Unit 1 – Ethics and the Global Economy

Lesson 1 – What is meant by the terms ‘Economy’ and ‘Globalization’

Introduction:
In this lesson, we are going to look at the meaning of two commonly used
terms, “economy’ and “globalization”. Globalization refers to the increase in the connections
between economies around the world. These connections are increased by agreements made
between governments which cover trade, the movement of money across countries and
agreements about the movement of people across countries. The globalization process has
enabled business to be able to set up operations in many different countries. All the
production and exchange activity that takes place over a period of time, in a particular place
is called Economy
These operations not only involve selling goods and services in different
countries such as opening a shop in a mall in Abu Dhabi, or Dubai, or Fujairah, or Sharjah or
any other Emirate, but also setting up manufacturing operations in different countries,
establishing offices, opening service centers such as call centers and using banking and
finance services to enable money to be transferred to and from different countries.
Exports and Imports
The difference between exports and imports are when a company sells goods
and services to customers in another country, these goods and services are called exports. An
export is the sale of a good or service to a foreign customer for which the domestic company
receives an inflow of currency in payment for the goods and services. Some companies may
buy goods from other countries for sale to customers in the domestic country because it is
either not possible to produce them to a better quality and cheaper than could be done in the
domestic economy are called imports.
The Term “Economy”
An economy can refer to a relatively small area, such as the economy of a
village, a larger area such as a town or city, a municipality, a country, a region, a continent
and globally. What is common to each is that an economy is made up of people; these people
are all engaged I living their life, and to do so must provide themselves and their families
with, at the very least, the basics in life – food, clothing and shelter.
To provide for ourselves and our families, many people work to earn money,
which in turn allows us to buy the goods and services we need to live. People who work for a
living do so through earning money in exchange for their efforts and skills. They then
exchange this money for the things they need to survive. Money acts as a medium of
exchange, it allows us to access the things that we want and need.
The Exchange Process
Every day, billions of people around the world engage in exchange. The
people who are providing goods and services are working for or run business and provide
these goods and services in exchange for money. This process of exchange is at the heart of
what we mean by the word ‘economy’. The economy is all the production and exchange
activity that takes place over a period of time in a particular place. The UAE economy
represents around 0.5% of the global economy.
The barriers to Globalization
The business must consider the legal requirements of the country it wants to
operate in. These may be different to those in its own country. There will be often be
different cultural norms and different regulations and the business must take these into
consideration as well. The more rules and regulations a must follow, the more difficult it can
be to set up and operate in different countries.
One of the features of globalization has been the opportunity for large
companies to employ contractors to produce goods for it. One of the ways to reduce the
barrier is trade agreement. A trade agreement is usually designed to allow goods, services,
money and people to move freely across borders.
The UAE ha bilateral trade agreements with such countries as Pakistan, India,
South Korea, the Netherlands, Argentina, Algeria, Morocco, Azerbaijan, the Maldives and
Kazakhstan. It is also a member of the Greater Arab Free Trade Area which includes Bahrain,
Egypt, Iraq, Jordan, Kuwait, Lebanon, Libyan Arab Jamahiriya, Morocco, Oman, Saudi
Arabia, Sudan, Syrian Arab Republic, Tunisia and Yemen.
Lesson 2 - What are the benefits and costs of Globalization?
Introduction
Globalization is associated with the increase in the connections between
countries, which has meant that trade between countries has increased over the last 50 years.
People in all seven continents of the world can access goods and services from many
different countries. It can bring many benefits to the people of the world but it can also result
in costs. It can bring many benefits to the people of the world but it can also result in costs.
The benefits of Globalization
An increase in the variety and quality of goods and services are one of the
main benefits of globalization has been the increase in trade between nations which has
meant that millions of people around the world have access to much greater variety of goods
and services and in many cases, goods and services which are of high quality. For example,
people can buy types of fruits and vegetables all year round, not just when they are in season.
Availability of goods and services at lower prices
The increase in global trade has also made many goods available to more
people at lower prices. Many young people in different parts of the world can buy clothes at
stores at very low prices.
Movement of labor
Many people who come to work in the UAE bring with them skills, innovative
ideas and expertise which can benefit the businesses they work for and also the country. They
also bring a richness of cultural diversity which helps to make the country attractive to
investors. The ability of people to move around the world to work, to travel and to receive an
education have all been made easier by globalization.
Movement of capital and Funds
The word ‘capital’ is used to refer to money, but it also has a more specific
meaning. Capital refers to any item which is produced for the purpose of assisting in the
production of other goods and services. Globalization has resulted in much greater
understanding and cooperation between financial institutions and governments and made it
much easier for money to move freely across the world.
The growth of Multinational companies
A multinational is a company that has its headquarters in one country but may
have many other departments, offices, outlets or factories in other countries. The growth of
multinationals as a result of globalization has led to an increase in the number and quality of
goods available for consumers around the world.
The costs of Globalization
Increases in inequality: Globalization tends to favor companies who are very
large and who have considerable power and influence both economically and politically.
The effect on local businesses
Globalization has resulted I the growth of very large business that expand their
operations around the globe. This can mean that small businesses in countries where these
large businesses locate can suffer. Smaller business may not be able to compete on price or
quality and can be forced out of business. This can lead to a reduction in local services as
well as unemployment for those who were involved in the business.
Cultural Diversity
Many countries have their own particular cultural histories and traditions. One
of the arguments against globalization is that it can threaten culture and tradition. The UAE is
trying to diversify its economy so that it does not rely on one or two key products for its
future wealth and prosperity.
The effect on the environment:
The expansion of companies across the globe and the increase in production of
so many goods and services can lead to effects on the environment, create pollution and the
depletion of non-renewable resources. Industrial development requires energy. Using carbon-
based, non-renewable resources such as oil, gas, and coal to generate electricity can increase
the amount of carbon dioxide in the atmosphere.
Many production processes require water, and in many countries of the world
water is a scarce resource. As the population of the UAE grows and economic development
expands, there is an increased demand for water.

