REGIONAL INTEGRATION

Lesson 1 – Pt 2: Globalization

Form 4/5

Teacher: Ann Samm-Regis

Objectives:

1. Define causes, benefits and disadvantages of

globalisation

2. Explain why we should be concerned about

globalisation

3. Explain how economies of scale work

KEY CONCEPTS• cooperation• teamwork• interconnectedness• competition• economic survival• economies of scale

Globalization explained

Globalisation is a process that sees

national economies, cultures and

societies being drawn together through

transportation, communication and trade.

Economic globalisation is usually

associated with the reduction or removal

of barriers to the flow of goods, services,

capital and labour across national

boundaries. This can result in some

companies becoming multinational,

doing business around the globe and

having access to the whole world as their

market.

Caribbean businesses need to be able to

function across the region if they are to

meet this challenge and compete in this

global market.

Top 10 MNCs:-

1. Microsoft

2. Nestle

3. PepsiCo

4. HP

5. Coca-Cola

6. Sony

7. Procter & Gamble

8. Citigroup

9. Nike

10.Apple

➢GLOBALIZATION refers to the process

by which the world’s economies are

becoming interconnected as a result of

improvements in transportation and

communication.

Due to development of:

1. air travel

2. computers, internet,

the worldwide web

3. satellite communication

➢Today, all countries are more

interdependent than ever before.

Globalization:

the greater movement of people, goods, capital and ideas due to increased economic integration.

•propelled by increased trade and investment

• living in a borderless world

Slide 1 of 2

There has always been a sharing of goods, services, knowledge and cultures between people and countries, but in recent years improved technologies and a reduction of barriers to trade means the speed of exchange is much faster.

Slide 2 of 2

Globalization:

• Technological improvements in transport and communication

• Increased speed of communication (email, social media, etc)

• Increased world travel

• Interconnectedness

• Increased trade (ecommerce)

• Increased competition for resources

• Satellite communication (news travels fast)

• Pandemics

• Borderless world

Issues to

consider

• World climate: All countries are affected by global

warming, ozone depletion, melting of the ice-caps,

rising sea levels, deforestation and pollution. All are

responsible for preservation of the environment.

• Tourism has grown into a globalised industry as a

result of international travel and can have a negative

impact on the natural environment and on societal

values (e.g. prostitution)

Issues to

consider

• A war or disaster in one country may have

worldwide impact (refugees, interruption of supply,

disruption of air-travel etc)

• Production is increasingly international

(↑ unemployment in some countries, ↑ exploitation

of workers in underdeveloped and developing

countries where labour is cheaper)

Disadvantages of Globalisation

1. Communicable Diseases can easily

become pandemics – SARS, H1N1, Bird

Flu, ebola, covid-19

2. Repatriation of profits by MNCs and

TNCs which exploit host country

resources and send profits to their own

home countries

3. Exploitation of workers in

underdeveloped and developing countries

where labour is cheaper

4. Local businesses face increased

competition from foreign products as

barriers to international trade are being

removed - (unemployment increases)

5. Loss of cultural uniqueness: People from

many countries eat the same foods and

watch the same TV programmes.

How can the

Caribbean

benefit from

globalisation?

How the Caribbean

can benefit from

globalisation: Advantages

1. Access to a wider range of goods

and services

2. Chance to export to new and

bigger markets

3. More exports:

➢increased employment

➢Increased government revenue

from taxation (income and

corporation tax)

➢increased business investment

(economic development)

4. Improved standard of living

Why must we in the Caribbean be concerned about globalization?

1. Many Caribbean countries depend on tourism for survival. Outbreaks of diseases such as SARS and H1N1 can cause great losses in the tourism industry because people tend to travel less during pandemics.

2. The cost of production in Caribbean countries is higher than the cost of production in larger, more developed countries. It is difficult for Caribbean products to compete on the international market against foreign goods. Also, our locally and regionally produced goods must compete on the local and regional market against cheaper foreign goods imported from countries such as China, Japan and the US. If local and regional goods do not sell, the industries will suffer, people will lose jobs and the economy will suffer.

CHALLENGES FACING CARIBBEAN COUNTRIES

1. With the opening up of world markets and free trade, how can we be competitive and produce high quality goods at cheap prices?

2. Should we finance development projects by taking loans from international lending agencies or should we open our doors to foreign investors?

3. How can we improve productivity in the workplace with the existence of powerful trade unions which consistently seek higher wages for members?

4. What can be done to train our nationals for jobs in an environment which is highly technological?

5. What can be done by Caribbean countries to reduce the food import bill and to be self-sufficient in food production?

6. What can be done to combat the effects on consumer tastes and spending of television programmes and other media (internet, books, magazines, newspapers etc) with a heavy foreign content?

Economies of scale are the cost advantages that enterprises obtain due to their scale of operation(typically measured by the amount of output produced), with cost per unit of output decreasing with increasing scale.

ECONOMIES OF SCALE

ECONOMIES OF SCALE

No. of wallets 10000

Fixed costs:

Land $50000

Factory building (mtge) $50000

Salaries $20000

Variable costs:

Wages per 10000 wallets $5000

Raw materials per 10000 wallets $10000

Electricity per 10000 wallets $5000

Total cost $140000

Unit cost (Total cost ÷ No. of wallets) = ?

$140000 ÷ 10000 = $14 per wallet

20000

$50000$50000

$20000

$10000

$20000$10000

$160000

?

$160000 ÷ 20000 = $8 per wallet

May 2006, Q7

GLOBALISATION: COOPERATE TO SURVIVE

a) Define “globalization” .

b) State TWO negative effects of globalization for Caribbean

businessmen.

c) Give THREE reasons why regional cooperation is necessary

to compete with international producers in a global

environment.

d) Suggest to Caribbean businessmen ONE action they may take

to prepare their workers for globalization. State why the

businessmen should support the measure you have suggested.

