3.1. What is Globalisation? Flashcards
What is globalisation?
The process of the world’s economies, political systems and cultures becoming more strongly connected to each other.
What is time-space convergence?
The process made possible by technological advances in transport and communication by which distant places are brought closer together in terms of the time taken to travel between them.
Example of capital flow?
2019 -> daily volume of foreign exchange transactions reached US $6 trillion
Capital flows fell during COVID-19 ->Direct Investment was reduced by 40% and global GDP fell by 4%
How are flows of capital a dimension of globalisation?
- Capital is money that’s invested -> it’s spent on something to produce an income or increased profit from it
- Increasing flows of capital are making the world more interconnected.
- Online banking and FDI have increased capital
Examples of flows of labour
- Before COVID-19 pandemic in 2020, there were 1/4 of a billion economic migrants in the world.
- However, 10s of millions of migrants returned to their homes during the pandemic, suggesting the ‘age of migration’ might be over
- Migration increased by over 40% between 2000-2015
How are flows of labour a dimension of globalisation?
- More people are moving overseas
- Increasing flows of people between countries are making the world more interconnected
Examples of flows of product
- 2019 -> global GDP reached $87 trillion in value before falling to $84 trillion in 2020.
- Of this, around 1/4 was generated by trade flows in agricultural and industrial commodities
How are flows of product a dimension of globalisation?
- In recent decades, manufacturing has decreased in more developed countries as lower labour costs overseas have caused many companies to relocate the production side of their business abroad.
Examples of flows of service
- By 2040, India is expected to be the 2nd largest economy in the world and some of its economic success is attributable to call centre services which Indian workers provide for large US and EU companies.
How are flows of service a dimension of globalisation?
- Services are economic activities that aren’t based around material goods e.g. banking
- Improvements to ICT have allowed services to become global industries
- Companies outsource low-level services to less developed countries where labour is cheaper.
Examples of flows of information
- Facebook had 2.8 bn users in 2021
- Major platforms like YouTube, Instagram, WhatsApp etc increase info flows
How are information flows a dimension for globalisation?
- The internet has brought real time communication between distant places, allowing goods and services to be bought at the click of a button
Financial systems
- Facilitate the movement of capital around the globe, FDI, individual and company investments and international loans support trade, business expansion and infrastructure development
- Deregulation has allowed countries to trade more easily. Foreign exchange, global banking, insurance and payment networks also cross-border transactions to be conducted
Communication technology
- Driven by satellite technology and fibre optic cables.
- Software applications, including social media, open source and AI are increasing availability and efficiency of communications.
Management and information systems
- Models of production management can be used in factories in different countries
- Increase efficiencies, take advantage of economies of scale, minimise costs and increase profit.
- Businesses benefit from global supply chains.
- Companies can also outsource or offshore part of their business to benefit from less strict rules or tax benefits in another country.
Transport and communication systems
- Transport network densities differ around the world meaning some countries have better internal and international access than others.
- Key technologies have included high-speed rail, increased capacity and efficiency of shipping due to containerisation and development of deep water ports, and advancements in non-stop aircraft routes.
Security
- Inter Governmental Organisations promote the globalisation of security based decision making
- It is also argued that global interdependence through interconnected trade systems reduces the possibility of conflicts
- With increased and different forms of communication come an increase in the possibility and severity of cybercrime and identity theft
Trade agreements
- The WTO governs the world trade system, under the free trade model
- It sets rules and settles disputes between member countries
- Trade agreements exist between 2 or more countries or as part of a larger trading bloc
- Critics say that the global trade rules prevent some countries from having fair access to the global markets
