EQ1 Globalisation Flashcards
Growth in the capacity of containerised ships
1990 - the average container ship held just 4000 containers
Now , fewer but larger ships dominate global trade carrying over 20,000 containers
How has containerised shipments shifted the balance of economic power from Europe to Asia ?
- products are made by European or us owned companies in Asia and transported to Europe
- outsourcing and relocating due to cheaper labour
- ships bring high value goods to Europe and take low value waste to Asia
How has globalisation encouraged the development of a borderless world?
E-tailers such as amazon can take advantage of global connections to reduce the cost of storing items in warehouses and can operate in many countries .
Items purchased through Amazon are usually cheaper due to lower operating costs and economies of scale.
What has been the disadvantage of economies of scale?
Race to deliver ever-cheaper goods - ‘race to the bottom’
People now buy more and throw away more increasing waste.
What is globalisation?
the process by which people, cultures, finance, goods and information transfer between countries with few barriers.
What has led to reduced time to to communicate and trade?
Developments in tech
Process called time space compression and it refers to a shrinking world
Financial processes and impacts of globalisation?
Global capitalism is spread by large TNCs
Cheaper labour in developing economies helps supply nations with goods
Trillions of dollars are exchanged globally electronically
People and migration processes and impacts of globalisation
High skill labour move to meet demand and to areas with higher incomes (economic migrants
Political processes and impacts of globalisation
Some TNCs seek to influence peoples ideas - Fox News
International political organisation expansion to promote economic growth
Communication and info , processes and impacts of globalisation
Lower transport cost allow for increased long distance Tourism .
Cheaper global phone networks and fast fibre-optic connection are available .
Exchanges of people, information and ideas are common
How did joining the WTO negatively impact Pakistans fishing communities?
To comply with WTO trade rules , Pakistan opened up its fishing ground to foreign competition.
Deep sea trawlers owned by TNCs were allowed to to fish in Pakistans coastal waters which take most of the catch and leaves fishing communities in Pakistan left in poverty
What three global organisations were set up post ww2 to restore and maintain financial stability?
IMF
World bank
WTO
What is the primary role of the IMF ?
Maintain international financial stability.
In return for loans it tries to force countries to privatise govt assets in order to increase the size size of the private sector and generate wealth
What is the primary role of the world bank ?
To finance economic development . Uses bank deposits placed by the world’s wealthiest countries to provide loans for development in countries that agree to certain conditions concerning repayment
Primary role of the WTO
Promote free trade without subsidies or tariffs. Advocates for trade liberalisation and encourage trade free of tariffs and quotas
What is trade liberalisation?
Removing barriers to free trade
Why do countries group together as members of trading blocs?
To promote free trade between them
EU and NAFTA
How do trading blocs support trade for their members?
Remove tariffs
Creating barriers for non members by placing tariffs on imports
Advantages of international trading blocs
Resulted in rapid economic growth eg Asia’s newly industrialising countries
Disadvantages of international trading blocs
Non members are excluded which prevents there development
Which was the first govt in the UK to embrace globalisation
Thatchers conservatives
How did thatcher embrace globalisation?
If an industries profitability was dependent on govt subsidies, it was left to close and they refused to support industries which were facing competition from cheaper overseas investors
Thatchers Conservative government two strategies for growth
Tax breaks to companies investing in the London docklands which encouraged a number of large overseas financial institutions to relocate to London
Grants and subsidies to companies who located new manufacturing plants in the UK such as Nissan and Toyota
When did China government declare its open door policy?
1978
What was the incentive for Chinas open door policy?
Needed western tech and investment to develop its economy
What are Export processing zones in China?
Offered tax incentives and huge pools of cheap labour
How have traditional flows of FDI changed ?
Now countries such as India and China control flows of FDI - invest heavily in EU, USA and sub Saharan Africa
Example of countries making deals outside of a trade bloc
USA has negotiated free trade agreements with a range of countries eg UAE and South Africa
Why are IGOs influential
Constructed of the worlds wealthiest countries to develop policies of mutual interest
Example of influential IGOs
OPEC which represents 40% of global oil producers and therefore influences oil prices
Who set the price that Ghanaian farmers could sell their cocoa for?
British govt as they were a British colony
What factors now dictate cocoa prices?
Commodity traders
Oversea tariffs
Unequal power
How do commodity traders influence the price of cocoa prices?
