2A. Global systems and global governance Flashcards
what are the concepts behind global systems growth
Global flows have deepened over time, a sense of connectivity from the imported food and TV programmes and a use of global social media
Global flows have lengthened over time, products and services are sourced routinely from distance places and far away continents
Global flows have grown faster over time, in recent years people have begun to talk to one another in real time using technologies like WhatsApp
what are flows
the connections that link people and places together
human systems depend on flows of money, people, ideas and commodities
what are the component parts of globalisation
economic globalisation - driving force behind global systems growth, the expansion of large businesses in developing and emerging economies accelerates cross border exchanges of raw materials and goods, ICT supports the growth of complex spatial divisions of labour for firms
cultural globalisation - diffusion and adoption of languages, fashions and foods that originated in powerful and influential states, glocalisation and hybridization are a more complex outcome that takes place as old local cultures merge and meld with globalising influences
social globalisation - international migration has created extensive family networks that cross national borders, world city societies become multi ethnic and pluralistic (many different types of people, with different beliefs, opinions, and needs), global improvements in education and health with increased life expectancy and literacy levels
political globalisation - the growth of trading blocs allows TNCs to merge and make acquisitions of firms in neighbouring countries, reduced trade restrictions and tariffs help markets to grow
define interdependent
‘relations of mutual reliance between different things or people’. In other words, it’s about people, places or countries who support and need each other
describe the important capital flows
Huge amounts of money cross national borders annually in the form of foreign direct investment by large TNCs purchasing overseas assets
Vast flows of money a generated by investment banks pension funds in private citizens who trade globally and shares and currency for profit
International lending and debt relief loans - can be an important financial flow for states at all levels of economic development
international aid flows - for example aid from the UK direct towards Commonwealth countries
remittances - money sent home by migrants remittances can be a peer-to-peer financial flow money travels directly from one family member to another
describe the flows of people (migrants and tourists)
Migration is directed many tours developed world destinations like New York and Paris however world cities in developing world countries like Mumbai Lagos and Dubai have also begun to function as major global hubs for immigration
International migration is relatively regionalised in general largest labour flows connect neighbouring countries like the US and Mexico
describe merchandise flows (raw materials and manufactured goods)
raw material trade in food and minerals helped link states together
rising industrial demand for materials and increasing global middle-class consumer demand for food, gas, and petrol are responsible for the growth and resource consumption globally
60 years ago the majority of high-value manufactured goods were both produced and sold in North America Europe and Japan factories in these regions made use of raw materials imported from Asia, Africa and South America
The rise of South Korea and China innovation habitant transformed the global past of trade for manufactured goods Koreans Samsung in China’s Huawei have become major players in the production of telecommunications and home media devices
Large of fast-growing African economies like Nigeria and South Africa are increasingly viewed as important markets by Asian manufacturing companies giving rise to greatly increased volumes of south south trade
describe the flows of services
Tourism - the value of international tourist trade had doubled between 2005 in 2015 similarly the number of international tourist arrivals has also doubled in that same period much growth and activity has been generated by touristic movements
Financial services - insurance free-market liberalisation is playing major role in fostering international trade and financial services, within the EU cross-border trade and financial services has expanded in the absence of barriers large banks insurance companies are able to sell services to customers in each of EUs member states
online media and retailing - faster broadband and powerful handheld computers have allowed companies like Amazon and Netflix to stream films and music on demand directly to consumers delivery companies like DHL have reaped benefits of e-commerce growth
describe the global flows of ideas and information
The Internet has brought real-time communication between different places allowing different ideas and perspectives to be shared
social media growth has been a worldwide sharing concerns ranging from climate change to animal welfare
some global technology has also been used to destabilise democracies and to foster local resistance against globalisation.
