The Mobility of Modern Economic Activity

The Globalisation of Economic Activity

• Definition: Globalisation refers to the increasing interdependence of world economies, cultures, and populations, driven by trade, investment, and technological advancements.
• Economic Mobility: Modern economic activities are more mobile due to advancements in transportation, communication, and global trade networks.
• Key Drivers:
  1. Market drivers (e.g., global consumer preferences).
  2. Cost drivers (e.g., low labour costs in developing countries).
  3. Government drivers (e.g., reduction in trade barriers).
  4. Competitive drivers (e.g., global strategic alliances).

The Role of Multinational Corporations (MNCs)

• Definition: MNCs are companies that operate in multiple countries, managing commodity chains from raw materials to finished products.
• Why MNCs Thrive:
  • Access to cheaper labour and raw materials.
  • Government incentives such as tax breaks and subsidies.
  • Market expansion and global brand recognition.

Mobility Through Global Trade Networks

Core, Semi-Periphery, and Periphery Regions

• Core Regions:
  • Dominate global trade and control advanced technologies (e.g., USA, EU, Japan).
  • High levels of productivity and standards of living.
• Semi-Peripheral Regions:
  • Emerging economies like China and India; exploited by core regions but able to exploit peripheral ones.
• Peripheral Regions:
  • Low levels of technology and productivity, dependent on exporting raw materials (e.g., Sub-Saharan Africa).

Trading Patterns

• The "Global Trading Triad" connects the USA, EU, and Asia.
• Developing regions increasingly attract foreign direct investment (FDI) due to lower costs.
• Ireland: A key player within the EU, exporting pharmaceuticals and ICT products globally.

Factors Driving Mobility in Economic Activity

Advances in Technology

• Improved transportation systems (e.g., container shipping, air freight).
• Digital communication (e.g., internet, mobile phones) facilitates global coordination.

Reduced Trade Barriers

• Trade agreements like the EU Single Market eliminate tariffs, making movement of goods and services easier.
• Ireland benefits significantly as part of the EU bloc.

Labour and Cost Advantages

• Production shifts to countries with lower labour costs and fewer regulations (e.g., textile industries in Bangladesh).

Consumer Market Growth

• Global brands adapt products to suit regional preferences, creating worldwide demand for similar goods.

Case Study: Ireland as a Mobile Economy

Foreign Direct Investment (FDI)

• Ireland attracts MNCs due to:
  • Low corporate tax rate (12.5%).
  • English-speaking workforce.
  • EU membership providing access to the single market.
• Examples:
  • Apple in Cork: European headquarters and assembly operations.
  • Pfizer: Pharmaceutical manufacturing in Ringaskiddy.

Export-Driven Economy

Ireland is a global leader in:

• ICT exports (e.g., software).
• Agricultural exports (e.g., dairy).
• Pharmaceutical products.

Challenges of Economic Mobility

Environmental Impact

• MNC operations can cause pollution, deforestation, and resource depletion in host countries.
• Example: Oil extraction in Nigeria has led to severe environmental degradation.

Economic Inequality

• Peripheral regions often remain dependent on low-value exports while core regions dominate high-value industries.
• MNC profits may not benefit local economies due to profit repatriation.

Cultural Homogenisation

• Spread of global brands and media reduces cultural diversity.

Future Prospects for Economic Mobility

New Technology Systems

• Innovations like robotics, AI, and renewable energy are reshaping global production and investment patterns.

E-Commerce and Teleservices

• Growth in online platforms like Amazon and remote services enables companies to reach global markets without physical presence.

Focus on Sustainability

• MNCs are increasingly adopting sustainable practices to align with global environmental goals (e.g., carbon neutrality targets).