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Globalisation and the British Economy Mr. Bentley, Head of Humanities, DBS
What do we really know? As we know, there are known knowns; there are the things we know we know. We also know there are k...
Globalisation & Britain <ul><li>Perspectives on globalisation </li></ul><ul><li>The drivers of globalisation </li></ul><ul...
What is globalisation?
What is globalisation?
Anti-globalisation protests
 
What is Globalization? <ul><li>Globalisation is the integration of economies through markets across frontiers (Martin Wolf...
The expansion of world trade
“ The World is Flat” “ The ability to click, connect and collaborate” (Thomas Friedman)
Forces driving globalisation
Drivers of globalisation
Technology and the death of distance
Global shift Brazil India Italy China France UK Germany Japan USA Largest economies in 2003
Brazil India Italy China France UK Germany Japan USA Largest economies in 2003 France Russia South Korea UK  India Germany...
Brazil India Italy China France UK Germany Japan USA Largest economies in 2003 Russia France Germany Russia UK South Korea...
The BRICs New central players in the world economy
Who are the BRICs? <ul><li>Brazil </li></ul><ul><li>Russia </li></ul><ul><li>India </li></ul><ul><li>China </li></ul>
The rise of the BRICs – stat attack <ul><li>2000-05: BRICs contributed 28% of global economic growth </li></ul><ul><li>200...
Comparing China and India Sources: World Bank Development Report, 2005  86.0 65.4 Literacy rate (% of population) 9.7 32.3...
China’s rapid march forward
Cameras and Colour TVs
China’s export performance
Growth environment scores Getting the conditions right
Conditions for achieving growth GES Economic stability Political  conditions Technological capabilities Human capital
GES scores across countries <ul><li>High scores / ranking </li></ul><ul><li>Sweden (3) </li></ul><ul><li>USA (10) </li></u...
How does globalisation affect the UK economy?
Globalisation and the UK <ul><li>The UK is a  highly open economy </li></ul><ul><li>Strong trade links with other countrie...
Opportunities for the UK <ul><li>Cheaper imports from emerging market countries </li></ul><ul><ul><li>Keeps down inflation...
Out-sourcing: Marks & Spencer Sourcing of clothes by region (%) 04/05 05/06 Indian sub-cont Far East UK & Europe
A world of low inflation
Threats for the UK economy <ul><li>Threats to our manufacturing industries </li></ul><ul><ul><li>Low cost competition </li...
Global oil prices
World Oil Demand - Projections Source: Goldman Sachs, “The World and the BRICs dream” March 2006  18 BRICs 3 Brazil 3 Indi...
World Oil Demand - Projections Source: Goldman Sachs, “The World and the BRICs dream” March 2006  31 18 BRICs 4 3 Brazil 7...
Cars owned per 1000 people Source: Goldman Sachs, “The World and the BRICs dream” March 2006  189 140 Russia 150 137 Brazi...
Cars owned per 1000 people Source: Goldman Sachs, “The World and the BRICs dream” March 2006  492 189 140 Russia 351 150 1...
Gainers and losers in the UK from globalisation Some summary thoughts
Some winners Consumers of low cost imports People with strong cross cultural skills Individuals Businesses with leading gl...
Some winners and losers Low skilled workers in tradable sectors Low and medium skilled workers in sectors open to migrant ...
How competitive is the UK? Competing in a global economy
Productivity and jobs
The productivity gap
Volatility of economic growth
Volatility of interest rates
Not enough investment?
Too little research?
 
