3.2.1.1 - Globalisation Flashcards
What is globalisation?
A process by which national economies, societies and cultures have become increasing integrated through the global network of trade, communications, transport and immigration.
What is an economy of scale?
Cost advantage of large scale output of a product as savings are made by spreading out the cost over more units
What are international flows of capital?
All financial transfer between companies for investment, trade or production
What are remittances?
Transfers of money from migrants to relatives back home
What is migration?
Generally now the outmigration of labour from poorer to richer nations
What is FDI?
Foreign Direct Investments. Money or assets invested by TNCs in overseas enterprises. Either by merging with another company, setting up subsidiary companies or through shares.
What are BRIC countries?
Brazil, Russia, India and China. Rapid economic advances during 1990s
What are MINT countries?
Mexico, Indonesia, Nigeria, Turkey. Recently emerging economies after the year 2000.
What is repatriation of profits?
Sometimes known as economic leakage. TNCs will extract profits from abroad and bring back to their HQ
What is aid?
Either from NGOs, as bilateral agreements between 2 governments or via multinational organisations such as the UN which puts aid from many nations together
What is the IMF?
International Monetary Fund which aims to allow economic stability and foster international trade.
What are the impacts of flows of labour?
- Most migrants have some level of education
- Can afford to move, therefore not very poorest in giving nation
- Long term issue as people stop sending remittances after 2/3 generations
- Inter-continental as well as long distance
What are flows of services?
An economic activity which is traded without the production of material goods
What are high level services?
Services to business, such as finance, advertising
What are low level services?
Services to consumers, such as banking, travel, communication
What are the impacts of flows of services?
- Easily traded in a globalised world, no locational grounding, offices and call centres can be located anywhere
- Low level services may be outsourced to developing nations, eg call centres in India
What are the impacts of flows of products?
- Gloablisation means more products need to be transported from pace of manufacture to chosen market
- Containerisation makes shipments quick, easy, cheap
- Removal of taxes and encouragement of global trade groups allow for greater levels of trade
- Some objections caused by protectionism
What are flows of information?
Both migrants and technology allow flows of information, recent and historic migrants allow for multiculturalism and information sharing
What are factors in globalisation?
- Communication development
- Transport development
- Financial development
- Information Systems
- Security development
- Trade agreements
- Management systems
What are financial factors in globalisation?
Linked to technological developments as well as relaxed trade barriers allowed by governments, the movement of finances around the world has grown hugely.
What is protectionism?
Putting barriers in place to prevent and reduce trade in order to maintain internal markets and own manufacturing industries
What is trade and finance liberalisation?
Groups such as the WTO encouraging governments to remove tariffs and barriers to trade, to encourage free movement of goods
What is the world customs organisation?
An intergovernmental organisation noted for its work in areas covering the development of international conventions, instruments and tools on topics such as commodity classification, valuation, rules of origin etc.
What is the EU secure operator initiative?
Set up and run by the EU in order to ensure a secure and reliable end to end supply chain for all goods and services.
How is air freight a factor in globalisation?
Faster, more places reached, fresh goods transported in large quantities, anywhere in the world, cheap, ease of ordering goods
How are cargo ships a factor in globalisation?
Shipping containers are standardised so can be transported universally, large quantities of goods can be transported easily, takes a long time but cheap and easy form of transport.
How are warehouses and robotics a factor in globalisation?
Anything can be ordered from anywhere in the world and arrive potentially next day due to ease of robotics, less likely to make mistakes and very quick. Robots run 24/7
How are budget airlines a factor in globalisation?
Makes more places accessible for normal people, travel on a budget, competition between airlines increases the number of destinations around the world, encourages travel.
What are trade blocs?
A type of intergovernmental agreement where regional barriers to trade (tariff + non-tariff) are reduced or eliminated among countries
What are the advantages of trade blocs?
Allows trade between many countries
One economy, one workforce
Travel between countries is easy, free travel
Encourages growth of economies, risk sharing
Trade of services and people as well as goods
What are the disadvantages of trade blocs?
Countries surrounded by trade blocs but not in them struggle to trade
Hinders development of countries outside the trade bloc
Creates problem sharing, if one country suffers, all do
Uneven reward for input
Migration issues, often uncontrolled
Lack of national control and identity
When did the volume of world trade first increase dramatically?
The late 19th century
What aided world trade to increase in the 19th century?
Multinational banks and global pricing systems, as well as the invention of the telegraph
By how much did global trade increase between 1870 and 1913?
It tripled
How has internal migration affected China?
As it has opened to international trade, most factory employees are from China’s rural interior, moving to the cities for low-grade service and construction jobs
How many rural migrants are there in China’s major cities?
150-200 million
5 dimensions of globalisation
Flows of Information
Flows of Capital
Flows of Products
Flows of Services
Flows of Labour
Flows of Information Key Points
News, financial data
Email, internet, social media
People in different countries can communicate
Interconnected- learn about different cultures
Share ideas- development
Flows of Capital Key Points
Money invested, historically within a country
FDI increased by nearly 4 times in last 20 years
Deregulation of financial services
Why was the Deregulation of Financial Services a positive for flows of Capital?
Money moved more easily across national boundaries for:
Trade
Investment
Production
Flows of Products Key Points
Historically made and sold in same country
Now made in LIC’s- reliance
Containerisation
WTO removal of taxes and tariffs encouraged global trade
What reduces Flows of Products?
Protectionist economies
Flows of Services Key Points
IT = global banking
Footloose companies
Deregulation of financial services means access to large markets
Low level services to LIC’s, cheap labour
High level services to HIC’s
Flows of Labour Key Points
International- some level of wealth and education
Can lead to better working conditions
Can lead to worse conditions i.e. Filipino builders in Saudi Arabia live in slums
Interconnected- mix of cultures, family all over the world
Importance of Marketing for TNC’s
Promoting and selling products everywhere
1 single market = 1 strategy
Economies of scale- cheaper- increase profit
Brand awareness
Why do TNC marketing campaigns need regional adaptation?
Different laws
Different cultural attitudes i.e. alcohol
5 Factors affecting Globalisation
Transport
Financial
Management and Information Systems
Communications
Security
Factors affecting Globalisation: Transport
Containerisation
High speed rail and faster planes, people and products move around more quickly
Cars and infrastructure
Factors affecting Globalisation: Financial
Links to technological advances and relaxed trade barriers
Internet means a potential investor can research a company- informed decisions
Factors affecting Globalisation: Management and Information Systems
Allowed companies to change how they manage themselves
i.e. R&D, manufacturing, sales rarely on same site
Instant communication
Global transfer of money
Factors affecting Globalisation: Communications
Satellites first launched in 1960’s- cheap wireless communication
Optic fibres- fast, almost instant communication
Rise in social media and instant messaging
Factors affecting Globalisation: Security
Online security breaches cost £1.5 million each in UK
Global trade increases global security as countries are less likely to go to war
World Customs Organisation- stays ahead of crime relating to movement of goods and services
i.e. Illegal weapons trade, drug enforcement
EU Secure Operator Initiative - important with the relaxed tariffs of the trade agreement, if too long movement of goods is slowed
HSBC
4th largest bank- 10 million customers
9,500 branches in 85 countries
First Direct, Bank of Bermuda (feels less global- more trusted)
HQ: Canary Wharf
Call Centres: India
How many people live outside the country they were born in
216 million
Supply chain security
. Focuses on risk management
. Reduce risks of working with other organisations
. Focus on physical threats like theft and cyber threats
Bioecurity
. Reducing disease outbreaks
. Controlling exports/imports of animals