what forces shape global systems growth
Political decision-making at National International scales – policies will allow and promote cross-border flows of trade people and ideas
transport and communications technology innovation - supports increase cross-border flows of trade people and ideas
financial goals of TNCs - profits can be increased by expanding trade and production into new markets
describe a shrinking world
Technologies and innovation have made it feel like the world is smaller
time and space have been compressed by technological advancements and transports making the world feel small
i.e. it takes less time to travel around the world
what is a TNC
transnational corporations which are defined as enterprises that are involved with the international production of goods and services, foreign investments or income and asset management in more than one country
what is foreign direct investment
Transnational corporations put capital into local economy meaning people have more disposable income to spend on transport housing and local services
Low income countries highly encourage FDI as even a relatively small investment can have a larger effect on their economy due to the multiplier effect
what is the multiplier effect
the ‘snowballing’ of economic activity. e.g. If new jobs are created, people who take them have money to spend in the shops, which means that more shop workers are needed
the effect on national income and product of an exogenous increase in demand. For example, suppose that investment demand increases by one. Firms then produce to meet this demand. That the national product has increased means that the national income has increased
define outsourcing
The use of other companies for products or services for example the increase of call centres in India
define offshoring
the movement of production and manufacturing to another country
reduces labour costs, exploit lower taxes and regulations
could lead to job losses in the TNCs country of origin
why do TNCs offshore and outsource
Most TNCs are based in developed countries that invest in other countries to do manufacturing and production work
they do this because it allows them to avoid trade barriers and expensive tariffs
they also lower the wage bill by paying workers less
they can get around environmental laws as the pollution and waste is not in the country of origin
define glocalisation
PlayStation is the process of adapting brands and products to suit the local market for example taste laws and culture many TNCs sell identical products in all countries have some change their goods to appeal to local community
for example McDonald’s has vegetarian outlets in some parts of India due to local seeking Hindu beliefs and car manufacturers change the side of the steering wheel depending on the country the car is being sold in
define global shift
global shift is the filtering down of manufacturing industry from developed countries to lower wage economies
Global shift is the movement of manufacturing and industry to countries that have recently industrialised
Global shift is historically the movement of manufacturing and service jobs to China and India but recently China has been moving from the secondary to the tertiary sector and has started outsourcing and exporting its manufacturing to countries like Bangladesh and kenya
Large amount of service jobs are still moved to India due to the massive population and English commonly being spoken well among the population this is the reason why there are so many call centres
how does transport accelerate globalisation
Globalisation is centered around trade and trade is centered around the ability for these goods to move from place to place this transportation is made possible by container shipping high-speed rail and air travel
The development of transport technologies has increased efficiency in the production line making products for transport and enabling it to be done at a larger scale, reducing costs
it is also meant that companies do not need to manufacture all the components of products on the same site leading to an increase in outsourcing and offshoring (can exploit the lenient laws, regulations and young, highly skilled workforce)
Ease of transport has allowed an increase in migration this contributes to the rise of diaspora and remittances which are other driving factors of globalisation
how has transport developed
container shipping - standardised so they could be able to hold the same volume of product and be placed on any ship/stacked on top of eachother, also reduced theft
standardisation are important om globalisation because it means that systems in place are the same globally, so no extra considerations need to be made in order to ship things to different parts of the globe
air travel - air travel increases the speed of transporting goods and services it takes less than 12 hours to deliver goods across the world it also allows people to move from one country to another a lot faster it also decrease the cost of transportation so cost per item will reduce when operating on a larger scale
high speed rail - allows goods to be transported efficiently countrywide encourages population growth and flow which leads to a country’s economic growth
how does communications and technology accelerate globalisation
telephone - allows virtually free telecommunications and videoconferencing, sellers can advertise their goods at no cost so products can be viewed and sold all over the world, supervisors can control warehouses remotely
5G -increases communication efficiency
internet/fibre optics - reduced cost of transmitting and communicating information meaning companies can outsource tasks at a lower cost, the Internet has made it easy to access goods and services produced from anywhere in the world
mobile banking - allows foreign direct investment to take place increasing interconnectedness of countries
in 2007 Kenya Safaricom introduced iM-pesa which is a simple mobile phone service that allows credit to be directly transferred between phone users 1/2 of Kenya’s GDP is now sent through this system, women in rural areas are now able to secure loans by using their m-pesa bills as proof of good credit
how does government and international organisations accelerate globalisation
improved security through UN - political stability is fundamental to globalisation because it encourages investment, trade and economic growth, the UN is an integral part of global stability as it resolves conflict and maintains please
platform for nations to collaborate on various issues which creates a cooperative environment essential for the global exchange of goods, services and ideas
EU trade agreements - these trade agreements typically involve the reduction of tariffs and non-tariffs, making it easier for EU businesses to access foreign markets, protection of foreign investments encourage cross-border investments flows contributing to the globalisation of capital
By reducing trade barriers EU agreements can encourage the development of global supply chains
IGOs - intergovernmental organisations like the world trade organisation and European Union negotiate and oversee trade agreements
the International monetary fund provides financial assistance to advise member countries facing economic crises
the World Bank provides funding for development product projects in member countries helping economic development and lowering economic inequality around the world
what is neoliberalism
“eliminating price controls, deregulating capital markets, lowering trade barriers” and reducing, especially through privatization and austerity, state influence in the economy
Political approach that favours free-market capitalism, deregulation and reduction in government spending, has been adopted since the 80s
it focuses on free trade, promoting the removal of tariffs meaning more exchange of goods and services across borders
define deregulation
The removal of restrictions or regulations especially in a particular industry financial deregulation amuse barriers to capital movement making it easier for investors to invest across borders encouraging the flow of capital
excessive deregulation can increase the risk of financial crises like the 2008 gfc
what are special economic zones
A special economic zone (SEZ) is an area in a country that is designed to generate positive economic growth. An SEZ is normally subject to different and more favorable economic regulations compared to other regions in the same country, including tax incentives and the opportunity to pay lower tariffs.
