Causes Of Globalisation Flashcards
Define globalisation
Globalisation is the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions
Capital/people/info/good/culture
Examples of global trade agreements
The World trade Organisation
123 countries agreeing to major reduction in tariffs
Define TNC
Transnational corporations
Invest abroad (FDI) building links between places that produce and consume goods/services
Factors that increased the process of globalisation
TNC’s
Lower transport costs
Computer/internet technology
International organisations
New markets
How has international organisations accelerated globalisation
Trade relies on trust and cooperation of international organisations allowing globalisation to accelerate
E.g World trade organisation allowing countries to agree on trade rules to make it easier/accelerate
How do new markets accelerate globalisation
Companies invest in new markets for hope of profit. And more consumers=more potential sales=more profit. The ability for more profit attracts more companies and accelerated globalisation
CASE STUDY: Containerisation’s contribution to a shrinking world
-introduction of containers in 1960’s
-containerisation spread because reduced the unit of cost of international transport from 30% to 1%
-increased speed/reduced theft/losses due to breakages
-Container ships increasing in size means they are more efficient
Impacts of political and economic decision making
Societies develop laws to regulate trade
Government make agreements to regulate cross border trade to encourage greater flow
Can lead to protectionism (steel industry)
International political and economic decision making
Increased after WW2 these international groups helped to rebuild shattered economies and prevent future conflict. As they provide confidence for businesses to trade internationally by reducing tax and tariffs
International momentary fund
Purpose to help governments balance their payments in case of eco in difficulties. With loans
Their aim was to ensure the stability of IMS (the system of exchange rates and international payments)
World trade organisation
23 countries signed agreement allowing them to begin process of facilitating trade. Agreeing to reduction in tariffs and taxes
FDI
Investment within a country originating from another country
Government mechanisms to encourage FDI
Low tax rates
Subsidies
Tax holidays
Special economic zones
Define privatisation
Transferring ownership from private to public sector
Margaret thatcher railway
Define liberalisation
To remove/reduce restriction on economic activity
Define trade bloc
Intergovernmental agreement to reduce trade barriers (EU) to attract FDI
Advantages/disadvantages of trade blocs
Adv
Bigger markets (larger pop)
National forms can merge into transnational companies (merge)
Protection from foreign competitors/ political stability (limiting cheap imports)
Disadv
Loss of sovereignty
Interdependence
Compromise/concession (loss of local business as large tnc priority)
Define special economic zones
Government leave large areas of land (coastal) for trade with good connection to encourage TNC FDI
Define global hub
An area of intense connections usually coastal so transport connections around world.
Measurements of globalisation
KOF index measure the extent of which countries are culturally and socially connected
KEARNEY index measure global cities index by info exchange, business activity
Define offshoring and outsourcing
Offshoring- when a company moves offshore to avoid high tax and maximise profit
Outsourcing - a contract where a company offshore does part of the work
Positive/negative impact of tnc
Positive
Raised living standards
Technology transfer
Political stability
Higher environmental standards
Negative
Tax avoidance
Growing global inequalities
Environmental degradation
Unemployment
Reasons for global isolation (switched off) physical political economic
Physical
Distance from market
Wilderness
Low agricultural potential
Lack of minerals
Political
Corruption/presence of terrorists
Weak commitment to development
Civil/tribal conflict
Exclusion from trade blocs
Economic
High levels of debt
Weak education/skills
Poor transport/telecommunications
Dependence on particular industries
