EQ1 - What Are The Causes Of Globalisation And Why Has It Accelerated In Recent Decades

Question 1

Define Globalisation

Answer 1

Is used to describe a variety of ways in which places and people are now more connected with one another than they used to be

Question 2

State the 4 types of Globalisation

Answer 2

Economic globalisation
Social globalisation
Political globalisation
Cultural globalisation

Question 3

Explain the factors Economic globalisation

Answer 3

Growth of TNC’s accelerates cross border exchanges of raw materials, manufactured goods and shares

ICT supports a more international economy and spatial division of labour

Online purchasing using sites like Amazon

Question 4

Explain the factors of social globalisation

Answer 4

International immigration has created extensive family networks with more multi-ethnic world city societies

Global improvements in education and health have seen rising life expectancy and literacy levels

Social interconnectivity has grown due to mobile phones , internet and email

Question 5

Explain the factors of Political globalisation

Answer 5

Growth of trading blocs allows TNC’s to acquire firms in other countries

Reduced trade restrictions and tariffs help markets to grow

World bank, IMF and WTO work internationally to harmonise national economies

Question 6

Explain the factors of cultural globalisation

Answer 6

Western cultural traits dominate some territories

Old local cultures merge with globalising influences, hybridisation

Ideas and information have accelerated thanks to virtual spaces and 24 hour reporting

Question 7

What is the impact of globalisation on finance

Answer 7

Global capitalism spread by large TNC’s are larger than many countries GDP

Cheaper labour in developing countries supplies goods to wealthier nations

Trillion of dollars are exchanged electronically every day

Question 8

What is the political impact of globalisation

Answer 8

Some TNC’s seek to influence how people think

Many trade barriers have been removed to liberalise world trade

TNC’s and political organisations can influence national governments

Question 9

What is the impact of globalisation on population

Answer 9

Employees with skills in management, finance and IT move around the world to where they are most in demand

Migrant labour flows to areas with higher incomes

Question 10

What is the impact of globalisation on communication and information

Answer 10

Lower transport costs allow long distance tourism

Increased mobile phone usage and fast broadband allow information to be communicated easier

Emerging global village of sport , music and films

Question 11

What is the impact of technology on globalisation

Answer 11

Improves economic globalisation as exchanges and trade are able to be made quicker, allows new markets of e-commerce.

Significant part of social globalisation (allows social interconnectivity) and cultural globalisation (acceleration of information around the world)

Important role in political globalisation as it is used to communicate internationally to harmonise national economies

Question 12

What are the benefits and drawbacks of container ships as part of transport developments affecting globalisation

Answer 12

B
Freights can be transported cheaply
Container ships are able to carry a large capacity
Dominate global trade
Have shifted the balance of economic power from Europe to Asia

D
Production of goods in China is due to low labour costs
Return journey back to Asia consists of plastic waste for recycling and incinerating, take back low value waste
High cost to transport goods

Question 13

What are the benefits and drawbacks of e- tailing as part of transport developments affecting globalisation

Answer 13

B
Reshaped the retail industry
Have low storage costs 
Offers manufacturing firms a global market for their goods 
24 hour access around the world

D
Operate in many countries, hard to calculate tax rates
Sell products that people throw away quickly
Environmental impacts and human rights cost

Question 14

What are the social costs of e-tailing companies like Amazon

Answer 14

A lot of workers manufacturing goods work in sweatshops, human rights issue
Factory workers inhale carcinogenic chemicals, health issues
Exploits lower paid workers

Question 15

What are the economic costs of e-tailing companies like Amazon

Answer 15

Operates in many countries, Amazon registers sales in low tax countries
People pay less for goods than they should cost to make , exploit developing countries

Question 16

What are the environmental costs of e-tailing companies like Amazon

Answer 16

Over 30% of whats purchased is thrown away within a year
Pollution involved in manufacturing and transporting goods
Uses finite resources , depleting natural resources

Question 17

How has developments in ICT and communication given new opportunities to businesses and created a time space compression

Answer 17

Development of ICT has led to heightened connectivity and has changed our conception of time and distance, making us feel closer than in the past

ICT has Improved economic globalisation. It allows managers to communicate easier, helping TNC’s outsource and encourages the movement of skilled migrants

Has allowed the development and growth of e-commerce. Allows smaller businesses to compete and access global markets without having physical stores, decreases storage costs and allows quick deliveries, increasing brand loyalty