Futures markets which guarantees price supply and delivery so traders can buy cocoa in advance for TNCs
How do overseas tariffs
EU sets tariffs for processed cocoa but none for raw cocoa beans. Ghana could gain extra income and employment by processing the beans but due to tariffs driving up the price they are forced to export raw cocoa instead
Vietnam trade deal with the EU
Removed all import duties and quotas on items traded between EU countries and Vietnam .
Vietnam would export : phones, electronics, footwear, clothing etc
Eu would export electrical machinery aircraft etc
Lower labour costs in Vietnam than China so eu benefit from lower prices
How would Guatemala of benefited if they processed there raw cotton into finished clothes?
Exports earning would increase greatly - only 1% of the land devoted to cotton production would have been needed to generate the same income
Why was Guatemala unable to process there cotton?
WTO policies
Why are TNCs vital in players in globalisation ?
Account for 25% of the worlds economic activity
What 3 factors ?
Motive
Means
Mobility
What is the motive of TNCs
Profit
- minimising and controlling cost
- expanding markets to increase revenue
How do corporations fulfil the motive of profit?
- economies of scale through expanding there capacity which reduces unit cost
- new markets to increase customers
- horizontal integration - expansion at one level of the production process so it can expand its services
- vertical integration - company owns and controls every stage of production
- Diversifying their product range
What is the means of the spread of TNCs?
Banking and the free flow of capital around the world are the mechanism for company growth
Example of reverse colonialism
In 2015, over 800 Indian owned businesses in the UK which employed more than 110,000
How has mobility contributed to the spread of globalisation?
Faster and cheaper transport - large container ship
Rapid communication - fibre optic , satellite and digital technology
What is just in time production ?
The means by which the time gap between production and delivery to the customer is sharply reduced - cuts warehousing and storage costs
What are global production networks?
Link sources of raw materials, finance , manufacturing, markets and sales
How did telephones and telegraphs promote globalisation ?
Telegraph cables across the Atlantic replaced a three week long boat journey with instantaneous communication
How has broadband and fibre optics promoted globalisation?
Large amounts of data can be moved through cyberspace. Enormous flows of data are conveyed across the ocean floor by fibre optic cables
How has global position systems helped the growth of globalisation?
Deliveries can be tracked helping the growth of global production networks
How has the internet promoted globalisation?
Meant that the connectivity between people and places has grown exponentially
What is glocalisation?
When a company restyles its products to suit local tastes
How has Disney used glocalisation?
- Mulan film was aimed at Chinese market
- Hunchback of Notredame to rebrand Disneyland paris
Arguments for globalisation
Improves many countries economic development which leads to higher standards of living and countries being switched on
Argument against globalisation
Creates a two speed world
Leads to corrupt practices and some countries are left behind and so are left switched off
What happens to flows as globalisation increases?
Higher volume of international trade
More migration
More FDI
What happens to technologies as a result of globalisation?
Increased internet usage, flows of information and telecommunications
How do the movements of people change as a result of globalisation?
Increased international air traffic
How does the media change as a result of globalisation?
Spread of global advertising, publishing, music, TV and film
How can countries degrees of globalisation be measured ?
KOF index
Kearney index
What are the 3 factors used in the KOF index?
Economic globalisation
Social globalisation
Political globalisation
How is economic globalisation measured ?
Cross border transactions and the volumes of FDI
How is social globalisation measured ?
Cross border contacts and information flows,
How is political globalisation measured ?
Number of foreign embassies
Membership of international organisations
How does the KOF index calculate globalisation?
Each set of indicators in each group is scaled because some indicators are more significant than others such as FDI. The three sets of indicators are then aggregated into one value
What does the KOF index show?
13 out of the 15 top countries are European. This is because it measures the international interactions
Why are China and USA not on the KOF top 15?
They have large domestic markets so internal connections are more important
What are the four indicators that the AT Kearney index uses?
Political engagement
Technological connectivity
Personal contact
Economic integration
How is political engagement measured ?
Countries participation in international treaties and organisations
How is technological connectivity measured
Number of internet users , hosts and servers
How is the Kearney index different the KOF index?
Uses more holistic indicators such as number of web servers rather than internet communication
Who are the top 3 countries on the Kearney index list ?
Singapore
Switzerland
USA
