EQ1 Globalisation Flashcards
Globalisation
Increasing integration of economies, ppl+places around world thru movement gds, services+ capital across borders. There are also broader cultural,pol +environ dimensions of globalisation
Econ globalisation
- growth TNCs accelerates cross-border exchange gds
- ICT supports growth complex spatial divisions of labour for firms+ more int econ
- online purchasing using Amazon on smartphones
Pol globalisation
- growth trading blocs (EU) allows TNCs merge+ firms neighbouring counties while reduce trade restrictions+ tariffs help market grow
- global concerns e.g. free trade, credit crunch+ natural disasters
- World Bank, IMF+ WTO work int harmonise Nat econ
Soc globalisation
- int immigration->extensive fam networks
- global improvements education+ health over time
- inter connectivity grown from spread ‘universal’ connections e.g. mobile phones, internet+e-Mail
Culture globalisation
- ‘Successful’ W culture traits come to dominate some territories
- glocalisation+ hybridisation more complex as old local cultures merge globalising influence
- circulation ideas+info accelerated due 24hr reporting+ ppl keep in touch Facebook+ Twitter virtual
Other impacts of globalisation financially, pol etc
- financial some lrg TNCs incomes>many countries, cheaper labour developing countries supply gds+ trillions$ exchanged daily electronically
- pol some TNCs e.g, News Corp (Sun+Sky)seek influence how think+ UK pol seek support, promotion econ growth EU, G8+G20, TNCs influence govts+ many trade barriers reduced
- pop skilled workers management, finance+IT a move where demand+ econ migrants move higher incomes+rewards
- commun lower transport costs-increase long-distance tourism+ ‘global village’ emerging interests universal sport, music+films W/no pol/soc boundaries
Interdependent
2 places become reliant/ pol countries e.g. econ recession affects host country for worst it will also impact migrant workers-econ source may shrink too due reduced remittances
Idea of a ‘shrinking world’
- transportation much quicker+connected
- circumnavigating world/travelling different countries used take weeks/ months
- tech changed 1500-1840 best avg horse drawn coaches+ sailing ships 10mph
- 1850-1930 steam trains avg 65mph+ steam ships 36mph
- 1950s propeller aircraft 300-400mph+ 1955 onwards containerisation keeps getting larger+reduced cost+increased efficiency int shipping
- 1960s onwards jet passenger aircraft 500-700mph+ 1990s onwards cyberspace info in space
Idea of ‘time space’ compression
=perception time+distance changed as increasingly connected+ can ship+buy gds worldwide
- developments ICT+communications reshaped shopping
- WWW 1989 e-commerce+business->/smart phones 2000s, email 1995+soc media changing communications
- online retailers extending from books, films+ music- consumer electronics+ clothes+ market places online food+ groceries e.g. Amazon 11 global market places+ buying customers 180countries
- est online marketplaces give small businesses access global customer base
Container ships benefits
- most made China/ elsewhere Asia by EU/US cos outsourcing exploit cheaper labour costs
- bring high-value gds EU+ take back low-value waste return
- getting bigger->less fuel consumption 1990 avg 4,000 containers now largest Oscar 19,224+ largest route EU-Asia huge distances so size important/ keep costs down
Problems container ships
-fewer but larger shipping co’s dominate global trade, shifted balance econ power EU-Asia huge amounts fuel consumers more than most countries
E-tailing benefits
- choices, quick delivery ‘prime’+ Amazon exploit global connections reduce costs storing lrg no. items warehouses long periods
- Amazon uses tech+ internet open up+exploit new markets
Problems E-tailing
- Nat govts find hard track sales each country+ calc lvl business tax owes each location+can easily register sales country lower tax rates
- items purchased cheaper than shops cos bulk buying+ lower operations costs
- environ more energy, running out resources, 1/3 natural resources space gone, 40%water ways contaminated, US 5% pop 35%resources+ 75% fisheries fished capacity+ mix toxins W/natural resources
- soc 30% purchased thrown away within yr not including packaging, externalised cost real cost not in products absorbed co/workers
Spatial division labour
Common practice TNCs move low-skilled work abroad low cost but managerial roles remain place origin
Mobile phones changing life better
-2005 6% Africans- 2015 70%as falling prices+growth provider co’s
M-Pesa:-1/3 Kenya GDP sent thru M-Pesa annually
-ppl towns+cities use payment utility bills+skl fees
-fishermen+farmers rural check prices before+ women rural show gd credit bills payed M-Pesa secure micro loans lifting them out poverty
BRICS Group
4 lrg(fast growing) econ-Brazil, Russia, India, China+ recently SA
