs)
large global firms
operate in a number of countries
have production of service facilities outside their country of origin
Why do TNCs set up their operations in different locations around the world?
source for new markets
lower cost of production
How are worldwide operations controlled and coordinated?
By the HQ in the country of origin
Process to arrive at the final product?
o source for component from around the world
o assemble final product in another country
Significance: economies around the world become more integrated
Impact of Globalisation
1. Economic Impact
Globalisation has led to:
Improvement in Standard of Living
increase in income levels, more revenue earned due to increased investments in
a country
Revenue earned used for: education, housing, health, defence and transportation

Increase in lifestyle choices (ie: instead of buying local products, now have the
choice to buy the same product made in other countries)
Significance: people enjoy benefits, have a higher standard of living and a better
quality of life

Increased Competition among Nations

Investment and Market
TNCs: With globalization, countries face intense competition as governments
compete with one another to attract the TNCs
Eg: Singapores port faces competition from Malaysias port at Tanjong Pelepas
Investors invest in a country:
o where productions costs are low
o incentives are offered to foreign investors
Result: The country ends up having well-developed industrial infrastructure
The country poses a strong challenge to other countries in the region
When will investors not want to invest in a country?
poor infrastructure
political instability
Talent
The workforce has had more opportunities to find employment in another
country due to globalisation
Widening Income Gap between the Rich and the Poor
Globalisation has brought about: rapid development in many countries as well as
led to spread of poverty in other countries
Developed countries: own manufacturing activities so = rapid income growth
The rich in these countries continue to prosper because of better opportunities
TNCs: draw investments, skilled people, resources away from poor areas and
relocate them in other regions that benefit them
Developing countries: face trade barriers from developed countries
Unable to produce higher quality goods
The poor and lowly-skilled workers in these countries: face economic
uncertainties such as retrenchment
Result: increasing tension between rich and poor
2. Social Impact

Increased Awareness of Foreign Culture

People have become aware of different cultures
HOW? Surfing the Internet, traveling, watching foreign movies

Loss of Local Culture

Global brands dominate consumer market in developing countries
TNCs: have created a homogenous culture across the world
Globalisation: led to spread of pop culture
Result: influenced the youths, resulting in loss of local culture

Reaction to Globalisation: people are uncomfortable with advancement of foreign

culture as it is seen as the foreign culture beliefs, cultures and languages is being
forced upon the rest of the world

3. Environmental Impact
Natural Resources in developing countries as timber, oil and metals used up quickly
Developing countries more concerned with profits and markets
o Result: Takes a toll on the natural environment
Problem with developing countries? Unable to implement and enforce environmental
regulations
Environmental Degradation
Deforestation and Related Problems
Deforestation:
o taking place at a rapid rate
o to make way for development of industries, agriculture, housing
and transportation
o for economic activities such as forestry, mining and cattle ranching
o to plant cash crops, build factories, transport facilities (Indonesia)
Problems:
soil erosion
extinction of flora and fauna
increase in flooding
haze (a result of burning forest fast as it is the cheapest and easiest way)
Effect of haze: not only caused environmental but also health problems and losses in
terms of tourism
Global Warming
Causes of global warming? Movement of goods via aeroplanes and ships, other
modes of transportation
How? Production of large quantities of greenhouse gases (fumes) such as carbon
dioxide and nitrogen oxides leads to an increase in the average global temperature
Environmental Management
increased awareness of environmental management
with a well-preserved environment future generation are able to use the resources
to generate income
Result: ability to continue to enjoy high standards of living
energy use will increase by more than half over the next 25 years
China and India: will take up much of the energy increase due to rapid
development and large-scale industrialization
How to ensure a sustainable source of energy supply?
Conservation
Alternative energy sources: wind, solar, geothermal
But alternative sources of energy are costly to arrive at.

