Factors affecting globalisation

Question 1

What is globalisation a result of?

Answer 1

New systems, technology and relationships.

Question 2

What are systems?

Answer 2

Systems include ways of working, procedures and methods of organisation that allow a particular function to be carried out e.g. JIT

Question 3

How have new systems being introduced, made it easier for globalisation to occur?

Answer 3

New systems have made flows of information, capital, products, services and labour easier to cross borders.

Question 4

How has new technology helped develop globalisation?

Answer 4

The technology used for information, communications and transport has advanced rapidly. The internet allows people from all over the world to access info on other places, and aeroplanes allow people to be transported around the world efficiently.

Question 5

How have new relationships promoted globalisation?

Answer 5

Before WW2 most relationships between countries involved one country gaining and the other losing, now countries engage in trade and follow common rules; countries have come together to form rules to help for the common good.

Question 6

What is the global financial system?

Answer 6

This is a system that governs the flows of capital between countries.

Question 7

What are financial systems based on?

Answer 7

The relationship between those who borrow money, those who invest money and the institutions that hold, give out and take in this money - investment banks.

Question 8

What is the main role of investment banks?

Answer 8

To help companies raise capital by selling shares on behalf of those companies. The people who buy shares are investors and they receive a fraction of the profits that the company makes

Question 9

How has information technology made the financial system more global?

Answer 9

Information Technology, such as the internet has given investors and banks more information on business performance, meaning people can invest with more certainty, so more people are likely to invest globally increasing capital flows.

Question 10

How has financial deregulation made the financial system more global?

Answer 10

Governments have relaxed rules over what banks can do, such as charging interest and letting banks invest in more businesses, it has also removed barriers to capital flows between countries making it easier for banks to trade shares internationally, expanding capital flows.
- Also allowed banks to sell shares globally and exchange currencies between countries to allow for more international trade

Question 11

How have financial technologies globalised the financial system?

Answer 11

Financial technologies
Financial technology has made financial information and money easily accessible for people
across the world, deepening the connections between countries:
● Communication technology has allowed banks to communicate across the world,
allowing for banks to have global branches with customers all over the world. This
technology also allows companies to invest offshore, and still manage/collect their profits
from overseas.
● The internet is also a type of financial technology, as it allows people to transfer money,
be that for buying/selling products, remittances, or investments.
● Cryptocurrency (encrypted digital currency) has been developed, which has created a
whole new market for online currency and trading

Question 12

What is the global trade system?

Answer 12

The system that governs the flows of products between countries.

Question 13

How is trade regulated?

Answer 13

Mostly by countries governments, who control which products go into a country at what price.

Question 14

What are some forms of trade regulation governments have?

Answer 14

Tariffs, non tariff barriers and banning of products and quotas.

Question 15

What is the purpose of the controls governments have over trade?

Answer 15

It makes it more expensive for foreign businesses to export their products to a country increasing prices for consumers, making it harder for foreign companies to succeed.

Question 16

How can businesses make exporting their goods cheaper?

Answer 16

By exporting to a country with a trade agreement with the businesses country.

Question 17

What are trade agreements? Who does it benefit?

Answer 17

Countries mutually agree to remove trade barriers. It benefits both countries some companies and all consumers

Question 18

What are trade agreements between two countries known as?

Answer 18

Bilateral trade agreements.

Question 19

What are multilateral agreements? What makes up the global trade system?

Answer 19

Multilateral trade agreements are trade agreements between several countries-all of the countries involved agree to remove tariffs and other controls. Multilateral and bilateral agreements together make up the global trade system.

Question 20

What is the global trade system governed by? What is their purpose?

Answer 20

The global trade system is governed by the world trade organisation established in 1995 the WTO sets rules on how countries can trade with each other e.g. To stop countries-from imposing unfair tariffs on each other’s company’s. It also allows countries to negotiate trade deals with each other and settled through disputes

Question 21

How have transport and communication systems enhanced globalisation?

Answer 21

Improved transportation systems e.g. high speed rail networks, larger and faster ships and faster planes have allowed people and products to get to places around the world more easily than ever before.

Question 22

How has containerisation enhanced globalisation?

Answer 22

Uniform metal containers otherwise known as shipping containers were introduced in the 1950s this allowed more goods to be loaded on to ships at once and transferred straight onto other forms of transport e.g. trains. This is made it easier for goods to be moved quickly and cheaply around the world

Question 23

How have communication satellites allowed for increased globalisation?

Answer 23

Communications satellites were first launched into earth orbit in the 1960s. They allow relatively cheap wireless communication between two devices, regardless of where they are. This means even people and companies even in rural or urban areas can access the Internet and communicate with others.

Question 24

How have optic fibre cables allowed for increased globalisation?

Answer 24

Optic fibre cables use signals of light to transmit more information than any other cable. They allow for fast communication between two devices, allowing almost instant communication between two people or companies.

Question 25

How has growth in software increased globalisation?

Answer 25

Over the past 20 years there has been a significant growth in software that allows free communication can anywhere in the world, for example text messaging services and video messaging services.

Question 26

How have new ways of working or new systems increased companies efficiency?

Answer 26

Companies’ supply chains have become global - now a companies supplier may be in a different country to their factory which is often in a different country to their R and D department this allows companies to minimise costs due to fall in labour prices.
Large companies can benefit from economies of scale. The average cost to a firm of making an item is usually higher if they don’t make many of them. Large companies can reduce the average cost of production per unit by purchasing specialized equipment and using production lines. They may also be able to buy raw materials at low prices as they’re able to buy in bulk. This gives larger companies an advantage over smaller companies.
- Outsourcing is when a company pays another one to do in house work, to save costs. E.g. call centre in India with surplus of cheaper capable labour.
-Business working practices have also changed such as more flexible contracts saving businesses money for not paying when employees aren’t working.

Question 27

How has globalisation created trade relationships to prevent security issues?

Answer 27

Many countries now have trade relationships and are interdependent on each other, so are less likely to go to war, increasing security.

Question 28

How has working together increased security?

Answer 28

Countries are stronger collectively e.g. NATO.

Question 29

Does globalisation always help to reduce the probability of war?

Answer 29

No, it can also exacerbate conflict where countries get involved in civil conflicts where they think it involves them.