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Unlock This CourseVietnam is a country in South East Asia. It has a long coastline on the South China Sea and borders China, Laos and Cambodia. Its capital is Hanoi in the north, and its biggest city is Ho Chi Minh City in the south. It is a MIC that used to be much poorer. This lesson is your detailed example for globalisation and TNCs. The general ideas were taught in Impacts of Globalisation, Transnational Corporations and Evaluating the Impacts of TNCs. Here we apply them to one place.
Key term:
| Date | What happened |
|---|---|
| 1986 | Doi Moi reforms begin. Private business and foreign investment are allowed. |
| 1990s and 2000s | Foreign companies open factories. Exports and manufacturing grow quickly. |
| 11 January 2007 | Vietnam becomes the 150th member of the WTO, making trade easier. |
| 2009 | Samsung phone production begins in Bac Ninh province. |
| 2013 | Samsung builds a second plant in Thai Nguyen province. |
Doi Moi and WTO membership plugged Vietnam into the global economy. Sorted by type, the impacts are:
Exports and manufacturing grew rapidly, and Vietnam's exports reached about US$350 billion in 2023. Phones and other electronic goods are now among its biggest exports. Foreign direct investment (FDI) from TNCs built factories and created many jobs.
Poverty fell sharply. The IMF reports that between 1993 and 2014 the share of people living in poverty dropped from almost 60% to about 14%. More families could afford food, schooling and healthcare.
Wages for factory work are low compared with HICs, and many workers have long hours. Incomes are higher in the cities than in the countryside, so inequality remains.
Fast industrial growth brought air and water pollution, especially around factories and big cities, and more waste and traffic.
At a national scale, Vietnam gained a lot. At a local scale, the picture is mixed: factory towns boomed, while rural areas gained less.
Samsung is an electronics TNC with its headquarters in South Korea. In Vietnam it makes smartphones and other electronics, mainly in its two big smartphone factory complexes: Bac Ninh (near Hanoi) and Thai Nguyen (further north). Vietnam is the host country. Samsung is attracted by lower labour costs than in South Korea, a young workforce and government incentives.
| Impact | Positive | Negative |
|---|---|---|
| Exports | Samsung made up about one-fifth of Vietnam's exports (22.7% in 2016) | Vietnam depends heavily on one company's sales |
| Jobs | About 130,000 workers in Vietnam in 2023, many in provinces that had few factory jobs | Long hours and repetitive assembly work |
| Skills | Workers learn electronics assembly, quality control and use of modern machinery | Most design and research is done in South Korea, so the best-paid jobs go there |
| Suppliers | The number of Vietnamese suppliers to Samsung has grown many times over since 2014, creating more local firms and jobs (the multiplier effect) | Many suppliers are other foreign firms, often Korean, and most components are still imported |
| Money | Tax revenue, and wages spent in Bac Ninh and Thai Nguyen | Much of the profit returns to South Korea |
Bac Ninh was mostly a farming province. After Samsung arrived in 2009 it became one of the main electronics-making areas of Vietnam. Jobs, wages and tax income rose, and supplier factories opened nearby. The costs were heavier traffic, pressure on housing and public services, and worries about pollution.
Use the same questions as in Evaluating the Impacts of TNCs.
A strong judgement says that globalisation and Samsung have lifted incomes and cut poverty in Vietnam, but the benefits are uneven, and Vietnam's future depends on moving from low-wage assembly to higher-skilled work.
Do not write only "Samsung gave jobs". Give a figure, a place and a reason, for example about 130,000 workers in factories such as Bac Ninh and Thai Nguyen. Do not mix up the two bullets of the spec: the impacts of globalisation on Vietnam (Doi Moi, WTO, FDI) and the impacts of Samsung. Always include both good and bad impacts.
Table 1 shows made-up figures for the exports of electronics from a country.
| Year | Exports of electronics (US$ billion) |
|---|---|
| 2000 | 2 |
| 2010 | 10 |
| 2020 | 40 |
(a) Calculate the increase in exports of electronics between 2000 and 2020. [1 mark]
(b) Define the term Doi Moi. [2 marks]
(c) Describe two negative impacts of globalisation on Vietnam. [4 marks]
(d) Using a named TNC in a named country, assess the impacts of the TNC on that country. [6 marks]
(a) US$38 billion (1).
(b) Economic reforms started in Vietnam in 1986 (1) that moved the economy from government planning towards a market economy open to trade and foreign companies (1).
(c) Any two, each described: low wages and long hours for factory workers (1) so some families gain little from growth (1); pollution of air and water around factories and cities (1) which harms health and the environment (1); higher incomes in cities than in the countryside, so inequality (1).
(d) Level 3 (5-6 marks): a developed answer with both sides and a judgement. For example: Samsung, a South Korean TNC, opened large factories in Bac Ninh and Thai Nguyen in Vietnam. It produces about one-fifth of Vietnam's exports and employs about 130,000 workers, so it has created jobs and raised incomes in provinces that were mainly farming. Workers gain skills and the number of Vietnamese suppliers has grown. However, much of the profit returns to South Korea and most design is done there. Workers face long hours and repetitive work, and Vietnam relies heavily on one company which could move. Overall, Samsung has brought real economic benefits, but Vietnam gains more if it builds local suppliers and higher-skilled jobs. (Credit is given for each developed point, named places and figures and a supported judgement.)
For "Assess", name the TNC and the country, give two or three impacts with figures or places, then finish with a judgement that starts "Overall".