Singapores Strategies to Maximize Opportunities and Overcome Challenges in a

Globalizing World
How are the strategies carried out?
1. Diversifying the Economy in the following areas
o Research and Development
o Manufacturing Hub
o Education Hub
o Tourism Hub
Singapores goal: centre for technology-intensive, high-value added manufacturing
Activities egs: chemical engineering, pharmaceuticals
Singapores direction: Life Sciences, attract TNCs (high value-added manufacturing)
Life Sciences: How to ensure development?
Need for Research and Development,
- so set up A*STAR
- Research institutes set up
TNCs:
o generates jobs
o affirms Spores position as a manufacturing hub
o
o

Education:
o International Universities have set up branches in Spore
o Significance? Singapore will be able to create a strong university sector that
attracts Talent

Tourism: (Service Industry)

o need to keep up with competition in the region
o Tourist destination building of IRs: Significance: Singapore will become a
choice tourist destination in SEA and generate economic benefits

2. Nurturing Growth of Small and Medium Enterprises (SMEs)

SMEs: important providers of jobs
Supplies TNCs with components in the manufacturing industries
Result: enhances Singapores attractiveness as
a. regional manufacturing hub
b. service hub
Problems with SMEs:
a. unable to cooperate with big corporations which have more resources
b. lack expertise in using advanced technology to keep operations up-to-date
c. shortage of skilled professionals to manage the company (because family-run)
d. lack capital to venture into overseas markets (because small domestic market)
Solution:

Loan schemes where banks provide assistance

Training: regular seminars and workshops organized for members to
enhance their capacity
Tax Exemption for new companies

3. Venturing Abroad
Regionalisation: invest in countries with abundant land and lower labour costs
and new markets
Country that is investing provides capital and expertise to develop Industrial parks in
host countries

Benefit: promotes development in the region

Eg: Suzhou Industrial Park, International Tech Park in Bangalore, India
SingTel Groups: ventured abroad (in the region)
Expanded into overseas markets
Investments in over 20 countries
Benefit; Ensures Singapores long-term growth
Singapore has International Investments as well
Overall Benefit: ensures Singapores economic growth is maintained
Impact
With Singaporeans relocating overseas, studying abroad and choosing to live there
and work there, may result in Singaporeans becoming less emotionally rooted to
Singapore
4. Expanding Market Reach Through Economic Cooperation
Singapores domestic market is small
local companies have to sell their goods to a larger market to establish trade ties
How to expand market reach?
o sign Free Trade Agreements (FTA) with other countries
Benefit: brings closer economic collaboration by legally binding countries
o setting up Special Economic Zones (SEZ)
Benefits: less stringent economic laws than those in other parts of the ountry
uses tax and business incentives to attract foreign investments
5. Managing Resources Efficiently
Singapore lacks natural resources
Have to take care of natural environment so future generations can continue to
enjoy clean and green environment
How to manage resources efficiently?
Developing People
HOW?
a. Promoting local Entrepreneurship and Technopreneurship
Local entrepreneurs should take risks in their business ventures and come
up with new products to compete with foreign countries
How to promote entrepreneurship?
Amend bankruptcy laws: Why? entrepreneurs who have failed can start a
business again
Recognising local entrepreneurs who have struggled and succeeded
b. Promoting Continuous Learning Among the Workforce
Singapore Workforce Development Agency (WDA) ensures that workforce
remains competitive
Skills upgrading provided for workers by WDA: for new job demands and
changing work environment
Skills Development Fund (SFD) provides financial assistance to employers to
train and upgrade skills of their workers
Attracting Foreign Talent
Why?
to meet manpower needs of a knowledge-based economy

brings with it overseas business contacts

creates more business opportunities and jobs in Singapore
make up for the lack of local expertise who have specialized
skilled (craftsmen, artists)

Managing the Environment

Environmental preservation is crucial to sustainable development
Managing Limited Land Resources
to allow for high standard facilities for housing, transportation, recreation,
commerce, defence and education
Benefit: Singapore enjoys a good quality of life
Ensures Singapores sustained growth in globalising world
Land reserved to preserve natural sites
Land allocated for waste disposal
Cooperation with Regional and International Organisations

Regional Level:
o Singapore cooperated with ASEAN on haze issue: Singapore hosted
the ASEAN
o Ministerial Meeting on Haze in 1997 to discuss matters to combat the
problems

International Level:
o Singapore worked with other countries to work on global
environmental problems
o Eg: signed agreement to phase out use of ozone-depleting
substances like CFCs
Public Education
people must be educated on understanding environmental protection
adopt environmental friendly ways
have a sense of responsibility
take personal interest in keeping surroundings clean
students encouraged in taking part in recycling and waste minimization
programmes
shoppers encouraged: reduce excessive use of plastic bags eg: BYOBD
programme