Question 18

Define Transnational corporations (TNC)

Answer 18

Are businesses whose operations are spread across the world in many nations as both makers and sellers of goods

Question 19

Define Gross Domestic Product (GDP)

Answer 19

Is a measure of the financial value of goods and services produced within a territory

Question 20

Define emerging economies

Answer 20

Are countries that have begun to experience high rates of economic growth, the BRICS group

Question 21

Define spatial division of labour

Answer 21

Is the common practice of TNC’s moving low skilled work abroad to places where labour costs are low

Question 22

Define Shrinking world

Answer 22

Means that due to developments in technology , distant places start to feel closer and take less time to reach

Question 23

How did the WTO affect fishing in Pakistan

Answer 23

Previously Pakistan had an exclusion zone around its coast, so only Pakistani fishing boats could fish there.

Joining the WTO meant Pakistan had to open up its fishing grounds to foreign competition, trawlers from TNC’s and India take most of the catch whilst Pakistani’s fishing communities are left in poverty and fishing stocks are at dangerously low levels

Question 24

Who are the IMF, what do they try to do and how and how have they enabled globalisation

Answer 24

The International Monetary Fund lends money for development, maintains financial stability and stabilises currencies.
Tries to force countries to privatise assets to increase the size of the private sector and generate wealth.
Accelerates cross border trade of materials and information

Question 25

Who are the WTO, what do they aim to do and how , how have they enabled globalisation

Answer 25

The WTO believes in free trade and removing trade barriers, trade liberalisation. Advocates for trade without subsidies or tariffs and encourage all trade between countries without restrictions. Helps accelerate the exchanges of goods between countries, contributing to the success of e-commerce

Question 26

Who are the world bank , what do they do and how, how have they enabled globalisation

Answer 26

Finance economic development by using bank deposits from the wealthiest countries to provide loans for countries in need Contributes towards economic development, potentially improves quality of workforce in developing countries

Question 27

What is a trading bloc Give an example Why have some been critical of trading blocs

Answer 27

Is an intergovernmental agreement where barriers to trade are reduced or eliminated among the participating countries. An example is the NAFTA trading bloc between USA, Canada and Mexico Non- members are excluded which prevents their development

Question 28

How has the UK promoted globalisation What are the issues with their strategy

Answer 28

Gives subsidies to firms investing into areas like London Docklands. Encourages overseas firms to locate in the country, by giving grants to allow foreign direct investment. Restricts smaller UK companies from competing

Question 29

How have China promoted globalisation Are there any issues with their strategy

Answer 29

Chinese government opened the door to international businesses , allowing firms from the UK and USA to relocate and outsource to gain advantages of tax incentives and cheaper labour. Large recipient of FDI but also invests into EU, USA and sub saharan Africa. Exploits cheap labour, human rights issues

Question 30

Define subsidies

Answer 30

Grants given by the government to increase profitability of key industries

Question 31

Define FDI

Answer 31

Foreign direct investment made by an overseas firm into another firm based in another country

Question 32

Define open door policy

Answer 32

When a country allows international business and FDI into the country

Question 33

Define special economic zones (SEZ)

Answer 33

Set up by government to offer tax incentives to attract FDI, which differs from incentives usually offered by a country

Question 34

Define Export Processing Zones (EPZ)

Answer 34

Another name given by China for a SEZ, where there is high economic activity

Question 35

Why do countries make deals with other countries , outside of trading blocs

Answer 35

Occurs so a country can make global connections and do not miss out on global trade, accelerating economic development.

Question 36

Why does China have strong links with Africa , in terms of FDI Who benefits

Answer 36

Africa is a big receiver of FDI from China due to the value of resources (oil, gas, resources) on the continent. Africa benefits from economic development and China has benefitted from cheaper raw materials

Question 37

Who is OPEC, why are they powerful and will there power remain

Answer 37

Is a regulator of the global oil market , made up of the worlds largest oil producers, who control the price and quantity of oil distributed. Power is shifting away from OPEC, due to the growth of non-opec countries like USA

Question 38

What have been the benefits and drawbacks for Ghana of their global connections due to Cocoa beans

Answer 38

B Cocoa is in high demand from large TNC’s D Ghana could gain extra income by processing Cocoa into chocolate or powder, but tariffs force them to export raw cocoa Other cocoa producers (ivory coast) supply TNC’s putting a downward pressure on prices WTO enforced that Ghanian farmers should not be subsidised , cannot compete with UK and US producers

