Social Studies Chapter 2: Globalisation

Chapter 2.1: Causes of Globalisation (3)

1. Globalisation is defined as the process by which people, their ideas and their activities in different parts of the world become interconnected or integrated. 2. Key Driving forces of Globalisation are a. Improvements in Transport and Communications technology and b. Transnational Corporations. 3. Transport is the means by which people, materials and products are transferred from one place to another. a. Improvement in transport technology has shrunk the world by reducing the time taken to travel from place to place. b. E.g. Commercial Jet aircraft, large vessels and containerization (system of cargo transport using standard size cargos) has increased/quickened the movement of people/goods from place to place. c. Efficient transportation infrastructure like airports, seaports, railways and highways has also helped to facilitate the mobility of people and goods by reducing travelling time. d. Thus by reducing travelling time, people goods can travel to many countries quickly and easily, allowing countries to trade with each other easily, and thus allowing countries around the world to become more interconnected with one another. 4. Communication systems are the means by which information is transmitted from place to place in the form of ideas, instructions and images. a. Advancements in technology has made communications among people in different locations faster and more convenient. b. Invention of such technology like the Internet has enabled consumers to access information/ news around the world easily. c. The Internet has transformed the way one communicates, conduct businesses, obtains info and purchase goods/services d. Therefore, through the Internet, people are able to communicate easily and quickly and thus allowed people to become more interconnected to each other. 5. Transnational Corporations (TNCs) are large global firms that operate in a number of countries and have production or service facilities outside their origin country (HQs). E.g. Microsoft Corporation, Toyota. a. They setup their operations in different locations for souring for new markets and lowering costs of production (Link: Geog Chp 2 Industrial World)

b. TNCs also source for components around the world before assembling the final product. c. Therefore, this has allowed economics around the world to become more integrated as these companies trade with various countries around the world, making them more connected.

Chapter 2.2: Impacts of Globalisation (7)

6. There are 3 main impacts of globalisation: a. Economic Impact: Improvement in SOL, Increased competitions among nations, widening income gap between rich and poor. b. Social Impact: Increased awareness of foreign culture, loss of local culture. c. Environmental Impact: Deforestation/Related Problems, Environmental Management 7. Economic Impact: Globalisation has helped improved the living standards of people by increasing their income levels. a. Improvement in Standard of Living i. As countries trade and attract foreign investments, they earn more revenue, which can be used by the governments to improve the housing, transportation, etc. ii. This has allowed people in these countries to experience a better SOL. b. Increased competitions among nations i. Investment and Market: As TNCs source for locations to locate their factories, governments compete with one another to attract these corporations to invest in their countries. They may offer incentives to foreign investors as well. ii. For e.g. China. When it first allowed foreign investors to come in 1970s, these companies set up their production facilities in cities like Suzhou, Wuxi and Dalian, causing them to have well developed industrial infrastructure. iii. This has also allowed China to become an attractive country for foreign investors and pose a strong challenge to other countries in the region. iv. However, many LDCs find it difficult to attract foreign investments due to reasons like poor infrastructure and political instability, trapping them in the poverty cycle. v. Talent: Highly talented people are in demand around the globe. With Globalisation, these people can move to different countries to search for better employment opportunities. vi. An increase in workers mobility may lead to brain drain. Without talented people in the country, its economy may suffer in decline compared to other countries. c. Widening Income gap between rich and poor i. DCs are experiencing rapid income growth as they own most of the manufacturing activities (TNCs from there can draw

3 Causes of Globalisation | 7 Impacts of Globalisation | 6 Challenges faced by Singapore | 5 Strategies by Singapore to sustain in a Globalising World

Copyright 2010. All Rights Reserved. No part of this publication may be reproduced without permission from the author.

