3211- Globalisation

Question 1

Globalisation is the process of

Answer 1

The world’s economies, political systems, and cultures becoming more strongly connected to each other

Question 2

What would be the consequences if there was no globalisation?

Answer 2

There wouldn’t be any interactions between different countries

Question 3

What would be the consequences if there was complete globalisation?

Answer 3

The whole world would act like a single community

Question 4

Globalisation is caused by the movement of

Answer 4

Information, capital, products, services and labour between different countries- people have been moving between countries and international trade has been a long-term occurrence, but the general consensus would dictate that globalisation really started to accelerate in the 1980s

Question 5

As the world becomes more globalised, countries are becoming more

Answer 5

Interdependent

Question 6

What is a consequence of increasing interdependence?

Answer 6

Led to global-scale attempts to manage a range of international issues

Question 7

What are the 5 factors that promote globalisation?

Answer 7

1- flows of information
2- flows of capital 
3- flows of products
4- flows of services
5- flows of labour

Question 8

Explain how flows of information promotes globalisation

Answer 8

• information such as financial data or current events can spread around the world very quickly and easily
• the development and rapid spread of e-mail, the internet and social media means that the large amount of information can be exchanged instantly across the globe, allowing people living in different countries to communicate and work together
• increasing flows of information are making the world more interconnected e.g. people can learn a lot about different countries and cultures without leaving their own country

Question 9

Explain how flows of capital promotes globalisation

Answer 9

• capital is money that is invested- it’s spent on something to produce an income or increased profit from it
• historically, capital was mostly invested within a country e.g. companies would expand by constructing new factories, or setting up branches within their country of origin
• over time though, the amount of capital invested in foreign countries has increased- foreign direct investment (FDI)
• improvements in ICT have encouraged flows of capital around the world - it can instantly be moved globally via the internet

Question 10

FDI has increased from around $400 billion late 1990s to $____ billion in 2016

Answer 10

1500

Question 11

What’s a consequence of increasing flows of capital?

Answer 11

Making the world more interconnected- most countries’ economies are now dependent on flows of investment from other countries

Question 12

Explain how flows of products promotes globalisation?

Answer 12

• historically, manufacturing industries were located in more developed countries; the products being produced were also sold in the country where they were made
• in recent decades, manufacturing has decreased in more developed countries e.g. the number of people employed in manufacturing in the UK has halved from 1980s to 2016
• lower labour costs overseas have caused many companies to relocate the production side of their business abroad- they then import the products to countries where they’re sold e.g. vacuum manufacturer Dyson moved the production side of its business to Malaysia in 2002, but the vacuums are still sold in the UK
• as a result of these changes, international trade in manufactured goods is increasing

Question 13

What’s a consequence of changing flows of products?

Answer 13

Making the world more interconnected e.g. many of the manufactured products purchased in the UK have been produced in other countries and then imported

Question 14

Explain how flows of services promotes globalisation

Answer 14

• services are economic activities that aren’t based around producing any material goods e.g. banking
• improvements in ICT have allowed services to become global industries in recent decades- services like banking and insurance depend on communication and transfer of information. Improvements to ICT mean that services can locate anywhere in the world and and still be able to serve the needs of customers anywhere else in the world
• during 1980s there was a 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 the UK. This meant that it was made easier for banks and other financial institutions to do business in other countries

Question 15

Services can be split into low-level e.g. customer service and high-level e.g. financial services. High-level services tend to be concentrated

Answer 15

In cities in more developed countries (world cities) e.g. New York, London- companies are increasingly relocating low-level services to less developed countries, where labour is cheaper

Question 16

What’s a consequence of increasing flows of services?

Answer 16

Making the world more interconnected e.g. people are connected to other countries just through having a bank account- many banks are huge international organisations

Question 17

Explain how flows of labour promotes globalisation

Answer 17

• more people are moving overseas- international migration increased by 40% from 2000-2015
• some people emigrate to escape conflict zones, but many people choose to emigrate for work
• some migrants are highly skilled workers e.g. ICT and medical workers, moving to more developed countries for the prospects of better working conditions and wages
• others are unskilled workers who move to more developed countries to look for work due to unemployment or poor wages (lack of minimum wage) in their own countries

Question 18

What’s a consequence of flows of labour?

Answer 18

Increasing flows of people between different countries are making the world more interconnected e.g. people bring aspects of their culture with them, and countries are connected because people have family connections worldwide

Question 19

Explain how marketing is becoming more global?

Answer 19

• marketing is the process of promoting and selling products or services
• nowadays, many products and services are sold worldwide, rather than just in the country of production, so marketing has had to become global
• global marketing involves treating the world as one single market and using one market strategy to advertise a product to customers globally
• global marketing gives 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 marketing can create a global brand awareness- consumers around the world identify a name or logo with with a particular product or service, so they will purchase that product over a lesser-known competitor
• marketing needs to be adapted to regional markets though as different populations still have different laws and cultural attitudes e.g. different countries have varying laws and attitudes regarding alcohol consumption

Question 20

what are factors in globalisation?

