Social 10-2 Chapter 13 Challenges and Opportunities of Economic Globalization Chapter Issue: To what extent does political and economic globalization affect people s lives? Part 3 Issue: Does globalization contribute to a sustainable prosperity for all people? Name:
Social Studies 10-2 - Chapter 13 Challenges and Opportunities of Economic Globalization Vocabulary 1. deregulation- 2. privatization- 3. Crown Corporation- 4. AGT- 5. EUB- 6. economic nationalism- 7. FIRA-
8. knowledge economy 9. factors of production- 10. sweatshop- Total: /17 marks
Chapter 13 Challenges and Opportunities of Economic Globalization Chapter Issue: To what extent does political and economic globalization affect people s lives? Does globalization contribute to sustainable prosperity for all people? *Should governments or private businesses be in charge of health care? *Should Canadians be concerned about child labour and sweatshops? You might already work part time in order to help support your interests or to save for your post secondary education. How would you feel if you lost your job because your company moved its operations to a foreign country in order to save money on wages? Some people feel that globalization of businesses help spread the wealth to nations who cannot support themselves. Others feel that free trade and trade reforms always hurt people, leaving someone in poverty. What do you think?? The Impact of Trade Liberalization in Canada Forms of Trade Liberalization (pages 217-219) Trade liberalization means removing tariffs and quotas from imports or removing barriers to increase trade. It can also mean removing government regulations from Crown corporations or the outright sale of these corporations. Crown corporations are usually created to provide services for people in areas that private industries are NOT interested in. Examples of these services may be postal, telecommunications or transportation. In the 1990 s, the trend to reduce the role of government in business became popular. Privatization meant selling these government owned business to private individuals who could make a profit. Government owned businesses are often subsidized (aided) by the government and therefore have an advantage over privately owned businesses. Crown corporations are sometimes privatized because the need for government services has changed or because governments are pressured to do so by globalization.
The attraction of profit is one way that globalization puts pressure on governments to privatize. The sale of the crown corporation provides cash for the government and as result can lower taxes. Another way globalization puts on pressure is that private companies cannot sell their products for more than the subsidized one. This is seen as a obstacle to freer trade. Deregulation of Alberta s Energy Industry In an ideal free market economy, businesses compete with one another to provide the best product or service for the lowest price for the consumer. However, the goal of business is to make a profit, not to necessarily provide the best for the consumer. Before deregulation, Alberta s electrical industry was run by 3 privately run companies. Municipalities owned the distribution systems for providing the electricity to its residents. Today, the electrical industry is owned and operated by a mix of investor-owned and municipally owned companies. The Energy and Utilities Board regulates the the rates of the electric utilities. Following deregulation, the government set up a rebate program to help Albertans deal with the higher electricity costs. Foreign Investment and Ownership in Canada (pages 220-221) Trade liberalization has also increased foreign investment and ownership in Canada. Many Canadians are concerned that this foreign influence will cost us our identity and economic independence. Economic nationalism means we do NOT want to be taken over by the United States. Control of Canada s Economy Due to the huge difference in population, it is very difficult for Canada to compete economically with the United States. 86% of our exports goes to the United States. Because of this, anything which occurs economically in the United States also affects Canada. The United States has many large transnational companies. It is easy for these large companies to buy out Canada s much smaller companies. In the 1970 s, there was a huge outcry in regards to this occurrence. As a result, the federal Liberal government created the Foreign Investment Review Agency in order to scrutinize foreign take overs and the creation of new businesses by non-canadians. The FIRA was replaced by Investment Canada in 1984, by Prime Minister Mulroney to encourage foreign
investment in Canada. Since then, 11 000 Canadian businesses have been bought by foreign companies. The Free Trade Agreement was signed with the United States in 1988 and by 1992, this extended to the North American Free Trade Agreement which included Mexico. (NAFTA) Outward acquisitions- Canadian companies buying foreign companies Inward acquisitions- Foreign companies buying Canadian companies In 2005, China National Offshore Oil bought a $150 million share in MEG Energy, an Alberta oil sands developer. Some economists say that Canada should improve trade ties with other countries in order to become less dependent on the United States as a trading partner. Do you agree? Is Chinese investment in the Alberta oil industry an example of good foreign investment?? The Knowledge Economy The Link between Globalization and the Knowledge Economy (pgs 222/223) The knowledge economy has sped up the process of globalization. In order to compete in the knowledge economy, governments need to: *develop education programs to promote knowledge workers *invest in online connectivity *invest in technology to build framework *stimulate innovation and creativity *pass laws to create security for businesses *create government web sites to help pursue economic activity * work to change institutions to adapt to the new economy The challenge of the knowledge economy is whether or not less developed countries will be able to benefit from the transformed economy. Many economists believe that the Internet and the knowledge economy will acutally be powerful new tools to help less developed countries climb out of poverty.
Outsourcing The challenge of the knowledge economy is whether or not less developed countries will be able to benefit from it. Outsourcing is an issue that is generating a great deal of media coverage. Outsourcing involves one company contracting out work to another company in a less developed country in order to get the work done more cheaply. In the 1980 s, the automobile industry began to outsource parts of the production process in order to make a higher profit. The outsourced plants in the textile industries are often referred to as sweat shops where the wages are low and the working conditions are poor. Supporters of sweatshops point out that although conditions are poor, the people are better off than without them. Read about what The Gap, Disney, and Walmart do with their workers in less developed countries on page 228. Is OUTSOURING our jobs to less developed countries providing an opportunity or more a of a challenge to workers in the developing world? Social Studies 10-2 - Challenges and Opportunities of Economic Globalization Chapter 13 Questions 1. Provide three examples of trade liberalization. 2. What is one impact of trade liberalization on Canada?
3. Where and why are Crown Corporations created? 4. Explain the difference between the responsibilities of Crown Corporations and private corporations. 5. Provide 4 examples of Crown Corporations in Canada. 6. What trend began in the 1990 s? 7. How does globalization put pressure on governments? 8. Why is foreign investment a concern for some Canadians? What is this concern called?
Part 2: The Knowledge Economy 9. How has the knowledge economy affected globalization? _ 10. What must governments do in order to be successful in the knowledge economy? 11. List 5 skills which are important to have in order for workers to be successful in the knowledge economy. 12. What is the challenge of the knowledge economy? Why will less developed countries be left out of this transformation? _ 13. How has outsourcing of car manufacturing affected workers in North America? _
14. How has outsourcing affected the textile industries? 15. Describe the working conditions for the employees of Gap. 16. Describe the working conditions for the employees of Disney and Wal-Mart in Bangladesh. 17. In 1999, the International Labour Organization estimated that children were working in Ecuador s banana fields. Over 50% of these children do not go to because they have to help their families. 18. Who is Educators for Social Responsibility and what do they do? _