EQ1 Flashcards
define TNC
TransNational Corporation
businesses that work in multiple countries as both makers and sellers of goods and services
define GDP
gross domestic product
a measure of the financial value of goods and services produced within a territory
define emerging economies
countries that have began to experience high rates of economic growth usually due to rapid factory expansion and industrialisation e.g BRIC group
who views globalisation as a positive thing
Hyper-globalisers
who celebrate the way cultures are mixing and places are becoming more diverse
what are the 5 global flows
capital, tourism, information, migrants and commodities
how is capital a global flow
People move money through he stock markets to create profit
how the stock market works:
A range of businesses, including investment banks and pension funds buy sell money in different currencies to make profit
how is commodities a global flow
Valuable raw materials such as fossil fuels, food, minerals traded between nations
Fuelled by low production costs in countries such as China
how is information a global flow
The internet has brought real-time communication between nations
Made possible by social media and the internet
Allows for goods + services to be brought instantly
how is tourism a global flow
Most tourists travel via plane
Budget airlines have brought a pleasure periphery of distant places
how are migrants a global flow
Remittances - money that migrants send home to their families via formal or informal channels
Interdependence - if two places become over reliant on financial/political connections with one another, they’ve become interdependent
Most governments have a pick and choose attitude to global flows, embracing trade flows but migrants will not always be embraced in the same way
define Spatial division of labour
the practice of TNCs moving low skilled workers abroad to places where the labour costs are low important skilled management jobs stay at the TNCs headquarters in its country of origin
what are intermodal containers
large capacity storage units which can be transported long distances
define shrinking world
distant places start to feel closer and take less time to reach because of technology
Why is trade and transport important for TNCs?
Transport is becoming more efficient, trade will become better as trade can reach new markets at a faster rate. Trade can expand its spatial division in labour to cheaper places of production such as China and still have fast delivery due to efficient transport.
explain time space compression
Increased connectivity changes our perception of time, distance and potential barriers to the migration of people, goods, monet and information
what are the 4 types of globalisation
economic globalisation
political globalisation
social globalisation
cultural globalisation
explain economic globalisation in terms of TNCs
the growth of TNCs accelerates cross border exchanges of raw material components, finished manufactured goods, shares and purchasing
explain political globalisation in terms of TNCs
The growth of trading bloc (EU, BRIC, NAFTA) allows for TNCs to merge, allowing for reduced trade restrictions and tariffs help market growth
explain social globalisation
-International immigration has created extensive family networks that cross national borders
-Global improvements in education and health, rising life expectancy and literacy level however these changes are not universal/uniform
-Social interconnectivity has grown due to the use of technology
explain cultural globalisation
-The process through which the values, ideas, and experiences of a specific culture are spread across the world.
Western cultural traits come to dominate in some territories (americanisation and mcdonaldization)
-Old cultures merge and meld with globalisation influences
what are the different type of technologies used to influence globalisation
Telegraph and telephone
broadband and fibre optics
GPS and GIS
Social media
define FDI
a financial injection made by TNC into a nation’s economy
define BRICS group
the five fastest growing economies: brazil, russia, india, china and south africa
define protectionism
the practise of shielding a country’s domestic industries from foreign competition by taking imports
what do international organisations such as IMF WTO and TWB aim to promote
IMF, WTO, the world bank promote free trade policies and foreign direct investment
define sovereign wealth funds
government-owned investment funds and banks
typically associated with china and countries that have a lot of oil like qatar
define trade blocs
Voluntary international organisations that exist for trading purposes, bringing greater economic strength and security to the nations that join.
define tariffs
the taxes that are paid when importing or exporting goods and services between countries
the 3 main government policies
Free-market liberalisation
Privatisation
Encouraging business start ups
what does free-market liberalisation do
It involves removing price controls, breaking up monopolies and encouraging competition, which increases efficiency further and promotes globalisation
positives of privatisation of firms
It may increase efficiency as the profit motive minimises loss (government reluctant to sack workers, leading to higher labour costs)
Permitting foreign ownership allows an injection of foreign capital through FDI, introduces new technologies and promotes globalisation
what is privatisation
in the 1980s many governments have sold industries once owned by them (nationalised industries) to private businesses
how do governments encourage business start ups
There could be low business taxes, well-enforced contract laws, minimum regulation and efficient bankruptcy procedures, which encourage new firm creation
positive of encouraging business start ups
Creating motivation and competition in the economy
How can governments joining a trading bloc also encourage globalisation
They promote free trade between members, increasing economic globalisation.
advantages of governments joining trade blocs
markets grow as there are no longer barriers increasing demand and supply of products increasing consumption and employment
Companies that have a comparative advantages in products or services should also do really well e.g french wine makers as france is known for its vineyards increasing the products desirability compared to UKs vineyards wine
what are the 4 sectors of the AT Kearney
political engagement
technological connectivity
personal contact
economic integration
what is a special economic zone
SEZ
An industrial area, where conditions are made to help attract FDI.
usually through government subsidies like low tax rates and no tariffs on imports and exports
what are government subsidies
a benefit given by the government to groups and individuals usually in the form of a cash payment or a tax reduction
what are the 4 types of FDI
offshoring
foreign merges
foreign acquisition
transfer pricing
what is foreign merges
2 firms in different countries join forces to create a single entity
what is foreign acquisition
when a TNC launches a takeover of a company in another country
what is transfer pricing
some TNCs, sometimes has channelled profits through a subsidiary company in a low tax country
example of offshoring and how it occured
hint: asian country
indonesia
Opens market to America and Europes TNCs – GAP, Levis
World bank lent money by funding speedy modernisation of roads, power supplies and ports
negative of offshoring in Indonesia
However its become a tax haven for sweatshops manufacturers
example of foreign mergers
hint: asian country
india
Globalisation began in 1991 for india
Indias. TNCs have grown in their size and influence
how has foreign merging occured in India
foreign retailers could only gain a presence of India’s own
led to mcdonald’s restaurants in North India + East India are a joint venture with vikram Bakshi and mcdonalds corporation
This has deterred companies such as Ikea but because of the agreement 90% of India’s shops are still family owned
define offshoring
TNCs move parts of their own production process (factories or offices) to other countries to reduce labour or other costs
whats a global production network
a chain of connected suppliers of parts and materials that contribute to the manufacturing or assembly of the consumer goods.
e.g The network serves the needs of a TNC such as apple or tesco
define outsourcing
TNCs contract another company to produce the goods and services they need rather than do it themselves. This can result in the growth of complex supply chains
how have some areas of the world benefitted more from FDI from TNCs than others
-Not all places have enough market potential to attract large retailers – low income/culture
-Not every country has the same amount of raw materials as others
-Not every country has the factors of production (land, labour, capital and enterprise) to produce the TNCs goods and services
define glocalisation
changing the design of products to meet local tastes or laws. It is an increasingly common strategy used by TNCs in an attempt to conquer new markets
do all companies need to glocalise
Yes, as if a company wants to make sales and profit there has to be demand for the goods and services which if a product such as mcdonalds cannot be consumed due to cultural beliefs will perform basket unless glocalisation takes place to cater towards their needs however, a company like lego wouldn’t need to glocalise as their products cater to everyone with genuine global appeal