Question 39

What have been the benefits and drawbacks for Vietnam of their global connections due to manufacture goods

Answer 39

B All import duties and quotas were removed for trade between Europe and Vietnam Vietnam exports manufactured goods (telephones, electronic goods and clothing) in return for machinery , vehicles and pharmaceuticals D Cheap labour is exploited , human rights issues

Question 40

What have been the benefits and drawbacks for Guatemala of their global connections due to cotton

Answer 40

D Only 1% of land used for cotton production would have been needed to generate the same income from manufacturing cotton into manufactured goods WTO policies tie Guatemala to only exporting raw cotton TNC’s export cotton into Guatemala to make t-shirts for cheap labour

Question 41

Distinguish the difference between colonialism and globalisation

Answer 41

Globalisation is the expansion of communication whereas colonialism is the expansion of power and territory

Question 42

Distinguish the difference between trade liberalisation and subsidies

Answer 42

TL is the removal of trade barriers whereas subsidies are funds given to firms

Question 43

Distinguish the difference between quotas and tariffs

Answer 43

Quotas restrict quantity traded whereas Tariffs control prices of goods traded

Question 44

Distinguish the difference between FDI and investment

Answer 44

Investment is the purchase of land, assets or buildings whereas FDI is an investment into a project

Question 45

What measures can be used to measure globalisation (4) As a country becomes more globalised what happens to these measures

Answer 45

Flows - higher volume of international trade, more FDI and more migration Technologies- increased internet usage and flows of information Movements- increased international air traffic Media- spread of global advertising, music, TV and film

Question 46

What are the 2 measures for globalisation

Answer 46

KOF index AT Kearney Index

Question 47

How does the KOF index measure globalisation (3) Give specific measures How do they work out the average rank

Answer 47

Economic - cross border transactions and volume of FDI Social- cross border contacts, information flows and presence of global brands within the country (mcdonalds and Ikea) Political - number of foreign embassies in the country, country’s membership of different international organisations and participation in UN peacekeeping activity Each set of different indicators in each group is scaled as some are more important than others

Question 48

Why are 13 of the top 15 countries on the KOF index in Europe

Answer 48

The index measures international interactions. European countries are small compared to China and USA, so every country has embassies, its own internet systems and investments. USA and China has more domestic economic markets which do not count in KOF values

Question 49

What are the advantages and disadvantages of the KOF Index

Answer 49

A Used since 197 Allows for comparisons between countries A wide range of globalisation data is available Uses a weighting system, taking into account missing data and rebalances discrepancies D The internet skews data Bias, smaller countries are over- represented at the top Informal economies are discounted and illegal migrants are not included

Question 50

What are the four main indicators for the Kearney Indicators of measuring globalisation Give examples

Answer 50

Political engagement - participation in international treaties and organisations Technological connectivity - number of internet users Personal contact- telephone calls and remittances paid Economic integration- volumes of international trade and FDI

Question 51

What are the advantages and disadvantages of using the Kearney Index to measure globalisation

