Desk 24 - Political and economic players, national government and TNCs

Question 1

What does the WTO stand for?

Answer 1

World Trade Organisation

Question 2

What is the purpose of the WTO?

Answer 2

The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland. Its purpose is to regulate and facilitates international trade. They aim to create a global trade bloc.

Question 3

What are the advantages of the WTO?

Answer 3

-trade disputes are handled constructively
-trade stimulates economic growth
-WTO promotes peace

Question 4

What are the disadvantages of the WTO?

Answer 4

Pakistan joined the WTO in 1995 however their membership has meant opening their fishing industry up to other countries and companies.

Huge trawlers from Indian TNC’s now catch most of the fish and local communities are left in poverty.

With an estimated 400,000 people dependant on the fisheries sector in Pakistan, marine fishing is a key source of food and livelihood for 184,000 people.

Some 90,000 tons of fish caught off the coast of Pakistan were exported to China, Japan, the Middle East, Sri Lanka, Germany, the US and the UK during 2004.

Question 5

What does the IMF stand for?

Answer 5

International Monetary Fund

Question 6

What is the purpose of the IMF?

Answer 6

To provide loans who are financially unstable. Ghana and Greece have received loans previously.

Question 7

Why may countries need to use the IMF?

Answer 7

Economic shocks, government instability

Question 8

What is the purpose of the World Bank?

Answer 8

To provide loans

Question 9

Why was the World Bank set up and how has the aim of this changed?

Question 10

What are trade blocs?

Answer 10

Trading blocsare groups of countries who form trade agreements between themselves.

Question 11

Which stakeholders set up trade blocs?

Answer 11

Governments work with other governments and organisations to set trade blocs.

Question 12

When was the European Union created?

Answer 12

1993

Question 13

How many countries are part of the EU?

Answer 13

27

Question 14

When was the ASEAN trade bloc created?

Answer 14

1967

Question 15

How many countries are part of ASEAN?

Answer 15

10

Question 16

What does free trade mean?

Answer 16

Free trade is a trade policy that does not restrict imports or exports.

Question 17

What are subsidies?

Answer 17

Grants given by governments to increase the profitability of key industries.

Question 18

What does Foreign direct investment mean?

Answer 18

Investment made by an overseas company or organisation into a company or organisation which is based in another country.

Question 19

What does privatisation mean?

Answer 19

Privatisation is the process of transferring publicly owned assets such as railways, buildings, or factories to the private sector.

Question 20

How did the UK government influence globalisation in the 1980’s?

Answer 20

-Industries such as shipbuilding were left to close as their profitability and technology depended on government subsidies and the government refused to support this, driving industries overseas.
-The government provided subsidies to companies investing in areas such as the London Docklands, almost all companies establishing in the Docklands in the 1990’s have been given life-long tax breaks.
-The government attracted TNC’s such as Nissan a Japanese car manufacturing company by providing grants and subsidies to locate in Washington.
-The UK government and local government has played a role in attracting TNC food and clothing outlets to areas such as Eldon Square where Apple, Nando’s and Hollister are located.

Question 21

How did China promote the open door policy in the 1980’s?

Answer 21

Special economic zones were created in 1980 under a new government which opened the country up to FDI and attraction from TNCs.

Question 22

What are some ways in which China is rejecting globalisation/westernisation?

Answer 22

• Limiting the number of westernised films shown each year
• Having a communist government.

Question 23

What does TNC stand for?

Answer 23

Transnational Corporation

Question 24

What is the definition of a TNC?

Answer 24

A TNC is a company which operates in more than one country.

Question 25

What does economic liberalisation mean?

Answer 25

The government no longer in control of regulations and restrictions, responsibility is passed to private entities instead.

Question 26

What does offshoring mean?

Answer 26

This is the process of moving part of a company’s own production process to another country, e.g. building a new factory in China, where wage rates are lower.

Question 27

What does outsourcing mean?

Answer 27

TNCs contracts with another company to obtain goods or services from it rather than doing it themselves, this can make the supply chains more complex.

Question 28

What are the problems with outsourcing?

Answer 28

-Less direct control over the production process can lead to problems, e.g. in 2013 Tesco discovered that its Romanian supplier was mixing horsemeat into budget beefburgers and lasagne
-Rana Plaza in Bangladesh the textile factory collapsed in 2013 due to poor structural conditions, killing 1,100 workers and halting supplies of outsourced garments to Benetton and Wal-Mart to name a few.

Question 29

Why are some companies trying to re-shore operations?

Answer 29

Zara is an example of a company which is moving operations closer to their headquarters to improve environmental conditions and improve economic conditions for the company.

Question 30

What does glocalisation mean?

Answer 30

Glocalisation refers to changing the design of products to meet local taste or laws.

Question 31

What is an example of glocalisation?

Answer 31

McDonalds can be found on six continents with over 30,000 restaurants worldwide. It continues to expand its territory by opening 1,850 new restaurants every year.
McDonald’s in India offers a McCurry Pan, along with other offerings for the local palate, including the Chicken Maharaja and other non-beef burger items (Delhi).