describe how the china belt and road initiative accelerated globalisation
This initiative involves the construction of many infrastructure projects like roads railways ports and pipelines in energy facilities which improve the physical connectivity between China and participating countries
it creates new trade right routes between China and party countries and reduces transportation costs
the BRI promotes culture in migration to initiatives like educational programs and cultural events
the economic ties between China and participating countries enhances its geopolitical influence and shapes regional and global politics
Some countries have raised concerns about debt incurred from BRI projects and potential dependency on China
define aquisitions
when an international corporate merger takes place, two firms in different countries join forces to create a single entity
allows expanded markets and the opportunity to reduce costs through rationalization (streamlining operations)
large flows are redirected to where the tnc is headquartered
define a joint venture
involves two companies forming a partnership to handle business in a particular territory
it makes good business sense for the tnc to work with a local company that has a better understanding of local customer preferences - the combined expertise makes the venture more successful
example is mcdonalds making its indian branches part owned with indian companies to make veg menu
a joint venture reduces the risk a tnc is exposed to
define reshoring
involves an tnc abandoning lengthy supply chains and instead returning productive operations to the country where it is headquartered
builds more resilient supply chains
produces more jobs in country of origin
what are the two kinds of global production network
closed networks are tightly integrated systems where technologies used by suppliers have in part been developed by the tnc hub company - more exposed to risks of disruption than open systems due to a lack of alternative sources for key parts
open networks are loosely integrated systems composed of suppliers who provide generic parts for many different hub companies - associated with cheaper electronics and food processing, if one supplier fails to deliver, substitutes are easily found
what are global production networks and supply chain interdependence
outsourcing and offshoring leads to a linked chain of tiered suppliers
many tnc’s lack direct contact with their suppliers’ suppliers and only inspect working conditions at the factories of their first or second tier suppliers
what is the just in time model of production
a production model in which items are created to meet demand, not created in surplus or in advance of need
many modern industries do not keep large stocks of parts on their premises
what are the risks of supply chain interdependence
natural hazard risks - 2011 earthquakes in japan highlighted the over-exposure of firms across the world to environmental supply chain risks - affect commodity prices
reputational hazard risks - reports of labour or worker suicides can do enormous damage to a company’s reputation
conflict and geopolitical hazard risks - war and conflict can result in a company losing its assets or suffering supply chain disruption, regime change may bring a tnc into conflict with new leader, e.g. new president in venezuela seized control of exxonmobil operations
what is premature deindustrialisation
when the start of a fall from the manufacturing employment peak (peak industrialisation) begins sooner
denies a country the full benefits of industrial development
what is the cause of premature deindustrialisation
AI and robotics are reducing the number of workers needed in factories
these new technologies are cost saving so easily replace human workers
international trade also plays a part because it has amplified the use of these technologies making them more widespread and accessible therefore putting more people out of their jobs
what are economies of scale
the cost advantage that result from larger size, output, or scale of an operation as savings are made by spreading the costs or by rationalising (Reorganising production in order to increase productivity and efficiency) operations
has the global shift led to injustices
the global shift has led to changes in the primary, secondary, tertiary and quaternary sectors
as a result problems have moved from developed countries to less developed countries, there is a projected shift from Asia to africa
the injustices include exploitative working conditions which disproportionately affect women, companies restrict the ability for workers to demand better rights
what are the problems associated with the fashion industry
3 trillian dollar industry
all negatives are excused because it generates so many jobs, it is the best option
workers are exploited, underpaid and exposed to harmful working conditions
overconsumption leads to extreme waste
what are the positive and negative impacts of global shift in HIC
positives -
Cheaper imports of all relatively labour-intensive products
can keep cost of living down and lead to buoyant retailing sector
growth of NIC and LIC leads to a demand for exports in HIC
greater industrial efficiency should lead to a development of new technologies
promotion of intrapreneurship and should attract foreign investment loss of industries can lead to improved environmental quality
Negatives -
Rising job exports lead to job losses, which are often of unskilled workers