Globalisation has increased awareness of issues like deforestation and global warming by
spreading information across borders through media and education. This greater
understanding encourages people to make more sustainable choices, such as supporting eco-
friendly products and advocating for environmental policies, contributing to global efforts in
mitigating climate change.
Lesson 3 - What is Fair Trade?
Introduction
What is trade? An exchange of goods and services for money is an example of a trade.
A trade can bring benefits to both parties in the trade – the seller and the buyer. The seller
receives money which they can use to buy the goods and services they need to survive and
the buyer gets the goods and services they want for whatever reason.
Why might trade be unfair?
It is not always the case that trade is fair between buyers and sellers. In some cases,
the buyer has a considerable amount of power and can use their power to force the seller to
accept prices that are much lower than they need to help their businesses run properly. If the
seller is forced to accept lower prices, they may find they do not earn enough to keep the
business going or cannot afford to feed their families and continue growing their crops. This
can be the case where the buyer is very big, such as a large global company and there are
many small producers each offering only a small amount of the product for sale.
Fair Trade organizations
Because not all trade is fair, organizations have developed to help support business to
get better trade deals. One such organization is the Fairtrade movement. Its aim is to help
small farmers to become more sustainable and have more control over their businesses.
Products produced under the Fairtrade Foundation principles can include a logo which sends
a message to customers. If the product includes the logo, it means that it meets certain social,
economic and environmental standards as it goes through the production process. These
standards include the necessity of paying farmers a minimum price for their products which
not only allows them to get a better return on their products than might otherwise be the case
but may also include an additional amount which can be used to invest in developing the
business or the local community in which the business is located.
 There are now around1.65 million farmers and workers who are part of the Fairtrade
movement.
 Fairtrade covers 74 countries and includes 1226 certified producer organizations.
 Just over quarter of farmers and workers in the Fairtrade movement are women.
 146 million AED of the premium was spent on improving productivity and quality.
The world Fair Trade Organization
It is not only organizations like the Fairtrade movement which seeks to promote fair
trade. The World Fair Trade Organization, for example, also seeks to promote fairer trade and
has identified ten principles which characterize fair trade. These are:
1. Providing opportunities for disadvantaged producers in the agricultural industry.
2. Transparency and accountability
3. Fair trade practices
4. Fair payment
5. No child labor and no forced labor
6. No discrimination, gender equity, freedom of association
7. Good working conditions
8. Building capacity
9. Promoting fair trade
10. Respecting the environment