investments, skilled people and resources from poor areas and relocate them) ii. LDCs face trade restrictions by DCs as they are not capable of producing better quality goods that fetch higher prices that the DCs can due to lowly skilled workers. iii. Therefore, the rich in the DCs continue to prosper due to better opportunities, whereas the poor face economic uncertainties such as retrenchment Social problems/increasing tension between the rich/poor. 8. Social Impact: Globalisation has changed the way people lived their lives. a. Increased awareness of foreign culture i. Through globalisation, one can become more aware of different cultures by travelling or surfing the Internet. ii. This will allow people to become more understanding and tolerant to other countries, and also help to reduce misunderstanding among countries. b. Loss of local culture i. Global brands like McDonalds dominate the consumer market in LDCs. With their standardized methods of operation and appearance, it has created a homogenous culture in the country. ii. Globalisation has also led to the spread of pop culture across the globe such as rap music, MTV and Hollywood Movies. This may cause the youths to lose interests in local culture. It may also cause people to think that other countries are forcing their beliefs, cultures and languages to the rest of the world. 9. Environmental Impact: TNCs are attracted to LDCs due to their natural resources. In addition, LDCs are eager to gain the economic benefits and concerned with profits rather than environmental protection, causing the natural environment to suffer. a. Environment degradation i. Deforestation/related problems: Rainforests in many countries have been cut down to make way for development of infrastructure and agriculture. Governments have also allowed trees to be cut down as economic activities like cattle ranching can generate revenue for the country. ii. Resulted in many environmental problems like soil erosion, extinction of flora and fauna, increase in flooding and haze. iii. Therefore environmental degradation will cause severe economic effects as tourism industry may be affected due to haze and money needed to be spent to clean the environment caused by natural disasters. iv. Global Warming: Advances in transport technology like aeroplanes and ships has worsened global warming as they emit greenhouse gases.

v. This will cause the global average temperature to rise and may lead to natural disasters like flooding of lowland countries due to melting of ice caps. b. Environmental management i. Countries have become more aware that sustainable development is the key to further growth, as when the environment is well preserved, future generations can use the resources to generate income and enjoy a good standard of living. ii. Alternative energy sources like wind, solar and geothermal power can provide some energy required by factories. iii. Therefore, this had helped to encourage governments to preserve the environment for our future generations and thus help manage the environment.

Chapter 2.3: Challenges faced by Singapore in a globalised world (6)

10. 6 Challenges faced by Singapore in the 21 century and their effects are: a. Economic Slowdown in other countries b. Transnational Terrorism c. Ageing Population d. Maturing domestic economy e. Rise in China and India as competitors f. Disease outbreak (e.g. SARS, Bird Flu)
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11. Economic slowdown in other countries: Refers to situations such as fall in investments, employment opportunities whereby there is a fall in the general purchasing power in other countries. a. Citizens of these countries would travel less which may affect our tourism and service industry. b. These markets may also not purchase goods exported from Singapore Oversupply in products. c. This will drive the prices of our goods down and make our country less attractive to foreign investors due to low profits from our goods. d. In addition, tourists would not come, tourism industry affected, taxis/hotels/restaurants would also suffer losses, causing many people to be retrenched. e. As Singapore is an open economy, it is highly dependent on tourism, thus any effect on the tourism industry would have a huge impact on our economy and slow down our economic development. 12. Transnational Terrorism: With globalisation, it is easier for terrorists groups like Al Qaeda to coordinate their terrorists attacks through the Internet. a. This is mainly because people are more likely to travel freely due to improvements in transportation. b. This can affect Singapores tourism as the level of international security has been compromised.

3 Causes of Globalisation | 7 Impacts of Globalisation | 6 Challenges faced by Singapore | 5 Strategies by Singapore to sustain in a Globalising World

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c.

For instance, if a terrorist attack happens in Singapore, people feel less secured to travel than before as they are unsure when terrorists will strike again. d. This can be seen in the 9/11 incident which affected Singapores tourism badly as most tourists from America did not come to Singapore. The government had to increase spending on security. e. Thus terrorism is a challenge to Singapore as it will affect Singapores economy and slow down its economic development. 13. Ageing Population a. It is a situation whereby there are more older people than younger people in our country. i. It will affect the productivity of our economy and our ability to attract TNCs, as TNCs would not want to invest in a country with a ageing workforce with low productivity. ii. This is also because old workers are slow and would demand higher salary. b. It would also increase the taxes the young people have to pay as more money is required to meet the needs of the elderly (the elderly cant work/ contribute to economy, also use up a lot of resources) 14. Maturing Domestic Economy a. This means that an economy is reaching a point where they are generally developed (a.k.a. saturation point) and there is little room for further improvement. b. When there is a crisis in another country, the country with saturated economy need to contribute more to help that country. c. There is thus fewer opportunities for Singapore to export goods to these places as they would have their necessary needs met (these places may not want to buy our goods) d. Hence, it will affect our export market to these places leading to the shrinking of market opportunities. e. This is thus a challenge to Singapore as Singapore needs to explore potential markets to sell its goods. 15. Rise of new economic competitors a. Emerging economies attract TNCs by providing goods at lower costs, having plenty of natural resources and a large market. b. These emerging countries would compete on the available pool of investors with Singapore, and Singapore will tend to lose out as we have no natural resources, small geographical size and low population (high production costs for investors) c. Thus this is a challenge as it is harder for Singapore to attract other TNCs to invest. 16. Disease Outbreak a. Diseases like Bird Flu and SARS were airborne diseases which had a direct impact on Singapore due to the mobility of people across countries.