big gaps develop between skilled and unskilled workers who may experience extreme employment differences
employment gains from new efficiencies will only occur if industrialised countries keep their wage demands down
what are the positive and negative impacts of global shift in LIC
positives -
higher export generated income promotes growth and productivity which leads to multiplier effect on national economy
can trickle down to local areas with many new highly paid jobs
can reduce negative trade balances
can lead to exposure of new technology improvement of skills and labour productivity
employment growth in relatively labour-intensive manufacturing spreads wealth and reduces the development gap
negatives -
Unlikely to decrease inequality as jobs tend to be concentrated in core regions of areas, may promote migration
destructive social impacts leading to instability
can lead to overdependence on a no economic base
can destabilise food supplies as people give up agriculture
environmental issues associated with over rapid in centralisation health and safety issues because of tax legislation
what are the positive effects of the growth of the global economy
1 billion people have been lifted out of absolute poverty during the last decade
linked with the transition of many countries from low income and developing to middle income and emerging
what are the reasons for global poverty reduction since the 1980s
global economy has grown since the mid 20th century
china’s economic development had a huge impact on the global number of people in extreme poverty in developing countries
what is purchasing power parity
PPP is the exchange rate that would make the purchasing power in one country equal to that of another country with a different currency
what is wrong with the gini index
it only captures relative change
if the income of the rich and the poor increase by the same rate the gini index remains the same even though absolute inequality is rising
describe land grabs and extractivism
Land grabs involve the illicit and illegal acquisition of large areas of land in developing countries by TNCs, governments and wealthy individuals
Indigenous communities may have no official legal claim to the ancestral land and they often a lack of literacy and education needed to defend their right
for example Amazonian tribes using the land to logging companies
describe transitional waste movements
Waste movements are discarded and broken consumer items originating in high income companies transported to lower income countries for disposal and recycling
This trade has economic benefits the waste reprocessing companies in recipient countries however there are significant health costs for workers in pollution havens
describe climate change refugees
Individuals or groups of people who are forced to leave their homes due to sudden or gradual changes in their local environment
why is relying on primary commodities for export earnings risky
prices of commodities fluctuate on the world markets
manufactured goods have added value and can be more profitable than primary products
what are the impacts of an integrated trade agreement
economic growth overall - on account of economic success through specialisation
declining domestic productive capacity for certain types of food, manufactured goods or services - because other countries in the agreement do things better
increased vulnerability to any disruption in the system
each country has become more dependent on imports of things it once produced for itself but no longer does
what are protectionist policies
an economic policy where a country imposes restrictions like tariffs, quotas, and subsidies to shield its domestic industries from foreign competition
what is the most notable trade war
the so called trade war between the USA and china
The US increased tariffs on China’s products this increase on tariffs has been made met by similar actions by the Chinese government on imports from USA
Trump also intends to renegotiate the North American Free Trade Agreement with Mexico and Canada on times which are more favourable for the USA which indicates the shift towards protectionism
what is the UN
an organisation of independent states formed in 1945 to promote international peace and security
it is argued that it only addresses the strategic interests and political motives of the permanent members
what is the world bank
gives advice, loans and grants for the reduction of poverty and the promotion of economic development
loans have not always has the effect of reducing poverty as they have concentrated on top down aid projects like dams
US is the largest single stakeholder
what is the IMF
international monetary fund
monitors economic and financial development of countries and lends money when countries are facing financial difficulties
known to offer financial assistance on the condition that countries impose severe cuts to education and welfare spending - structural adjustment programmes
what is the world trade organisation
promotes global free trade and settles trade disputes between nations
current trade agreements between developed and developing countries make it difficult for emerging nations to export agricultural products to developed countries
describe how IGOs have led to stability growth and development
morocco’s noor solar plant - world bank provided funding for the plant that has achieved its energy targets
the plant is located in an economically disadvantaged area so it brought social and economic development to the area