May 2006, Q7

a) Define “globalization” .

GLOBALIZATION refers to the process by which the world’s

economies are becoming interconnected as a result of

improvements in transportation and communication.

b) State TWO negative effects of globalization for Caribbean

businessmen.

– Competition from cheaper imported goods due to high cost

of production and lower levels of technology and

productivity in Caribbean countries.

– Difficulty accessing international markets or global

markets because prices are uncompetitive and quality

standards in the Caribbean need to improve to meet

international standards. Caribbean goods seen as inferior

to foreign products.

May 2006, Q7

(c) Give THREE reasons why regional cooperation is necessary

to compete with international producers in a global environment.

– Greater bargaining power as a region in dealing with

trade negotiations with external countries and MNCs

which have traditionally played us against each other

– Increased regional market allows for economies of scale

so our costs of production can go down allowing us to

compete on the global market

– Allows us to implement common policies such as the CET

and other barriers to trade which can protect regional

goods from competition from cheaper foreign products

(d) Suggest to Caribbean businessmen ONE action they may take to

prepare their workers for globalization. State why the businessmen

should support the measure you have suggested.

– Foreign language training to prepare workers for dealing with

customers and suppliers from foreign countries

– Investment in educational courses and short seminars e.g. by

provision of study leave for workers to improve their knowledge,

skills and competences

– investment in technology (the latest model of machines and

equipment) and training in ICT to ensure technologically skilled

workers and greater productivity

– Arrange for workers to attend seminars or workshops on

globalisation and the effects it can have on the business (increased

competition etc)

– Negotiation training/ cultural sensitivity training to prepare them

for interactions with people from different cultures and

backgrounds

– invite resource persons for sessions on values and attitudes,

designing of websites and advertisements

(1) Modules in Social Studies:

Read pages 236-241, 393, 401-403

(2) Study Guide: Read Unit 6.1-6.2 on pages 92-95

(3) Answer the following questions:

a) What does regional integration involve?

b) What is the fundamental purpose of regional integration?

c) List the 14 major challenges facing Caribbean countries?

(4) Complete the online quiz entitled: RI-Q1 Challenges facing

the Caribbean region

(5) Do Question 1 (a-d) on page 113 of your Study Guide.

ANSWERSa) What does regional integration involve?

Regional integration involves the unification of a number of

nation states into a larger whole .

b) What is the fundamental purpose of regional integration?

The fundamental purpose of regional integration is to enhance

the development of the region.

c) List the 14 major challenges facing Caribbean countries?

Small markets /no economies of scale, unemployment and

underemployment, Brain drain, debt burden, shortage of

capital, low productivity, limited physical resources and

unequal resource distribution, lack of

diversification/monoculture, unfavourable balance of

payments as imports exceed exports, inadequate technology,

transportation, natural disasters, difficulty accessing foreign

markets, high rates of illiteracy

ANSWERSa) The small size of Caribbean nations is a challenge to

economic development because the small size:-

• limits the markets, renders economies of scale impossible,

makes Caribbean goods comparatively more expensive on

the world market

• businesses remain small which limits job creation

capability and limits ability to earn foreign exchange from

exports

• limits government revenue from taxation .

b) Two reasons for the need to develop human resources are:-

- need well developed human resource to provide the skills and

knowledge to make full use of our physical resources for

economic development

- A well-developed human resource is more innovative, creative

and productive

- high rates of illiteracy and lack of employable skills lead to

high levels of unemployment so development of human

resources would make people more employable

Ways in which the region’s human resources are currently

underdeveloped are:

- high rates of illiteracy

- low level of skill

c) Diversification in agriculture is needed because

- It leads to more export products, increased foreign exchange

earnings, decreased vulnerability to natural disasters, pests and

diseases, more stable economy

- most agricultural products are sold on the commodities market

where prices fluctuate wildly so it is better to not have all your

eggs in one basket

- the wider availability of local fruits and vegetables leads to

increase self sufficiency in food production .

c) Diversification in tourism is needed because

- There is a lot of competition in traditional tourism product

areas such as cruise ship tourism and hotel or resort based

tourism; development of new forms of tourism such as

ecotourism and adventure tourism can create a unique niche

market

d) CARICOM leaders can support attempts at regional integration,

ensure the education system keeps pace with the needs of the

industrial sector, give incentives to farmers to introduce new crops.

These incentives might include:

- soft loans,

- duty-free import of equipment,

- training and advice,

- subsidize purchase of seeds, equipment and fertilisers,

- development of rural infrastructure,

- assistance in finding markets for their products

Vocabulary• Global: worldwide

• Market: a place where goods and services are bought and sold

• Trade: the buying, selling and/or exchanging of goods and services

• Multi-national corporation / trans-national corporation: organisations that have businesses in more than one country

• Social media: websites and applications that allow people to post and share content in order to connect with others

• Communicable disease: a disease that is passed from one person to another (e.g. hepatitis, influenza, HIV/AIDS)

• Epidemics: a widespread outbreak of a disease in a community

• Pandemics: a disease that spreads over a whole country or the world

• Economy: the system of how industry, trade and finance is organised in a country, region, or worldwide to manage wealth

• Global village: the way people all over the world have become connected through technology

• Technology: devices and systems which have been created for practical purposes

Image sources

• Flags graphic: http://www.jamaicaobserver.com/apps/pbcsi.dll/storyimage/JO/20170519/ARTICLE/170519571/AR/0/AR-170519571.jpg

• Map of the Caribbean: http://www.shipdetective.com/images/maps/caribbean_map-FS.png

• http://www.primemovermag.com.au/uploads/globaltrailer/news/gt-1116-news-globalisation2.jpg