b. Singapore is very vulnerable to disease outbreaks due to its openness to other countries lots of people from other countries come to Singapore every day. c. Singapore thus has to be vigilant to monitor the rise of epidemic in other countries to prevent it to spread in our country, which will affect our workforce and tourism industry. d. Singapore has to rely on technology at immigration checkpoints to monitor the flow of tourists state of health into our country to ensure they are disease free. e. Thus disease outbreak is a challenge to Singapore as it can affect the tourist and services industry, which can hinder our economic development.

Chapter 2.4: Strategies by Singapore to sustain in a globalised world (5)

17. There are 5 strategies adopted by Singapore to manage these challenges of Globalisation: a. Diversifying the economy b. Nurturing growth of SMEs c. Venturing Abroad d. Expanding market reach through economic cooperation e. Managing resources efficiently (Developing local talent, attracting foreign talent, managing the environment) 18. Diversifying the Economy: This is basically a strategy which reduces the reliance on a particular industry. a. Singapore is venturing into areas like Life Sciences and organisations like A*STAR is set up to build up Singapores research and development capability. b. Singapore also tries to be a regional hub for services like education and tourism by encouraging international universities like Standford University to set up their branches in Singapore. This will help create a strong university sector that attracts talent. c. Tourism is also another service industry that is promoted. 2 IRs are being built in Marina Bay and Sentosa as Singapore is facing stiff competition from neighbouring countries as a tourist destination. d. Thus by diversifying the economy, there will be less reliance on a particular industry which will help to bolster the effects if that industry falls as the other industries can help to continue generating revenue for the country. 19. Nuturing growth of SMEs (Small/Medium Sized Enterprise) a. SMEs are small companies that provide support for the TNCs as subsidiary branches to supply resources for a larger manufacturing process. b. However, many SMEs may face many problems running their businesses as they do not have enough resources, manpower or advanced technology for their operations.

3 Causes of Globalisation | 7 Impacts of Globalisation | 6 Challenges faced by Singapore | 5 Strategies by Singapore to sustain in a Globalising World

Copyright 2010. All Rights Reserved. No part of this publication may be reproduced without permission from the author.

They also face a small market as they do not have capital to venture to overseas markets. c. The Singapore Government has stepped in to help them. For instance, the Association of Small and Medium Enterprise (ASME) was setup in 1986 to provide assistance to SMEs through training. New companies are also granted tax exemption by the government on their first $100, 000 for 3 years. d. Therefore, these SMEs are important to Singapores economic growth as they provide employment opportunities for the local workers if jobs for TNCs are not available. Their role will also help to attract TNCs, helping Singapore to gain more income for development. 20. Venturing Abroad a. Singapore faces the challenge of limited land and lack of natural resources to develop our economy. b. Thus we need to regionalize by investing in nearby countries that have abundant land, lower labour costs and new markets. c. It is a win-win situation as the Singapore companies provide expertise and capital to develop industrial parks in those countries, whereas those countries provide land and labour for Singapore companies. d. Singapore invests in countries where there are low costs of production, abundance resources (low in price) and big/new markets to sell our products. e. For e.g. SingTel, a Singapore company has expanded into overseas markets with investments in over 20 companies. These investments will ensure the companys long term growth. f. Therefore by venturing abroad, this helps to ensure that if our countrys investments do not work out in 1 region, we have other regions to rely on without affecting our economy. g. However, Singaporeans may also choose to stay on in the host countries for good which may cause us to lose our talent. 21. Expanding market reach through economic population a. As Singapore has a small domestic market and population, it need to establish trade ties with countries around the world to enable our local companies to sell their goods to a larger market. b. One way to expand market reach is through Free Trade Agreements, where both countries agree to take away tariffs (taxes imposed on overseas goods) to allow Singapore goods to sell better overseas it is cheaper. c. Another way is through Special Economic Zone (SEZ) (Indonesia) where Singapores industries are diverted to these zones overseas. This can make Singapores industries more competitive as labour cost is cheap, goods can be sold cheaper and job opportunities can be created.