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Introduction to Globalisation

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Introduction to Globalisation

  1. 1. Globalisation and the British Economy Mr. Bentley, Head of Humanities, DBS
  2. 2. What do we really know? As we know, there are known knowns; there are the things we know we know. We also know there are known unknowns; that is to say, we know there are some things we know we do not know. But there are also unknown unknowns - the ones we don’t know we don’t know. Donald Rumsfeld, US Defence Secretary, 2003
  3. 3. Globalisation & Britain <ul><li>Perspectives on globalisation </li></ul><ul><li>The drivers of globalisation </li></ul><ul><li>The rise of the BRICs </li></ul><ul><li>Growth environment scores </li></ul><ul><li>How is Britain affected? </li></ul><ul><li>Winners and losers from globalisation </li></ul><ul><li>Remaining competitive in a globalized world </li></ul>
  4. 4. What is globalisation?
  5. 5. What is globalisation?
  6. 6. Anti-globalisation protests
  7. 8. What is Globalization? <ul><li>Globalisation is the integration of economies through markets across frontiers (Martin Wolf) </li></ul><ul><li>Globalisation is the “death of distance” – (Frances Cairncross) </li></ul><ul><li>“ The international integration of markets for goods, labour and capital” (Niall Ferguson, Historian) </li></ul>
  8. 9. The expansion of world trade
  9. 10. “ The World is Flat” “ The ability to click, connect and collaborate” (Thomas Friedman)
  10. 11. Forces driving globalisation
  11. 12. Drivers of globalisation
  12. 13. Technology and the death of distance
  13. 14. Global shift Brazil India Italy China France UK Germany Japan USA Largest economies in 2003
  14. 15. Brazil India Italy China France UK Germany Japan USA Largest economies in 2003 France Russia South Korea UK India Germany Japan China USA Largest economies in 2025
  15. 16. Brazil India Italy China France UK Germany Japan USA Largest economies in 2003 Russia France Germany Russia UK South Korea Mexico UK Brazil India Japan Germany India Japan USA China China USA Largest economies in 2050 Largest economies in 2025
  16. 17. The BRICs New central players in the world economy
  17. 18. Who are the BRICs? <ul><li>Brazil </li></ul><ul><li>Russia </li></ul><ul><li>India </li></ul><ul><li>China </li></ul>
  18. 19. The rise of the BRICs – stat attack <ul><li>2000-05: BRICs contributed 28% of global economic growth </li></ul><ul><li>2005: BRICs had 15% share of global trade, double the level of 2001 </li></ul><ul><li>2005: BRICs held 30% of global reserves of gold and foreign currency </li></ul><ul><li>2005: BRICs received 15% of global foreign direct investment and took 3% of FDI outflows </li></ul><ul><li>Since 2003, their stocks markets have increased by approximately 150% </li></ul>
  19. 20. Comparing China and India Sources: World Bank Development Report, 2005 86.0 65.4 Literacy rate (% of population) 9.7 32.3 Service exports (% of total) 86.0 49.7 Manufacturing exports (% of total) 53.6 3.6 Foreign direct investment ($bn) 43.9 23.3 Gross investment (% of GDP) 1.4 1.6 2050 population (billions) 1.3 1.0 2003 population (billions) China India Data is for 2003 unless stated
  20. 21. China’s rapid march forward
  21. 22. Cameras and Colour TVs
  22. 23. China’s export performance
  23. 24. Growth environment scores Getting the conditions right
  24. 25. Conditions for achieving growth GES Economic stability Political conditions Technological capabilities Human capital
  25. 26. GES scores across countries <ul><li>High scores / ranking </li></ul><ul><li>Sweden (3) </li></ul><ul><li>USA (10) </li></ul><ul><li>Germany (16) </li></ul><ul><li>UK (21) </li></ul><ul><li>China (53) </li></ul><ul><li>Thailand (57) </li></ul><ul><li>Russia (81) </li></ul><ul><li>Brazil (95) </li></ul><ul><li>India (97) </li></ul><ul><li>Low scores / ranking </li></ul><ul><li>Zimbabwe (170) </li></ul><ul><li>Burundi (169) </li></ul><ul><li>Liberia (168) </li></ul><ul><li>Afghanistan (167) </li></ul><ul><li>Nigeria (147) </li></ul><ul><li>Pakistan (126) </li></ul><ul><li>Indonesia (114) </li></ul><ul><li>Turkey (112) </li></ul>
