3.1.3 Factors affecting globalisation Flashcards
Two types of services
- High end | e.g. Finance, banking, law
- Low end | e.g. Cleaner, hairdressers
BRIC
Brazil, Russia, India, China | Countries experiencing massive economic growth.
MINT
Mexico, Indonesia, Nigeria, Turkey | Modern day equivilent to BRIC nations.
How can counrties work together to prevent security threats?
1) Globalisation creates new trading relationships between counties. By forming trade agreements, counties become interdependent – if two countries need each other to buy and sell their products, if would not be in the interests to be at war with one another. This means trade makes war less likely.
2) By working together, countries are able to improve security. E.g. the North Atlantic Treaty Organisation (NATO) was founded by several counties in 1949, with the aim of providing security during the Cold War – by grouping together, they were able to deter common threats.
3) However, globalisation can also make a conflict more likely. E.g. developed counties have intervened in conflicts in developing countries to secure resources like oil.
How has globalisation changed financial systems?
In the 1980s several things happened to make the financial system more global:
- Improvements in technology improved access to information and promoted investment in the stock market.
- Governments around the world undertook financial deregulation, where they relaxed rules about what banks were allowed to do. Financial deregulation included allowing banks to charge people more for their services, as well as letting banks invest in a greater range of businesses.
- Financial deregulation also involved removing barriers to capital coming in and out of a country, making it easier for investment banks to buy and sell shares and other products across the world.
- These changes enabled banks to take on a greater number of services, such as exchanging currencies between countries to allow them to trade across borders.
Today, investors, banks and other companies all over the world are part of the global financial system.
The decisions of banks or investors in one part of the world can affect a company on the other side of the world.
How do trade agreements work to remove barriers to trade?
Trade agreements act like contracts — one country agrees to remove controls in exchange for the other country doing so. This benefits both countries’ companies and consumers.
Multilateral and bilateral agreements together make up the global trade system.
The global trade system is governed by the World Trade Organisation. The WTO sets rules on how countries can trade with each other, e.g. to stop countries imposing unfair tariffs on each other’s companies. It also acts as a forum for countries to negotiate trade deals with each other and settle trade disputes.
What are bilateral trade agreements?
Trade agreements between two countries
What are multilateral trade agreements?
Trade agreements between several countries — all of the countries involved agree to remove tariffs and other controls.
How has globalisation improved transportation?
Improved transportation systems (e.g. high-speed rail networks, larger and faster ships and faster planes) have allowed people and products to get to places around the world more easily than ever before.
Uniform shipping containers were introduced in the 1950s, which allowed more goods to be loaded onto ships at once and transferred straight onto other forms of transport, e.g. trains or lorries.
This has made it easier for goods to be moved quickly and cheaply around the world.
How has globalisation improved communication?
Communications satellites were first launched into Earth’s orbit in the 1960s. They allow relatively** cheap wireless communication** between two devices, regardless of where they are. This means even people and companies based in rural or remote areas can access the Internet and communicate with others.
Fibre-optic cables use signals of light to transmit more information than any other cable. They allow fast communication between two devices, allowing almost-instant communication between two people or companies.
Over the past twenty years there has been a significant growth in software that allows free communication from anywhere in the world, e.g. email hosts, text messaging services and video messaging services.
How has technology improved the efficienct of companies?
1) Comapnies have started using global supply chains - a company’s supplier may be in a different country to their factory, which is in a different country to their research and development department. This allows companies to minimise costs.
2) Large companies can benefit from economies of scale. Large companies can reduce their costs by bulk buying products at a lower price and using specialisation. This gives large companies an advantage over smaller companies.
3) Outsourcing is when a company pays another company to do work that in the past may have been done in-house, usually to save costs. Cheap labour costs mean many companies choose to outsource abroad.
4) Companies’ working practices have also changed. E.g. 0 hours contracts and working from home can cut costs for companies.