d. Through this, Singapore has more countries to sell our manufactured goods at more competitive prices. Moreover with simplified immigration procedures due to trade, it will be faster for goods to be transported to earn profits. 22. Managing resources efficiently a. Human Resource i. Local talent ii. Foreign talent (sparked unhappiness among the people) b. Environmental / Natural Resources i. Limited Land resources ii. Environmental Issues 23. Local Talent: Encourage entrepreneurship and technopreneurship. a. Singapore needs more local entrepreneurs who are willing to take risks in their business ventures and come up with new products to compete with foreign companies. b. One way this can be done is to amend bankruptcy laws to allow entrepreneurs who have failed to start a business again. c. Another way is to give recognition to outstanding local entrepreneurs who have struggled and succeeded to inspire more entrepreneurs to achieve better success. (e.g. Kenny Yap, Chairman of Qian Hu Fish Farm) d. The government is also promoting continuous learning among the workforce. With Globalisation, the workforce need to continuously upgrade their skills so as to remain employable as jobs become obsolete very quickly. e. An example is a program offered by WDA which is Employability Skills Systems to enable workers to better adapt to new job demands and changing work environment. f. Therefore by encouraging local talent, it will ensure that Singapore will not be taken over by foreign talent and that Singaporeans can contribute to the economy as well. 24. Foreign Talent: As Singapore is experiencing a declining birth rate and requires new skills in a knowledge-based economy, there is a need to attract foreign talent to meet its manpower needs. a. It is the fastest way to fill up the workforce and is an important source of contact overseas for new business opportunities. b. Therefore, by attracting foreign talent, it will allow new skills to be brought in and increase the standards of our workforce, which will be more attractive to foreign investments and promote economic growth. 25. Managing Limited Land Resources: Singapore has a small geographical land size that are highly demanded for different uses. a. Singapore government needs proper planning for the overall development and growth (else it

3 Causes of Globalisation | 7 Impacts of Globalisation | 6 Challenges faced by Singapore | 5 Strategies by Singapore to sustain in a Globalising World

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will lead to haphazard growth causing land space to be wasted) b. Singapore also makes use of innovative technology to save space such as landfills in Palau Sermakau after incinerationand Incineration plants for waste disposal at Ulu Pandan, Tuas and Senoko (high chimneys to prevent air to be polluted at ground level). c. With careful land use planning, high standard facilities for housing, transportation, defence, etc can be built. These facilities will enable Singaporeans to enjoy a good QOL and ensure that Singapore can sustain growth in a globalizing world. 26. Managing the environment a. Cooperation with regional and international organisations: Singapore works with ASEAN to solve the haze problem from Indonesia. i. Detect forest fires and haze using satellites. ii. Hosted the ASEAN Ministerial Meeting on Haze to discuss measures to combat the problem. iii. Therefore, this allows Singapore and other countries to share knowledge and expertise so that it would be beneficial to both parties. iv. Singapore has also played a part at the international level by signing the Kyoto Protocol to phase cut CFCs progressively from 1 January 1996. b. Public Education of Locals i. Singaporeans should be instilled with a sense of responsibility and personal interest to keep their surroundings clean. ii. People are encourage to practice the 3Rs. For e.g. Bring Your Own Bag day programme is on every Wednesday where Singaporeans are encouraged to bring their own bags to the supermarkets. iii. The Clean and Green Week is an annual campaign that tried to educate people on environmental issues through exhibitions, seminars, workshops, beach cleaning, etc. iv. This will prevent the government from spending large amounts of money to clean the environment and divert more money for use in other areas.

1. Globalisation poses a challenge to Singapore. Do you agree? Explain your answer. (13m) Guideline Paragraph 1: Challenges (e.g. Terrorism, spread of diseases) Paragraph 2: Opportunities (e.g. Foreign Talent) Paragraph 3: Conclusion Remember to state examples!

Exercise: Sample SEQ Question

3 Causes of Globalisation | 7 Impacts of Globalisation | 6 Challenges faced by Singapore | 5 Strategies by Singapore to sustain in a Globalising World

Copyright 2010. All Rights Reserved. No part of this publication may be reproduced without permission from the author.