  26. 27. How does globalisation affect the UK economy?
  27. 28. Globalisation and the UK <ul><li>The UK is a highly open economy </li></ul><ul><li>Strong trade links with other countries </li></ul><ul><li>Open financial (capital) markets </li></ul><ul><ul><li>Bonds </li></ul></ul><ul><ul><li>Equities </li></ul></ul><ul><ul><li>Property </li></ul></ul><ul><li>We have a fairly open labour market – tolerant of inflows of workers from overseas </li></ul><ul><li>Globalisation creates opportunities and threats </li></ul><ul><li>The key is to be internationally competitive </li></ul>
  28. 29. Opportunities for the UK <ul><li>Cheaper imports from emerging market countries </li></ul><ul><ul><li>Keeps down inflation and interest rates </li></ul></ul><ul><ul><li>Boosts consumer welfare </li></ul></ul><ul><li>Potential for increasing export sales </li></ul><ul><ul><li>Which markets are we best at? </li></ul></ul><ul><li>Opportunities for overseas investment </li></ul><ul><ul><li>Mergers and takeovers </li></ul></ul><ul><ul><li>Direct investment (e.g. new factories overseas; out-sourcing) </li></ul></ul><ul><li>Opportunities arising from migration of labour </li></ul><ul><li>Opportunities of rapid technological change </li></ul>
  29. 30. Out-sourcing: Marks & Spencer Sourcing of clothes by region (%) 04/05 05/06 Indian sub-cont Far East UK & Europe
  30. 31. A world of low inflation
  31. 32. Threats for the UK economy <ul><li>Threats to our manufacturing industries </li></ul><ul><ul><li>Low cost competition </li></ul></ul><ul><ul><li>Lost jobs from out-sourcing </li></ul></ul><ul><li>Threats to jobs in service sector industries </li></ul><ul><li>Structural unemployment </li></ul><ul><li>May cause a widening of the rich-poor divide </li></ul><ul><li>Social and economic tensions from migration </li></ul><ul><li>Threats to the global environment – affects us all </li></ul><ul><li>Inflationary risks from higher energy prices </li></ul>
  32. 33. Global oil prices
  33. 34. World Oil Demand - Projections Source: Goldman Sachs, “The World and the BRICs dream” March 2006 18 BRICs 3 Brazil 3 India 3 Russia 9 China 6 Japan 25 USA 2005 Per cent of total
  34. 35. World Oil Demand - Projections Source: Goldman Sachs, “The World and the BRICs dream” March 2006 31 18 BRICs 4 3 Brazil 7 3 India 4 3 Russia 16 9 China 4 6 Japan 19 25 USA 2025 2005 Per cent of total
  35. 36. Cars owned per 1000 people Source: Goldman Sachs, “The World and the BRICs dream” March 2006 189 140 Russia 150 137 Brazil 8 5 India 15 7 China 503 480 USA 2005 2000
  36. 37. Cars owned per 1000 people Source: Goldman Sachs, “The World and the BRICs dream” March 2006 492 189 140 Russia 351 150 137 Brazil 48 8 5 India 137 15 7 China 532 503 480 USA 2025 2005 2000
  37. 38. Gainers and losers in the UK from globalisation Some summary thoughts
  38. 39. Some winners Consumers of low cost imports People with strong cross cultural skills Individuals Businesses with leading global brands Business services Niche high value manufacturers Suppliers of energy and utilities Businesses Potential Winners
  39. 40. Some winners and losers Low skilled workers in tradable sectors Low and medium skilled workers in sectors open to migrant labour Consumers of low cost imports People with strong cross cultural skills Individuals Mass market manufacturers Multinationals without the right local partners and strategies in a global economy Businesses with leading global brands Business services Niche high value manufacturers Suppliers of energy and utilities Businesses Potential Losers Potential Winners
  40. 41. How competitive is the UK? Competing in a global economy
  41. 42. Productivity and jobs
  42. 43. The productivity gap
  43. 44. Volatility of economic growth
  44. 45. Volatility of interest rates
  45. 46. Not enough investment?
  46. 47. Too little research?

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