7.3.5 Flashcards
Explain how one transnational corporation (TNC) has contributed to the globalisation of the world’s economy (4 marks)
Nike has become one of the world’s largest suppliers of sports equipment (1), employing over 44 000 workers in over 50 countries (1d).
Manufacturing helps the social and economic development of these countries through the transfer of skills, technology and the rise in wages (1).
Components for sports goods are sourced from various different countries around the world (1), including rubber for its trainers from Malaysia and Indonesia and cotton from Turkey and India (1d).
What are the benefits of Fairtrade?
Free trade means producers get the price manufacturers and consumers are prepared to pay whereas Fairtrade aims to:
Pay a fair and guaranteed price for a product
Improve working conditions
Pay a Fairtrade premium, which is reinvested in the community
How many bananas are produced and exported?
More than 50 million tonnes are produced each year, and over 20 million tonnes of these are exported
Where most of the banana exports generate from?
More than 90% of bananas for export originate from Central and South America and the Philippines
What TNCs dominate banana trade?
The global banana trade is dominated by just a few TNCs such as Chiquita, Dole and Del Monte
How TNCs in banana industry gain power?
They often own or control large plantations, allowing them to dictate terms and prices to smaller growers who depend on TNCs for access to the market
Vertical and horizontal integration enables the TNCs to control the entire supply chain from production to transportation and marketing
This gives them a significant advantage in terms of economies of scale, allowing them to undercut smaller competitors
They also have considerable marketing power, influencing customer preferences e.g. the USA banana market is dominated by Chiquita and Dole which together account for around 70% of the market
Positive impacts of banana trade
Bananas provide lots of nutritional benefits and are a staple food for many people in LDE countries such as Uganda where they account for over 60% of calorie intake
Employment opportunities throughout the world e.g. over 300,000 people are employed by the industry in the Philippines
Export earnings support the economies of major banana-producing countries such as Ecuador and Costa Rica
Development of transport and communication infrastructure e.g. building of roads and railways in Honduras to transport bananas from plantations to ports
What are the negative impacts of banana trade?
Most bananas are treated with chemicals such as pesticides and herbicides to control disease – this affects the health and safety of workers and local communities as well as negatively affects the environment
The use of artificial fertilisers is high which can lead to eutrophication
The land is cleared to create plantations leading to deforestation leading to loss of biodiversity
The exploitation of workers due to low wages and poor conditions e.g. minimum wage for banana workers in Ecuador is $400 per month which is below the poverty line
Child labour – children as young as eight were found to be working on banana plantations in Honduras
What Fairtrade initiative aims to do?
Fairtrade aims to empower producers by promoting better trading conditions for farmers who have been disadvantaged by the global trading system
What impact does Fairtrade initiative have on environment?
Fairtrade requires farmers to use sustainable farming practices to protect the environment:
In the Windward Islands, Fairtrade farmers have reduced their pesticide use by 50%
