3.1.1 Globalisation

Question 1

What is globalisation?

Answer 1

The increasing interconnectivity of the world’s economic, political and cultural systems.

Question 2

What are the two categories of labour?

Answer 2

• Unskilled labour
• Skilled labour

Question 3

Unskilled labour

Answer 3

Jobs that do not require a high level of training. These often have a low barrier of entry. E.g. Waiter, Shopkeeper, Hairdresser

Question 4

Skilled labour

Answer 4

Highly skilled jobs which require a high level of training (often a university degree). E.g. Lawyers, Doctors, Engineers

Question 5

Is there more demand for unskilled or skilled labour?

Answer 5

There is a much greater demand for skilled labour, than unskilled, because of increasing technological improvements.

Question 6

NICs

Answer 6

Newly Industrialised Countries.

These include: Thailand, Mexico, South Africa, Brazil, Singapore, Turkey, Taiwan, India, and Hong Kong.

Question 7

BRICs

Answer 7

Brazil, Russia, India, China – A group of fast developing countries with significant economic growth.

Question 8

MINTs

Answer 8

Mexico, Indonesia, Nigeria, Turkey - A more modern version of BRIC nations. These are fast developing countries.

Question 9

Asian Tigers

Answer 9

Four countries located in Asia with steady, high levels of economic growth.

These are:
* Singapore
* Hong Kong
* South Korea
* Taiwan.

Question 10

Define de-industrialisation

Answer 10

The loss of jobs in the manufacturing sector and the movement of jobs to the tertiary and quaternary sector. It particularly occurred in the UK in the 1970s – 1980s.

Question 11

Where is the most Coca-Cola drank + why?

Answer 11

Mexico - it is made in Mexico.

Question 12

Famous quote about globalisation

Answer 12

“Arguing against globalisation is like arguing against the laws of gravity” – Kofi Annan, former UN Secretary General.

Question 13

What has globalisation led to?

Answer 13

• The opening up of world trade
• Development of advanced means of communication
• Internationalisation of finance markets
• Growing importance of TNCs
• Population migrations
• Increased mobility of labour, capital, data, goods and ideas but also infections, diseases and pollution.

Question 14

Flows of information

Answer 14

1) Information (such as financial data or news of current events) can be spread across the world very quickly and easily.

2) The development and rapid spread of email, the internet and social media mean that large amounts of information can be exchanged instantly across the globe. This allows people living in different counties to communicate and work together.

3) Increasing flows of information are making the world more interconnected, e.g. people can learn a lot about different counties and cultures without leaving their own country.

Question 15

Flows of services

Answer 15

Services are economic activities that aren’t based around producing any material goods, e.g. banking.

1) Improvements in technology have allowed services to become global industries in recent decades. Things like banking and insurance depend on communication and transfer of information. Improvements to technology means that services can locate anywhere in the world and still be able to serve the need of customers anywhere in the world.

2) During the 1970s and 1980s there was also deregulation (removal of rules to increase competition) and opening up of national financial markets to the rest of the world, e.g. in the USA and UK. This meant that it was easier for banks and other financial institutions to do business in other counties.

3) Services can be split into low level (e.g. customer services) and high level (e.g. financial services). High-level services tend to be concentrated in cities in more developed counties (e.g. London and New York). Companies are increasingly relocating low-level services to less developed counties where labour is cheaper.

4) Increasing flows of services are making the world more interconnected, e.g. people are connected to other counties just through having a bank account – many banks are huge international organisations.

Question 16

What is capital?

Answer 16

Money that’s invested – it’s spent on something to produce an income or increased profit from it.

Question 17

What is FDI?

Answer 17

Foreign direct investment (FDI)

When a person, company or other group spends money in another country in order to generate a profit, e.g. by opening a new branch of their business or investing in local infrastructure.

Question 18

What is economic leakage?

Answer 18

Sometimes referred to as repatriation of profits.
TNCs invest huge amounts of money on production in LICs, but all profits are sent back to the TNC’s HQ’s country. The only thing staying in the LIC are salaries for workers.

Question 19

What are remittances?

Answer 19

Where money is sent back from workers in HICs to their family/friends in LICs.

Question 20

Which country is highest recipient of remittances from its diaspora?

Answer 20

India

Question 21

Flows of capital

Answer 21

1) Historically, capital was mostly invested within a country, e.g. companies would expand by doing things like building new factories or setting up new branches within their country of origin.

2) Over time though, the amount of capital invested in foreign counties has increased – this is foreign direct investment (FDI). E.g. global FDI increased from about $400 billion in 1996 to nearly $1500 billion in 2016.

3) Improvements in information and communications technology (ICT) have encouraged flows of capital round the world – it can instantly be moved around the world via the internet.

4) Increasing flows of capital are making the world more interconnected, e.g. most countries’ economies are now dependent on flows of investment to and from other countries

Question 22

Flows of products

Answer 22

1) Historically, manufacturing industries were located in more developed countries. The products being produced were also sold in the country where they were made.

2) In recent decades, manufacturing has decreased in more developed counties, e.g. the number of people employed in manufacturing in the UK fell form more than 5 million in 1985 to around 2.6 million in 2014.

3) Lower labour costs overseas have caused many companies to relocate the production side of their business abroad – they then import the products to the countries where they’re sold. E.g. Dyson moved the production side of its business to Malaysia, but the vacuums are still sold in the UK. Post-Brexit, Dyson moved their HQ to Singapore.

4) As a result of these changes, international trade in manufactured goods is increasing, e.g. the UK imported £200 billion of manufactured goods in 1990, and £550 billion in 2008.

5) Changing flows of products are making the world more interconnected, e.g. many of the manufactured products bought in the UK have been produced in other counties and then imported.

Question 23

Flows of labour

Answer 23

Flows of labour are movements of people who participate in the workforce from one country to another.

1) More people are moving overseas – international migration increased by over 40% between 2000 and 2015. Some people move because they have to (e.g. to escape conflict zones), but many people choose to move for work.

2) Some migrants are highly skilled workers (e.g. ICT and medical workers), moving to developed counties where wages and working conditions are better. Others are unskilled workers who move to more developed counties to look for work because of unemployment or poor wages in their own counties.

5) Increasing flows of people are making the world more interconnected, e.g. people bring aspects of their culture with them, and counties are connected because people have family all over the world.

Question 24

What is global marketing?

Answer 24

Treating the world as one single market (a fully globalised world) and using one marketing strategy to advertise a product to customers all over the world.

Question 25

What is an example of global marketing?

Answer 25

Coca Cola’s Brotherly Love campaign.

Question 26

What are the benefits of global marketing?

Answer 26

• Economies of scale – it is cheaper to have one marketing campaign for the whole world, rather than having a different campaign for every country.
• Global brand awareness – consumers around the world identify a name or logo with a particular product or service, so they will purchase that product rather than a lesser-known competitor.

Question 27

What is the difficulty with global marketing?

Answer 27

Mrketing needs to be adapted to regional markets – different populations still have different laws and cultural attitudes, e.g. different counties have different laws and attitudes about consuming alcohol.

Question 28

How does global marketing work to cut costs for TNCs?

Answer 28

Instead of doing several different adverts for different countries, there is the same advert with the same sets, props and locations – the only difference (usually) is the actors.

Question 29

What are economies of scale?

Answer 29

The cost advantages that result from the larger size of an operation as savings are made by spreading the cost.