1.3 Key factors in globalisation Flashcards
What is globalisation
The increased integration of economies, societies and cultures globally
How many years ago did globalisation really take off
30 years ago
What are the 6 main factors of globalisation
- Government support (trade)
- Finance (technology)
- Transport (technology)
- Security (technology)
- Management and information systems
- Trade agreements
How has government support contributed to globalisation
By encouraging trade
How does government support encourage trade
Governments often have trade departments in other countries to facilitate exports
Give an example of the UK government support system
The UKTI hav centres in over 100 countries, where they offer support and advice on trade to encourage business and new exporters.
How has integrated finance contributed to globalisation
By allowing for fast transactions and allowing economies to trade money
How has integrated finance made transactions easier
Exchange rates have been made easier by the deregulation of financial markets
Transactions completed quickly and securely through algorithmic trading (mathematic formulas to make computer decisions)
How has transport contributed to globalisation
Products can now be shipped more quickly, in larger quantities for cheaper prices
Why is transport always getting better
Containerisation
Fast computer systems
High speed rail networks
Give an example of a global transport network
Eddie Stobart has over 24 global distribution centres with lorries, aircraft and boats
How has security contributed to globalisation
An increase in security means an increase in global trade, through secure finance systems etc.
However security can actually hinder globalisation
What is the ‘stable door’ security approach
The stable door approach means keeping the door to trade open, and relaxed
Why has the ‘stable door’ had to be shut and what are the consequences
Terrorist incidents, Smuggling, Bio security
This means that costs have risen and goods have been delayed
How have management and information systems contributed to globalisation
They control all of the other categories listed and by managing them better, the other categories become more efficient.
How are management and information systems improving and benefiting from ‘economies of scale’
They have become increasingly organised in global value chains by
1. Global marketing
2. Purchasing large assembly plants
3. Organise production to how it suits them (such as the JIT system)
Give an example of an efficient management system and explain how it works
The JIT system means producing product only when there is demand for it.
Production pulled rather than pushed through , meaning NO STOCK BUILT UP goes to waste
What are the advantages and disadvantages of JIT
Cost efficient
Consumers can customise
Faults spotted easily
If one part stops, whole production stops
Spatial seperation
Give an example of a JIT system and how does it work
Toyota kanban. A kanban is a card containing product information required to start production
Consumer and sales rep discuss product, kanban card is made and sent to factory and is made
How has trade contributed to globalisation
Every economy wants to achieve economic success, and the main way to do this is through trading systems
Trade integrates global economies
Give some examples of trade blocs used to stimulate trade
Free trade areas - eliminate internal barriers
Customs Union - eliminate internal barriers and have same external barriers
Common Market - Customs Union but with labour aswell, such as the EU
What are the global advantages of trade unions
Improve global PEACE and TRADE
DEVELOP economies
What are the regional advantages of trade unions
Give countries good representation
Can compete on a global level
Particular sectors supported
What are the disadvantages of trade unions
Loss of power and financial control
Pressure to adopt legalisation
Share resources
What is the pattern of trade and how is it changing
- Trade agreements does not just happen regionally
- Trade agreements have lifted amount of duty free goods 20%, and the largest proportion has risen in NEE’s
Give an example of a non-regional trading agreement
OPEC
When was OPEC founded and by who
Founded in 1960 by 5 countries in the Middle East and South America. They are now in South America, Middle East, Asia and Africa
Explain the story of OPEC
Demand for oil was growing, but the exporters were not getting paid enough , so they joined together to control the prices.
From the 1970’s-80’s they controlled 50% of global oil and adopted 4 new members across other continents
However due to renewable energy they now only control 1/3
Give an example of a regional trade agreement
NAFTA (usmca)
When was NAFTA founded and by who
Founded in 1994 by USA, Canada and Mexico
Why was NAFTA created
- Complete with other trade blocs
- Revive Mexicos economy
They promised to eliminate all trade barriers to increase investment and corporation
What were the advantages of NAFTA
Trade TRIPLED between the 3 countries
Manufacturing grew in USA
Mexico got more TNC investment
Mexicans got better wages
What were the disadvantages of NAFTA
- Jobs lost to cheap Maquiladoras
2.Mexico exploited of natural resources
3.Food surplus dumped in Mexico, effects AGRICULTURE
Bosman ruling ?
