11.4.1

Responses to Global Migration

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Tax Havens - Globalisation

Globalisation has led to the deregulation of capital markets and the emergence of new states. Tax havens are countries where personal and corporation taxes are very low. Monaco and the Cayman Islands are examples of this.

Illustrative background for Low-tax business regimesIllustrative background for Low-tax business regimes ?? "content

Low-tax business regimes

  • Some states attract TNCs to their country by offering low business tax rates.
  • Governments hope that they will prosper as a result of capital flows into their country e.g. the relocation of HQs of some TNCs to Ireland and Luxembourg. Apple, Microsoft and Google all have large operations in Ireland.
  • TNCs are attracted by paying lower taxes, but they can damage their brands if people think they don't have integrity or corporate responsibility.
  • TNCs won't move to places where they fear they could be nationalised by hostile governments.
Illustrative background for Low-tax personal regimesIllustrative background for Low-tax personal regimes ?? "content

Low-tax personal regimes

  • Monaco is an attractive location for global citizens because of its zero tax rate on income tax.
  • Wealthy individuals (or expatriates) may use tax havens.
  • F1 driver Lewis Hamilton moved from Britain to Monaco a few years ago.
  • The Cayman Islands, Monaco and Bahamas are all tax havens.
Illustrative background for Tax avoidanceIllustrative background for Tax avoidance ?? "content

Tax avoidance

  • Tax evasion is illegal. But moving operations to places to benefit from lower taxes is called tax avoidance.
  • This loses developed nations a lot of tax revenue.
  • Several IGOs (Intergovernmental organisations) like the G20 want stricter regulations on tax avoidance.
  • NGOs (non-governmental organisations) also try to raise awareness of the social costs of tax avoidance (worse public services and lower welfare benefits).

Alternative Systems to Capitalism & Globalisation

Several political leaders in the developing world have challenged the way in which global capitalism creates inequality.

Illustrative background for 2008 global financial crisisIllustrative background for 2008 global financial crisis ?? "content

2008 global financial crisis

  • In 2008, global banks had to be bailed out by governments. Commercial banks had lent too much money to people who could not afford their mortgages. Investment banks then repackaged these failing loans and spread them around the financial system.
  • Banks and bankers were not punished for this, but they caused a recession and a global credit crunch, where many individuals and businesses could not borrow money.
  • This brought into question the global economic system, which spread risk internationally. The credit crunch was also felt internationally.
Illustrative background for Fidel Castro - CubaIllustrative background for Fidel Castro - Cuba ?? "content

Fidel Castro - Cuba

  • Fidel Castro argued against global capitalism arguing that it caused inequality.
  • Cuba is a communist state, but it is opening up to globalisation. US tourists, who were previously banned are now being allowed to enter the country.
  • Communism and a 'command economy' was tried in the USSR under Stalin. However, there were widespread food shortages and economic performance was worse than in the USA.
Illustrative background for Chavez - VenezuelaIllustrative background for Chavez - Venezuela ?? "content

Chavez - Venezuela

  • Hugo Chavez and currently Nicolas Maduro pursued authoritarian and redistributive policies, however, the policy has not worked too well in the long-run.
  • In 2013, Venezuela was ranked 179 out of 185 countries on who was the best to trade with.
  • In 2015, Venezuela topped the Global Misery Index.
  • In 2018, the IMF predicted 1,000,000% inflation in Venezuela, with food shortages widespread.
Illustrative background for Morales - BoliviaIllustrative background for Morales - Bolivia ?? "content

Morales - Bolivia

  • President Morales of Bolivia has a strongly socialist viewpoint that national wealth (derived from natural gas and minerals) should be shared amongst its people (though not equally).
Illustrative background for Western capitalism/globalisationIllustrative background for Western capitalism/globalisation ?? "content

Western capitalism/globalisation

  • Although capitalism and globalisation can lead to inequality and perverse incentives (like those of the banks), it seems to be the best system that has been tested. Other regimes look to have failed.
  • But, having some taxes that redistribute and provide safety nets (like pensions, welfare benefits and free healthcare) seems wise.
  • China has a similar capitalist model, but it protects Chinese companies and industries more vehemently.

Jump to other topics

1Tectonic Processes & Hazards

2Option 2A: Glaciated Landscapes & Change

3Option 2B: Coastal Landscapes & Change

4Globalisation

5Option 4A: Regenerating Places

6Option 4B: Diverse Places

7The Water Cycle & Water Insecurity (A2 only)

8The Carbon Cycle & Energy Security (A2 only)

9Superpowers (A2 only)

10Option 8A: Health & Human Rights (A2 only)

11Option 8B: Migration & Identity (A2 only)

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