From all this it would seem the globalisation is a positive thing because now our supermarkets are able to supply us with any type of fruit or vegetable all year round, the clothes we buy in our chain stores are much cheaper than they would be if they were produced in Britain because they’re produced in Asia where the companies finances are less this makes it less for us. We can also now buy music from Mexico and watch films from India. However, many people think that globalisation has many problems for each of the countries in the world. For a start, it has made the world smaller and mutually dependant, now a decision made in New York can mean unemployment in China for thousands of people where as a decision in Tokyo can create thousands of new jobs for people in Scotland. Globalisation also has the problem of international trafficking and child pornography and environmental issues such as global warming.
So what does globalisation mean for a small country like Wales? Wales has suffered heavily as it’s major industrial backbone, for example coal mining and steel making, has declined rapidly in the last thirty years. After the Second World War, Wales and the rest of Britain suffered many economic problems with the main one being the re-casting of it’s economic structure, for example production had fallen dramatically during the war with tin and black plate falling from 976,000 tons in 1940 to only 511,800 in 1945, there were now only 10,000 workers in the industry compared to 26,000 in 1939 as most had been lost to the armed forces or munitions factories. (Morgan:1981:ch.11). Because of this decline there were political moves to nationalise key industries in Wales as well as the rest of Britain, this helped to make Wales’s industrial output thrive once again with full employment, which lasted up until the seventies. During the 1970’s changes in global infrastructure and global economics especially from countries such as Japan saw greater output of goods at lower prices appear in the British market. This can be seen as the culmination of post war rebuilding in defeated countries. Because of this, traditional industries in Wales became uneconomic as it was now too expensive to export goods such as steel into the growth markets of the east. A consequence of this is the acceleration of the decline of traditional industries in Wales.
Wales has needed to promote inward investment to replace the old core jobs and diversify into a new skill set that has a long term future. During the 1980’s Wales engaged in an ‘economic miracle’, it was reported by 1989 that Wales had seen faster growth than any other northern region, with employment in the coal and steel industries being reduced to around only three per cent of the workforce and now fewer than 4,000 people were employed in deep-mining coal. Jobs in vehicles and motor components had risen to 8 per cent of the workforce higher than Britain’s national average of just five per cent. These included Ford opening factories in South Wales and Toyota locating a production facility to North Wales. Welsh employment in electronics had also grown by 70% between 1978 and 1989 to reach more than 23,000 with the help Sony and Bosch setting up in South Wales.
The Welsh development agency was set up in 1976 to encourage companies from abroad to come to Wales and since then it has brought over £12 billion into the country (). The government at this time also was offering incentives to transnational corporations to set up in Wales and the new road links were also built across Wales for example the A55 was set up in the eighties in North Wales to help with the transportation of goods and so this also encouraged companies especially from Japan come to Wales. The M4 corridor in South Wales also helped to draw in companies to erect business parks in the South Wales valleys where the old industries had once been. With only an average of five per cent of foreign investment in Britain Wales was thriving with twenty per cent of it’s business’s coming from abroad. It was believed that industries saw Wales as a modern economy, which had good grounds for entering the European Market. By 1991 foreign owned firms had increased employment in manufacturing to 28% of Wales’s output hiring over 67,000 employees.
Wales also benefited from over 545 inward investment projects making this 16% of the UK’s average and also creating 37,000 jobs. By 1987 Wales large number of Japanese owned companies in Wales providing over 5,000 jobs and by 1997 there were 50 Japanese firms in Wales and this is still increasing, a number of reports were drawn up as to why this was the case each report agrees that the main reason is that they were able to gain access to the British and European Market and also by locating in Britain they were able to operate firms through the English language and Wales proved that it had the labour of the desired quality the Japanese desired and at a low cost. There was also the issue of Wales having a strong manufacturing base and was not likely to have local opposition to foreign development. They were also able to diversify well with other companies that had settled in Wales.
‘Wales developed earlier than most other European countries, a diverse ethnicity that went side-by-side industrialisation and globalisation. The economic expansion and the importance of it’s seaports made Wales much more like America than any other parts of Europe – creating a cosmopolitan, multi-ethnic, multi religious country much earlier than any other part of Britain and Europe.’ (Rhodri Morgan: ‘Global Britons Forum in Wales’, Foreign Policy Centre).