Answer 20

• new systems and technology
• financial systems
• trade agreements remove barriers to trade
• transport and communication systems
• countries work together to prevent security threats

Question 21

explain how globalisation is a result of new systems, technology and relationships

Answer 21

• the development of new systems, technology and relationships in a range of sectors including finance have been the driving force behind globalisation:
• systems include ways of working and methods of organisation that allow a particular function to be carried out e.g. the just-in-time manufacturing system is a way of making products in response to the demand for them
• since 1940s many new systems been introduced to make it easier for flows of info, capital, products, services ans labour to cross national boundaries
• the technology used for information, communications and transport has advanced rapidly e.g the internet allows people from all around the world to access information and aeroplanes allow goods and people to be transported efficiently and swiftly
• before WW2, most relationships between countries involved one country losing and another gaining but nowadays, relationships are based on trade and common rules allowing everyone involved to gain

Question 22

explain how financial systems promote globalisation

Answer 22

• the global financial system governs the flow of capital between countries
• financial systems are based on companies called investment banks- the main role of investment banks is to help companies raise capital by selling shares on behalf of those companies
• people or groups who buy shares are called investors and they receive a % of profits the company
• in 1980s several things happened to make the financial system more global:
• information tech such as the internet allowed investors to greater access to info- investors and investment banks could easily find out whether a company was doing well or struggling and make an informed decision regarding whether to invest
• govs globally 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 allowing banks to 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 led to a greater range of companies getting involved in finance e.g commercial banks also began selling shares
• today, investors, banks and other companies around 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

Question 23

explain how trade agreements remove barriers to trade

Answer 23

• the global trade system governs the flow of products between countries
• trade is primarily regulated by countries’ govs who control the products they allow into the country and at what price- controls include tariffs, non-tarrif barriers and the banning of certain products e.g. illegal drugs
• controls make it more expensive for companies to sell their products abroad, as well as for consumers to purchase them
• to make it cheaper, countries can enter into a trade agreement which act like contracts where one country agrees to remove controls in exchange for the other country doing so, ultimately benefiting both countries, companies and consumers (trade agreements between two countries are called bilateral trade agreements)
• multilateral trade agreements are trade agreements are trade agreements between several countries; all of the countries involved agree to remove tariffs and extra controls
• bilateral and multilateral trade agreements together make up the global trade system
• the global trade system is governed by the WTO

Question 24

what is a tariff?

Answer 24

import taxes

Question 25

when was the WTO established?

Answer 25

1990s

Question 26

briefly, what do the WTO do?

Answer 26

set and regulate rules on how countries can trade with each other e.g. to stop countries imposing unjust tariffs on each other’s companies- it also acts as a forum for countries to negotiate trade deals with each other and resolve trade disputes

Question 27

the WTO sets rules about how countries should trade with each other:

Answer 27

• countries can’t give another country special access to their markets without doing the same for every other country in the world- but there are exceptions e.g. countries can give special access to members of their trade bloc
• countries should promote free trade e.g. by removing as many barriers as possible
• countries should act predictably in their trading e.g. by not raising tariffs on particular products once a deal has been reached
• there should be fair competition: one company or country shouldn’t get an unfair advantage over rivals

Question 28

explain how transport and communication systems have improved global business

Answer 28

• improved transportation systems e.g. high-speed networks, faster planes etc have allowed people and products to get to places all around the world easier than ever before
• uniform metal containers (known as shipping containers) were introduced in 1950s allowing more goods to be loaded onto ships at once and transferred straight onto other forms of transport making it easier for goods to be moved quickly and cheaply around the world
• communication satellites were first launched into orbit in 1960s allowing relatively cheap wireless communication between 2 devices, regardless of where they are meaning that companies based in rural or remote locations can access the internet and communicate with others
• over the past 20 years there has been a significant growth in software that allows free communication from anywhere in the world e.g. email hosts, text messaging and video messaging services such as skype

Question 29

explain how management and information systems have increased companies’ efficiency

Answer 29

• new ways of working have made companies more efficient- they can make the same products more cheaply
• companies’s supply chains have become global- a companies’ supplier may be in a different country to their factory, which is in a different country to their research and development department allowing companies to minimise costs
• large companies can benefit from economies of scale- the average cost to a firm of making an item is usually high if they don’t make very many of them. Large companies can reduce the average cost of making each item by purchasing specialised equipment and using production lines. They may also be able to buy raw materials at a lower price as they are able to buy in bulk giving large companies an advantage over smaller companies
• 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 e.g. rather than developing its own call centre, a company might pay another company to take on these services. Cheap labour costs mean many companies choose to outsource abroad

Question 30

explain how countries work together to prevent security threats

Answer 30

• globalisation creates new trading relationships between countries. By forming trade agreements, countries become more interdependent- if two countries rely on each other to buy and sell their products, it would not be in their interests to be at war with one another = trade makes war less likely
• by working together, countries are able to improve security e.g. North Atlantic Treaty Organisation (NATO) was founded by several countries in 1940s with the aim of providing security during the cold war- by grouping together, they were able to deter common threats

HOWEVER globalisation can also make conflict more likely e.g. developed countries have intervened in conflicts in developing countries to secure resources like oil