EQ1- Globalisation Flashcards
Globalisation
The increasing integration economics around the world, particularly through the movement of goods and services and capital across borders. There are also broader cult, pol+ environ dimensions.
‘Shrinking world’
Transportation much quicker+ connected (not acc shrinking)
Role of trade
-increasingly consistently since 1950s
-$61bn 1950->$19tn 2019
-tech developments transport+commun 19th century->development TNCs
-developments transport encouraged growth trade (dependent) cheaper+ quicker (tech)
(Increasing connection fin crisis 2009 can affect others also food+fuel crisis 2022)
Role of transport
-circumnavigation world used to take yrs-months 1700s HMS Dolphin 2yrs, 1930s propeller aircraft 8 days+ 1990s jet aircraft Concorde 31hrs
-19C: railways, telegraph (telephone)+ steam ships (COAL)
-20C: jet aircraft+ containerisation (REFINEMENT OIL)
-reduce transport costs
CRUCIAL- others couldn’t happen without
containerisation
- 1950s ships larger (1990 avg 4,000 largest largest 2015 Oscar 19,224)+ more efficient less fuel consumption
- standardised shape, easily transferable crane more auto-> reduced labour costs dramatically sped up trade as consumer gds cheaper (iPhone/ TV from China-UK less £1)
- faster (less queuing ports to unload) perishables from distant markets opened up Kenya cut flowers
Jet aircraft
- 1960s Boeing 747 ‘jumbo jet’ lowered cost air travel so int tourism within purchasing capabilities m/c (migration package holidays)
- reduced time hrs rather steam ships days
Railways
- steam trains invented 1802
- 1830s public railway (Liverpool+ Manchester)
Steam ships
- Replaced sailing ships+ increased speed+ cargo capacity
- Suez Canal opened 1869 cut route Br->India 6,000miles
- Panama canal but Hong Kong billionaire funding possible Nicaragua as too small
Telegraph
-1st long distance instant commun tech 1830s
-Trans-Atlantic telegraph cable 1860s replaced 3 week boat journey w/ instant morse code msgs (Revolutionised business)
(telephone successor core tech commun long distance)
‘Time space compression’
Perception of time+ distance changed (+barriers) as increasingly connected
-thru development ICT+ mobile communications reshaping world (mobile phones, internet, social networking, electronic banking+ fibre optics)
Role of commun
- mobile phone 1973+ smart phones 2000s
- internet 1989 (50% use now w/ broadband) change e-commerce-> online retailers extending from books, films+ music Amazon 11 global market places+ buying customers 180 countries,
- SOCIAL MEDIA (networking) Facebook registering 5m ‘likes’ a day 2015 wider commun cheaper
- fibre optics increase land+ sea more 1m km undersea cables carry world data lrg amounts info transferred within cyberspace in secs
- electronic banking revolutionised 6% Africans 2005-70% falling prices 1/3 GDP sent thru M-Pesa Kenya annually women show gd credit bills (for utilities)-> secure loans lifting out poverty (also send remittances home+ business keep in touch production, supply+ sales network)
- CRUCIAL OTHERS WOULDN’T HAPPEN WITHOUT (cult+ econ)
Migration
Increased tourism since 1960s ->package holidays
Increasing each yr till 2019
Most countries ‘pick and mix’ attitude global flow embrace trade flows but resist migrant flows unless special need (Indian workers Qatar)
Econ migrants+ refugees reached almost quarter billion 2013
(Dependent transport + commun)
WTO (free trade policies)(World Trade Organisation)
- aim use trade generate econ growth poorer regions (LICs)
- advocate free trade liberalisation+ encourage all trade between countries free tariffs, quotas or restrictions trade (barriers)
- govern rules
- failed stop richest countries UK+USA subsidising own food producers harmful farmers developing countries not lvl playing field
- GATT (General Agreement on Tariffs and Trade) become WTO 1994 123 countries agreed major reduction tariffs (about 40%) +agri subsidies
Bretton Woods agreement
1944 pol promoting free-market democracy instead 1 party communism, econ objective rebuilding world econ after WW2
Set up World Bank+ IMF
US dominance questionable whether HIC preventing LIC development (challenge)
World Bank (multilateral aid)
- finance econ development (aim)
- uses bank deposits by wealthiest countries provide loans for development developing countries that agree repayment+ econ growth
- e.g. gave $470m Philippines for poverty reduction programme
- also helps countries reconstruct natural disasters+ humanitarian emergencies 1st loan given Fr post war
- like IMF strict conditions loans+grants+ all pres US citizens
- Ghana borrowed for Akosombo dam linked aluminium refinery U.S. decided could get cheaper Jamaica bought own didn’t use refinery so only flooded 12% country (lil econ benefit)
IMF (International Monetary Fund) (multilateral aid)
- development purposes primarily maintain fin stability, stabilise currencies maintain growth (aim)
- lends money in return force countries privatise govt assets/ SAP (Structural Adjustment programs)
- e.g.Greek debt crisis 2008 forced cut govt expenditure (pensions lost) (austerity programmes)
- US significant influence (most votes relation money inv) over despite always EU pres, rules+ regulation can be controversial cut back health, education etc