Criticisms of Fair-Trade Organization

As with any initiative, fair trade organizations can bring some benefits but may also
bring some costs. Only a small number of farmers can get the necessary certification to
comply with fair trade rules, and as a result many small farmers continue to be poor and may
even be worse off.
The fair-trade movement does not cover a sufficient number of the less developed
countries- it is generally assumed that fair trade farmers come from the poorest countries of
the world, when this may not be the case.
The higher prices received by some farmers distorts the market and can mean that
poor farmers become even worse off as they are unable to compete.
There are other, more effective ways of helping support poor farmers as well as
ensuring a more sustainable planet.
Benefits of Fair Trade:
Fair trade organisations aim to help small farmers become more sustainable and have more
control over their businesses.
Fair-trade organizations benefit producers by ensuring fair wages, better working conditions,
and sustainable practices. They promote ethical supply chains, reduce exploitation, and
empower small farmers and workers in developing countries. Consumers benefit by
supporting responsible businesses, fostering social justice, and encouraging environmental
sustainability in global trade.

Lesson 4 - What is Socially Responsible Investing?

Introduction

The term ‘investment’ means doing something today which will generate some return in the future.
We use the term in different ways; for example, by going to school, you are investing in your future.
The hope is that by getting an education, you will be in a better position get a job in the future. By
investing in the moral education programme, it is hoped that as members of society in the future,
you will learn values and moral principles that will guide you through life and contribute to the
success and development of the UAE in its bid to become the best country in the world.

“The real asset of any advanced nation is its people, especially the educated ones, and the prosperity
and success of the people are measured by the standard of their education.”

Investing in our health

 We can also ‘invest in a healthy lifestyle’. In this context, what we eat today, how we
exercise and live our lives can have a bearing on how we will be able to live our lives in the future. If
we choose to eat foods which are high in salt, fat, and sugars, and take little exercise, we might end
up becoming obese, suffer from diseases such as diabetes, and have higher risk of heart attacks and
strokes in the future. In many developed countries, obesity rates and diabetes are major health care
problems.

Financial investment

In many parts of the world, people will refer to investment in terms of setting aside some
money now through saving. Money might be saved in a bank, through a pension fund or investment
fund. The UAE government invests in infrastructure to help improve connectivity in the country.
Roads, bridges and transport systems are all essential to the operation of a modern, efficient and
dynamic economy which is capable of growing and developing in the future.

Investment in capital

Business and governments spend large sums of money on investment. It means the
purchase of capital items which are not bought for their own sake but for the contribution they will
make to production.

Investment by Government

Many governments oversee large investment projects in a range of services. Hospitals and
schools, for example, are major investments for many governments. In the UAE, the ministry of
Health and Prevention works with health authorities to ensure both private and public hospitals
meet high standards and are appropriately equipped and staffed.

The global financial system helps to put individuals, businesses, governments and organizations with
funds available which they are willing to allow others to use.

Socially Responsible Investing:

Socially responsible investing looks at investing in different ways. Socially responsible investing
involves assessing investments to take into consideration ethical factors. A socially responsible
investment might seek to avoid placing funds into governments that have poor human rights
records, who are classified as being corrupt or who are alleged to be linked to terrorism. Socially
responsible investment might also avoid placing funds into businesses which are associated with
certain products and services which are considered ‘bad’ in some way. For example, companies who
are associated with producing alcohol or tobacco, gambling, are seen to support poor working
practices like child labor, paying low wages, not providing appropriate health and safety for its
workers or who produce goods which have a negative impact on the environment.

Investing in tobacco companies raises ethical concerns due to the harmful health effects of
their products, which cause addiction, illness, and death. While profitable, such investments
may conflict with social responsibility. Ethical investors often avoid tobacco stocks,
prioritizing companies that promote health, well-being, and sustainability instead.
Decisions may be made on investment which has a measurable impact on generating employment,
on building houses, in the provision of health and education services, the provision of clean drinking
water or improvements in rural services, the provision of clean drinking water or improvements in
rural services and agriculture.