Digital divide
Refers gap between ppl+regions that have access modern info+ commun tech+ those don’t/restricted access can include telephone, TV, personal computers+internet
Some global flows seen threat
- imports raw materials+ commodities can threaten a nation’s own industries
- migrants can bring cultural change+ religious diversity not welcomed by every1
- info can provide citizens W/knowledge govts find threatening-> many examples Nat govts authoritarian(strict)+ democratic(independent) attempting isolate/ protect themselves from global financial+ trade flows including FDI org e.g. World Bank hard persuade different approach
The IMF (International Monetary Fund)
- Development purposes primarily maintain int financial stability, stabilise currencies maintain growth(aim)
- lends money in return tries force countries privatise govt assets to increase size private sector+ generate wealth e.g. Greek debt crisis 2008 forced cut back expenditure
- USA significant influence over IMF policy despite always EU pres, rules+ regulations can be controversial may require cut back health, education, sanitation+ housing progress
The World Bank
- finance econ development (aim)
- uses bank deposits by wealthiest countries provide loans for development developing countries that agree conditions repayment+ econ growth
- helps countries reconstruct natural disasters+ humanitarian emergencies 1st loan Fr post-war
- like IMF imposes strict conditions loans+grants+ all pres American citizens
The WTO (World Trade Organisation)
- aim use trade generate econ growth poorer regions
- advocate for trade liberalisation+encourages all trade between countries free of tariffs, quotas or restrictions on trade (barriers)
- failed stop richest countries UK+USA subsidising own food producers- harmful farmers developing countries not on lvl playing field
Different types FDI- offshoring
TNCs build new production facilities ‘offshore’ in low-wage econ
Different types FDI-foreign mergers
2firms different counties join forces create single entity
Different types FDI- foreign acquisitions
When TNC launches take over co another country, UK few restrictions foreign takeovers whereas USA Committee on Foreign Investment scrutinises
Different types FDI-transfer pricing
Some TNCs channeled profits thru subsidiary co Low tax country, The Organisation for Economic Cooperation and Development (OECD) attempting cut down on this
Trading bloc
- group countries promote free trade between them (removing tariffs) e.g. EU, N American Free Trade Agreement NAFTA+ ASEAN
- means can get access resources may not have themselves
- move away industry e.g. traditional agriculture as import gds better price
- joint W/ others give more econ influence global sphere
Critics of trading blocs
- fixed+ restricted countries trade with
- all trade blocs have rules but not policed well as UK+US (mainly) get away as more powerful
Free market liberalisation
Restrictions being lifted on way co’s+banks operated from beliefs govt intervention in markets impedes econ development+ as overall wealth increases increase trickle down richest-poorest in society e.g, Margaret Thatcher 1980s
Privatisation
Successive UK govts led way allowing foreign investors to gain a stake in privatised Nat services+ infrastructure- reducing govt spending+ raise money
Encouraging business start-ups
Methods ranging low business taxes to changes in law allowing both local+ foreign-owned businesses to make more profit
SEZ Special Econ Zones
Set up by Nat govts offer financial/ tax incentives to attract FDI which differ from those incentives normally by a country
China ‘open door’policy 1978 explain+benefits
- no int trade before W/‘special economic zones’ now known ‘Export processing zones’offering tax incentives+ huge pools labour for foreign business->300m left rural areas
- fuelled growth low wage factory ‘workshop of the world’ by 1990s 50% GDP generated SEZ now econ matured (largest), 400m claimed escaped poverty since reforms
- Since 2001 became member WTO+ 2005 50% exports foreign co’s W/connections in these zones
- largest recipient FDI but growth shifted Asia changed flows China+India control FDI W/BRICS inv other countries increase 20% 2000-12 now 10% global
- major inflow+outflow inv USA,EU,sub-Saharan Africa+ S America
- FDI China+ TNCs predicted $1.25tn 2015-25
- agreed export more ‘rare earths’ minerals other countries in line WTO ruling+ foreign TNCs now allowed inv some sectors Chinese domestic markets including rail freight+ chemicals industries
China ‘open door’ policy 1978 problems
- only promotes urban development fails aid rural-urban gap worsening situation over reliance cheap industry
- soon 200 cities 1m or more
- not entirely open global flows Google+ Facebook lil access instead Youku soc media, strict quota only 34foreign films cinema each yr