- privatisation argue damage LICs more long-term Bolivia Chochabamba 1999 co increased 20% avg income protests 4days govt cancelled contract
FDI (Foreign Direct Investment)
Fin capital from one country to another for purpose constructing physical capital (factory)
Developing countries may prefer borrow China 2010 loaned $110bn more than World Bank (less conditions)
Trading bloc (Nat govts promote)
Group of countries that promote free trade between them (removing tariffs) e.g. EU, NAFTA, ASEAN
Lead to globalisation they reduced restrictions+ specialisation products comparative advantage then trade for other members specialisms (TNCs)
-access resources don’t have themselves, move away industries (agri) + w others more econ influence global sphere
EU
- 19 adopt euro single currency prevents exchange rate affecting deals
- 28 guarantees free movement gds, capital+ ppl->26 removed barrier controls
- some foreign policy determined
- uniform product labour+ environ regulations
- integrated econ policy e.g. Structural Funds assist regions in countries GDP less 75% EU avg
ASEAN (The Association of South East Asian Nations)
-10 uniform low tariff (working towards removal by sector)
-(more pol than econ) aims co-ord response regional issues
-nuclear weapons free 1995
But won’t comment Burma internal policies
Opposition to trading blocs
- fixed+ restricted countries trade w
- all trade blocks have rules but not policed well as UK(subsidise farmers)+ US mainly get away as more powerful
- trade distortion cheaper non members->expensive members
- short term unemployment non specialised industries
- cult erosion cheap uniform products replace expensive local variants
- sovereignty loss nation give up some econ policy (immigration, single market)
Free market liberalisation (Nat govts promoting thru policies GLOBALISATION)
- promoting free markets+ reduces govt intervention in econ (‘impedes’ econ development)
- competition once restricted markets -> innovation+ lowest cost production w efficiency (could be foreign removing restrictions ownership, FDI)
- removing price controls+ breaking up monopolies (services e.g. telephones, gas)
- Margaret Thatcher 1980s money trickle richest-poorest
Privatisation (Nat govts promoting thru policies GLOBALISATION)
- allow foreign investors gain slice former state owned services+ infrastructure (many still own big slices Fr)
- allow FDI+ increase efficiency profit minimises losses+ reduce govt expenditure+ gain money
- successive UK govts allowed foreign inv gain stake services electricity, gas (+industry car+ steel) e.g. Fr EDF energy in UK
Encouraging business start-ups (Nat govts promoting thru policies GLOBALISATION)
- methods ranging low business taxes to changes law allowing local+ foreign-owned businesses to make more profit (also grants+ loans)
- creates innovation+ competition new production techniques, lower prices etc (maybe globally important industries renewable energy)
- e.g. UK govt support ICT start-ups Tech City (Silicon roundabout) in Old Street area London
SEZ (Special Econ Zones) (govt attracting FDI)
-set up by Nat govts offer financial/ tax incentives attract FDI which differ from those incentives normally by a country
Attitudes to FDI (contributed spread globalisation into new regions+govt attracting FDI)
- during decolonisation 1950s onwards many newly independent rejected int trade as exploitative preferred self sufficiency
- Asian Tiger econ (Taiwan, Hong Kong, S Korea, Singapore) chose export led growth+ much faster econ growth
- most changed attitudes 1980s viewing FDI positive new tech, jobs, better paying+ conditions e.g. China’s ‘open door’ Policy 1978
Govt subsidies
- Payment by govt to a co to promote a particular activity+ ensure profits
- may attract FDI cover relocation costs etc
- WTO against as lower market price undercutting imports may accept in SEZ as promotes trade (+UK get away subsidising farmers)
China ‘open door’ policy 1978 explain
- no int trade before ‘switched off’
- slowly intro econ liberalisation+ opening up FDI while maintaining 1 party pol system (communism)
- SEZ offer tax incentives+ huge pool labour e.g. Shanghai Econ Zone
China ‘open door’ policy benefits
- growth low wage factories-> ‘workshop of the world’ ->econ matured now
- 1990s SEZ generated 50% GDP
- 400m escaped poverty since+ 300m left rural
- 2001 member WTO guaranteeing other countries lower tariffs exports from China
- 2005 50% exports foreign countries w connections in SEZ
- largest recipient FDI (receiving $60bn 2006) growth shifted Asia, changed flows China+ India control FDI BRICS inv increase 20% 2000-12 + 10% global now (inv sub Saharan Africa)
- major inflow+outflow, FDI outflow predicted $1.25tn 2015-25
- agreed export more ‘rare earths’ minerals in lime WTO
- foreign TNCs allowed inv some sectors domestic market rail freight+ chemicals industry
- GDP 124th 1976 now 2nd largest
China’s ‘open door’ policy problems
-only promotes urban development worsen rural- urban gap 300m left rural, reliance cheap industry
- soon 200 cities 1m or more (pressure demands)
- not entirely open global flows: Google+ Facebook lil access instead Youku Soc media, strict quote 34foreign films cinema each yr + Coca-Cola’s acquisition Huiyan juice 2008 blocked (strict controls some sectors)