the project worked on gender equality (employed 70 local women and supported a local girls secondary school)
increasing power supply provides the necessary infrastructure for industrial development - more appealing for FDI
trade liberalisation (free trade) - removed trade barriers
encourages dumping
describe how IGOs have led to inequality, injustice and conflict
structural adjustment programmes (SAP) - making cuts to public sector funding to enable debt repayment - can help improve economic growth
in the ebola crisis countries had to prioritise debt repayments over funding health services
Ghana turned to IMF to stabilize their economy
IMF advisors helped the government through their loan, avoiding corruption as top down projects are subject to mismanagement - privatisation and trade liberalisation can result in more efficient business, however locals will not see the benefit of international market access as a result the HDI of Ghana remained low despite the IMF intervention
Ghana still relies on aid and may never be able to pay off their debt
WTO favours western nations - the tariffs are lowest in these nations because they can maintain quotas
the US has such a huge influence on these institutions so they reflect the US’ economic interests
underrepresentation of the global south - voting shares are based on the size and openness of a countries economy, LICs are therefore under represented and have little ownership of the decision making process
what is dumping
farming subsidies encourage farmers to make more of a certain crop
they cant use it all so they dump it on other countries at a low cost, undercutting locals
selling a product at below cost price
what are the environmental consequences of globalisation
climate change refugees - enhanced greenhouse effect will affect the world disproportionately - desertification of arid regions will affect agriculture and cause food insecurity, countries like bangladesh (5m above sea level) are risk of flooding
10 million people from africa, south asia have been displaced by environmental degradation
increased imported foodstuffs - makes food have a large carbon footprint, flying food creates 10 times the emissions than of road food
globalisation facilitates the spread of invasive alien species
leads to increased transport between countries - transboundary pollution (from oil spills etc)
leads to increased for production of products - cheaper products with high demand that do not last long, leading to increased waste and increased hazardous practices to process waste
deforestation - habitat destruction and high carbon emissions
technological advancements enables a modern lifestyle - depends on natural resources like fossil fuels to meet our energy needs, leads to deforestation and fracking
increased communication - social media can raise awareness of various issues like climate change
communication between governments brings countries together and allows for agreements and conferences to be formed
what are the costs and benefits of the chinese trade investment in africa for china
costs -
dealing with a less skilled workforce with different cultural and economic values - did not want to work on the weekend
receives criticism for the non-interference policy (like making deals with uganda even after LGBT punishable by death)
return of investments not guaranteed
benefits -
africa has oil, copper, cobalt and iron ore - materials can be exported for cheap and used in china
has markets for chinese manufacturers and construction companies
allows them to create greater interconnectivity in the word - establishes trade links
can outsource work so that they can move up the value chain to more high tech and capital intensive manufacturing
high flow of remittances
little competition (dangerous and morality)
what are the costs and benefits of the chinese trade investment in africa for africa
costs -
the loans may saddle governments with large debts - economic and political debt
moved into trade deficit with china
too many chinese workers brought over to build the infrastructure - restricts employment opportunities
low safety standards (collum coal mine in zambia)
benefits -
makes investments in resource poor countries like ethiopia
brings in finance and engineers
policy of non-interference attracts angola and zimbabwe
trains 12000 students in telecoms a year at centres across africa
moves people out of poverty and provides jobs
loans are not in forms that can be taken advantage of by corruption
what are the key features of africa’s sezs
areas where the government provides infrastructure and services to allow the development of export oriented industries, they also provide tax concessions (A tax deduction or benefit is an amount deducted from taxable income)
the zones are responsible for the processing of raw materials
china are moving some of their polluting industries like leather tanning to africa
they bring employment opportunities, new technologies, training and tax revenue
what are terms of trade
the cost of goods that a country has to import compared with the price at which they can sell the goods they export
in general, the prices of manufactured goods have continually increased over the last few decades whereas the price of the primary products have fluctuated, this means that LICs have to export increased volumes of primary products to purchase the manufactured goods they require
the terms of trade for LIC are often unfavourable and unstable
what is the futures market
when large companies like Cadbury or Nestle buy supplies now to ensure delivery in 3-6 months