It would appear from this the Wales was doing extremely well in the economy but many had suspicions of how the Welsh labour would adapt to the style of management the Japanese had as their attitudes towards traditional labour values and practices were less serious and by 1989 half the workforce within Japanese firms within Wales was female with mainly their recruiting being for young people and school leavers meaning lower costs. There was no guarantee of lifetime employment, their wages were not related to length of service and they were not rewarded with bonuses or welfare benefits. Instead strict work regimes were enforced in which the trade unions took no notice of and the Japanese lost hardly any production time through strike actions. The other issue of concern to employees is that they are unlikely to be promoted in their jobs as the decision making power stayed remained in Japan. Marketing, finance and production engineering were kept under tight Japanese control and it was highly unlikely for an employee to be on a higher rank than a Japanese one. This meant if you had a job as a production operator you were likely to remain in it with the same pay.
Critics complained that the Japanese firms were only producing commodities such a video recorders and televisions that were already well imbedded within the market and there no new products or technology being created in Wales, although the Japanese did build links with local supplier to keep the European Directives happy. Although there still the problem of getting hold of the supply’s they needed as most of them came from other parts of Britain and were not produced in Wales. A recent example of this come from Sony in South Wales who recently cut 300 jobs due to the prices of their goods falling in the market. This is mainly due to new advances in the technology of other goods which they do not produce themselves and so meant that the demand for their goods fell. After analysing this situation, Munday (1990:137) concluded that this was because there was such a large concentration of foreign owned firms in such a small region it could lead to ‘a truncation of the economy, technology and skills dependence’ and this could well lead to serious implications for the economic future of Wales. At the time though Wales faced serious economic problems which could have lead them into a repeat of the 1930’s recession and because they did not want this to happen Wales had little option to chase it’s policy of jobs for any price, and also the jobs created by the Japanese firms made people feel more secure and happy than other jobs that were on offer at the time.
Geographically it is noticeable that these companies tend to congregate along the M4 corridor. In part this is due to monies being offered in those areas where there has been major decline in industrial output. This meant there has been uneven distribution of the investment throughout Wales, therefore only parts of Wales have benefited from globalisation.
Lovering has reviewed the Welsh economy and has come to the conclusion similar to that of Munday that the growth of the Welsh economy based on foreign investment is not as strong as the politicians make it out to be. He exclaims that throughout the nineties politicians told us that Wales was undergoing a minor economic miracle due to the incoming of multinationals to Wales. We were told that production was constantly increasing and cultural industries were booming. However, only a few years later they tell us the Welsh economy is facing serious problems and now needs outside help.
Lovering points to the fact that this is not due to the economy suddenly changing but simply that these problems have been in existence from the start and now that the European Union has offered to help Europe’s poorest regions (with a project known as objective one, the Welsh government is finally ready to admit that our economy is failing. The have put the blame down to globalisation complaining that Wales is no longer able to attract foreign investment as the labour can be bought at a much lower price in third world countries. However, if this really is the case then why isn’t Africa’s economy booming? He believes we cannot blame cheap foreign workers for our employment crisis because it’s due to our own government. ‘Their Economic policies reflect not the inescapable logic of a “globalised world” but the political power of the affluent and the acceptance of a mortality which says it is ok to dump on the less fortunate. “Globalisation” is the excuse, not the cause.’ (Lovering: Hoping for a Honeypot).
The fact that Wales still needs Objective One assistance from the European parliament demonstrates that the economy is not strong enough to support Wales in the future the warning signs have been clearly laid out by Lovering and Munday for sometime it is to be hoped that this inward investment is more geared towards developing natural welsh resources rather than using it to the benefit of companies who take perhaps more than they give.
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Scholte, J., A. Globalization: A critical Introduction. (2000). Macmillan Press Ltd: Basingstoke.
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‘Hoping for a Honeypot’ – John Lovering
‘New Myths of the Welsh Economy – John Lovering
The Foreign Policy Committee –
The Guardian -
