Year 12 Economics- Economic Globalisation: Inquiry - Enron Corporation

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1.0 Executive Summary

In relation to the statement of the Minister of Youth Affairs to the Federal Standing Committee which shall provide the general consensus of Australian youth as to why Australia should not support a policy of globalisation, a report has been compiled outlining the adverse affects inherent in globalisation. The report, commissioned by the Youth Minister, will outline the issues surrounding of Globalisation, discussing in detail both the advantages and disadvantages of adopting such a policy. A case study of the former multi-national corporation ENRON will be used to show why Australia should adopt a policy to support Globalisation.

2.0 Globalisation

The International Monetary Fund, from the Oxford English Dictionary defines globalization as "the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology".(1) Globalization is caused by four fundamental forms of capital movement throughout the global economy. The four important capital flows are:

* Human Capital (i.e. Immigration, Skilled Workforce)

* Financial Capital (i.e. Aid, Unrequited Transfers)

* Resource Capital (i.e. Energy, Metals, Minerals, commodities

* Power Capital (i.e. Security Forces, Alliances, Armed Forces, etc)

The best part thereof the complexities and issues that arise in the general macro undertakings of countries, communities and the key relations between can be traced to capital flows.(2)

"Globalisation has been perpetuated the corporation which derived it's overwhelming power from the industrial age which began in 1712. In which machines were used to produce more goods and service for trade per man hour. Today the concept is much the same, merely with more sophisticated goods and services." (Ray Anderson, CEO Interface, world's largest commercial carpet manufacturer). (3)

Put simply globalisation is an inevitable occurrence whereby as countries economies, populations and technology grow their desire to trade and compete on a world scale is amplified. Resulting in the need to outsource labour to developing countries in an attempt to be more competitive, lowering trade barriers, and opening up the market to privatisation eg utilities, fire brigade, hospitals. Capitalism is the driving force behind this phenomenon though laden with many positives it does have an equal amount of flaws as our outlined in the report.

2.1 Advantages

There are many advantages inherit of globalisation including:

* The percentage of people in developing countries living below US$1 (adjusted for inflation and purchasing power) per day has halved in only twenty years [4], although some critics argue that more detailed variables measuring poverty should instead be studied [4].

* Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Child mortality has decreased in every developing region of the world. [4] Income inequality for the world as a whole is diminishing. [4]

* Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000. [5]

* The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. (6)

* Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000. (9)

* The percentage of children in the labour force has fallen from 24% in 1960 to 10% in 2000.(4)

* There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion...
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