Measure globalisation thru
-flows-trade+ ppl
-tech-internet+telecommunications
-movements-air traffic
-media-ad+publishing+music+TV+film
(Unevenness due variations policies+attitudes govts not all favour involvement global econ+physical factors-availability resources+ accessibility TNCs assess best opportunities)
Measurement globalisation- KOF index by Swiss Economic Institute produces annual index globalisation
-economic:cross border transactions+FDI
-social:cross border contacts(calls, letters, tourists)+ info flows (internet/TV/Press)+ presence McDonalds+IKEA indicator ‘global affinity’
-political:no. foreign embassies, membership int org+ participation UN peacekeeping
(Each set scaled significance)
KOF index advantages
- wide range data available
- easy comparison
- weighing system takes into account missing data+ rebalances discrepancies
Disadvantages KOF index
- used since 1970
- internet skews data
- bias small countries over-represented at top e.g. Belgium
- informal econ discounted
- illegal migrants not included
- does globalisation always bring benefits
- 13/15 top countries EU as small compared China (lead manufacturing output)+ USA(leads GDP) so have import lots gds+less internal trade+ close proximities in trade bloc
AT Kearney Index
- different more holistic indicators no. Web servers rather internet commun+ includes countries players pol stage-participation UK+ Ireland int treaties recognised
- measure personal contact- thru telephone calls, travel+ remittance payments
Advantages AT Kearney Index
- covers 84%pop
- 96%GDP world
- allows comparison+over time
Disadvantages AT Kearney Index
- only 64countries included
- weightings who decides+how measure cultural trends
Global production networks (GPNs)
Way gds being produced from different countries, being brought together to make a final product, cost efficient
How TNCs contribute spread globalisation+ take advantage econ liberalisation MOTIVE
- economies of scale-expanding capacity reduced cost warehouses etc
- developing new markets-create updated models existing customers buy
- integration W/other co’s-horizontal integration expanding 1 lvl production process/vertical co controls+owns every stage production thru outsourcing+ offshoring
How TNCs contribute to spread globalisation+ take advantage econ liberalisation MEANS
- global digital movement money made possible trade+FDI BRICS TNCs investing around world
- relatively unrestricted flows finance connect banks
- business+countries complex webs
- flows variable 2008 financial crisis
How TNCs contribute to spread globalisation+ take advantage econ liberalisation MOBILITY
- faster+cheaper transport- ever larger container ships
- ICT+ instant internet commun-fibre optics
- satellite+digital tech
- JIT(just in time) new production tech+flexible provides cheaper products+ more linkages around world
- GPNs link sourced raw materials, finance, manufacturing, markets+ sales run from co headquarters almost always in High Income Countries
Glocalistaion
Changing design of products to meet local tastes=laws e.g. ‘McArabia’ cater halal
-v common strategy TNCs conquer new markets as lots Geog variations but not all co’s need some ‘authentic’ what sells Nike/ no point
Switched off
-area/ locations may not able access globalisation+/ unwilling to participate
Many reasons:ethnic clashes+ civil war between tribes DR Congo, controlled TNCs old trade agreements Sierra Leone, pol isolated N Korea, vulnerable CC+natural hazards Philippines, lrg parts Africa land locked/ desert like sub-Saharan Africa W/lil econ value+ poor literacy rates+ badly run govts
Zambia CS
- land locked so relies gd pol relations neighbours for access ports+ huge debts
- sub-Saharan mobile connections growing rapidly cheaper than landlines but cost 3G+4G connections make internet usage more expensive than just sending mobile txt
- Chinese inv TanZam railway Tanzanian coast meaning copper exports increased+ Beng rail link to Angolan coast but value copper less as fibre-optic cables increasingly replace it in telecommunications
- since 2008 privatisation+ debt cancellation=reduced debt+$20bn FDI inv copper industry GDP 2004-14 $7.3-27.07bn, life exp 38-58, HDI 0.47-0.56
Tanzania CS
- relies agriculture 80%employed especially cotton fluctuated due overproduction
- sub-saharan mobile connections growing rapidly cheaper than landlines but cost 3G+4G connections make internet usage more expensive than just sending mobile txt
- Heavily Indebted Poor Countries (HIPC) initiative->cancellation many debts now income gained growing cotton+other export crops helping country inv crops helping skls+health care
- growing inv links W/India, China, Japan+ UAE export farm produce+ mineral resource GDP 2004-14 $12.1-49.2bn, life exp 46-61, HDI 0.42-0.49