Answer 51

``` A Covers 84% of the worlds population Covers 96% of the world’s GDP Allows for comparison between countries Allows for comparison over time ``` D Weightings- who decides Only 64 countries are included in the Index Hard to measure cultural trends

Question 52

Define Global production networks (GPN)

Answer 52

A chain of connected suppliers of materials that contribute to manufacturing a good

Question 53

Define outsourcing

Answer 53

When work is contracted out to another company

Question 54

Define offshoring

Answer 54

When a company does work overseas , either itself or using another company

Question 55

How do TNC’s contribute towards the spread of globalisation and take advantage of economic liberalisation (3)

Answer 55

Motive - economies of scale, developing new markets, integration with other companies, outsourcing and offshoring Means - global digital movement of money has made it possible, FDI, reverse colonialism where India and China invest in the UK and US Mobility- faster and cheaper transport, ICT and instant communication, JIT and other global production networks

Question 56

Define switched on

Answer 56

Those who believe globalisation and increased connectedness improves countries economic development, leading to a higher standard of living

Question 57

Define switched off

Answer 57

Those who believe globalisation leads to corrupt practices and that some countries and people are left behind

Question 58

Explain the physical and human reasons why some countries are switched off Give examples

Answer 58

Physical: Vulnerable to climate change and natural hazards (Philippines) Poor resources for agriculture (Eritrea) Physical isolation and land locked deters FDI and TNC’s (Niger) Human Lack of skills and literacy deters TNC’s and FDI (Somalia) Ethnic clashes and civil war (DR Congo) Low prices for exports due to overproduction and trade rules (Ethiopia) Controlled by TNC’s due to old trade agreements (Sierra Leone)

Question 59

Why are large parts of Africa bypassed by globalisation

Answer 59

Its location, not being close to any wealthier countries to have natural customers, prevents globalisation. The history of colonisation has prevented African countries from developing, behind

Question 60

Why did Zambia and Tanzania find it difficult to switch on

Answer 60

In Tanzania there main export is cotton, the price fluctuates frequently. There is no guarantee of income and GDP fluctuates, meaning Tanzania struggled to switch on In Zambia the country is land locked meaning it was hard to attract FDI and export goods

Question 61

How has Zambia and Tanzania switched on

Answer 61

In Tanzania they are switching on, the heavily indebted poor countries initiative led to the cancellation of many debts, allowing income gained from cotton exports to be invested into development indicators In Zambia, Chinese investment has taken place into railways into Angola and Tanzania to export copper, clearing the country’s debt and increasing income

Question 62

State and explain the important innovations in transport to allow globalisation (4)

Answer 62

Steam power- steams ships and trains moved goods quickly along trade routes in the 1800’s into Asia and Africa Railways- in 1904 railways connected Moscow with Japan and China along a 9000km route, still used today Jet aircrafts- the arrival of the Boeing 747 in the 1960’s made quick international travel possible Container shipping- starting from the 1950’s, now 200 million individual container movements take place each year, allowing cheap and efficient transport

Question 63

Define Glocalisation

Answer 63

Occurs when a TNC tailors its product to specific market areas and local laws and preferences

Question 64

State and explain the different types of FDI

Answer 64

Offshoring - some TNC’s build new production facilities in offshore low wage countries Foreign mergers - Two firms in different countries join forces to create a single entity Foreign takeovers- when a TNC acquires a business in another country Transfer pricing - some TNC’s (Starbucks and Amazon) have channeled profits through a subsidiary company in low tax countries

Question 65

Define Free market liberalisation

Answer 65

Is the belief that government intervention impedes economic development and as wealth increases , trickle down will take place from the richest to the poorest members of society

Question 66

Define privatisation

Answer 66

Is the sale of government owned assets to the private sector

Question 67

Explain the advantages and disadvantages of joining a trade bloc

Answer 67

A Access to larger markets (gives firms in a country a larger potential customer base) National firms can merge to form TNC’s (achieve EOS and increased market share) Protection from foreign competition (an idea to limit the import of cheap goods to protect domestic manufacturers) D Loss of sovereignty (countries lose some power) Interdependence (a disruption in the trading bloc will have severe economic impacts on the countries) Compromise (countries in a trade bloc must allow foreign firms to gai n domestic market share, at the expense of local communities)

Question 68

Explain the advantages and disadvantages of TNC’s on host countries

Answer 68

A Raised living standards (increases the productivity of the labour force, higher wages) Technology transfer (TNC’s transfer tech to branch countries, accelerating economic development) Political stability (TNC’s have helped reduced conflict and provided work for the floating population) Higher environmental standards (TNC’s have global brands to protect and set high environmental standards to maintain a good reputation) D Tax avoidance- TNC’s pay tax in the lowest tax regimes they can Growing global inequalities- TNC’s cluster in specific areas of a country leading to regional inequalities Environmental degradation- TNC’s can move production out of the EU to avoid carbon taxes Unemployment- offshoring can lead to unemployment in developed countries

Question 69

State the physical, political and economic reasons why some regions are isolated from FDI and globalisation

Answer 69

``` Physical Distance from market discourages FDI Wilderness (desert, tundra) Low agricultural potential (short growing season) Lack of energy and mineral deposits ``` Political Corruption and presence of organised crime groups Weak commitment of government to development Civil or tribal conflict Exclusion from trade blocs Economic High level of government debt Weak education levels and poor workforce Poor transport and telecommunication infrastructure

Question 70

Define Heavily indebted poor countries (HIPC)

Answer 70

Consists of 38 of the least developed countries with the biggest debts. Since 1996 the debts have been made eligible to be cancelled or rescheduled, due to the IMF and World Bank