Globalisation is the process by which companies become more distributed and ideas, lifestyles and cultures are increasingly spread and adopted around the world. Globalisation affects what we.
Eat; for example, we eat Indian and Mexican food.
Wear; for example, people all around the world wear Nike trainers.
Watch in TV; for example, we watch shows made in the USA, such as The Simpsons.
Globalisation has been made possible by improvements in transport, communications and technology, which have meant that proximity to raw materials, energy supply and market are no longer important for the location of a business. Goods can now be transported easily, energy supplies are available all over the world and markets have become global. Some companies have taken advantage of these improvements to move their operations to different parts of the world where there are favourable locations factors such as low labour costs. These companies are called Transnational Corporations (TNCs) - also known as Multinational Corporations (MNCs) - and are often large, wealthy and powerful organisations who have branches in many countries.
The location of TNCs in a developing country (LIC) can have a significant effect on the people an the country's economy. Some of these effects are positive and some of these negative.
Positive Effects:
A reduction is trade taxes means that companies in developing countries find it easier to trade their products with other developing countries and more recently with developed countries.
Huge improvements in transport and demand for global holiday destinations from people in developed countries means that many developing countries are now generating a high income form tourism. For example, many Asian and African countries such as Thailand and Egypt generate money from tourists through a tourist tax paid to the government which then invests the money in developing facilities such as schools, roads and hospitals.
Many TNCs that decide to locate their factories in developing countries provide jobs for local people who may otherwise be unemployed.
When TNCs come into a country, they provide jobs which, together with goods being shipped out of the country (exports), should increase the country's wealth.
Workers gain skills, practical and managerial, that they may not have had the opportunity to gain.
Workers and their children may benefit from healthcare and/or education schemes provided by the ZNCs.
TNCs can often supply a greater range of cheaper products to their markets while maintaining and growing their profits.
Negative Effects:
Governments in developing countries have often encouraged the growth of industry without considering the environmental effect. China, for example, contains 16 out of the 20 most polluted cities in the world.
Some TNCs have located their factories in developing countries in order to exploit the low wages in these countries and thereby increase their profits. Often factory workers are paid below the average wage of workers in developed countries and forced to work very long hours in poor conditions where they may not have access to drinking water. In some factories child labour is used, even when it is illegal.
The rapid increase in TNCs locating their factories in developing countries means that many developing countries are becoming dependent on these companies for jobs. many local people, who may have previously worked for local companies or as farmers, take jobs with TNCs.
As manufacturing jobs move to developing countries, manufacturing industries close down in developed countries and employees suffer job losses.