G -> 1.1-1.4 Flashcards
Define globalisation
Increasing connections between places and people across the planet, established through trade, politics and cultural exchanges, and helped by technology and transport
Widening vs deepening
Widening - New links between places that are greater distances apart
Deepening - deepening of connections, number and types of connections increase and volume of flows grow
What is flowing through globalisation? And what could be potential reasons for this
Information, culture, ideas, people, goods
Technological advances have made this flow more efficient and accessible
Willingness of people to document their experiences
Possible positives of globalisation
- widening of connectivity so more trade routes and political relations
- increased flows of commodities, culture which spreads culture which can lead to deeper connections
- multiplier effect of TNC investment
Possible negatives of globalisation
- monopolistic businesses can come in and pay higher wages
- less developed countries being exploited for resources
- TNC’s hold power and can threaten to leave a specific country
- interdependence - German DAX (stock market) lost 1.2% within minutes after tsunami
how can flows of information create global networks
- internet enables personal information flows
- and can create social networks
- can help migrants keep in contact with family abroad
- network between host and foreign country
How do developments in transport and trade (ie connectivity) contribute to a shrinking world?
- Instantaneous connectivity achieve telegraph - telephone and internet
- global messaging by TNC creates a sense of global village
What are the key developments in transport and trade since19th century that would increase rates/ flows of globalisation
- steam ships made it easier to cross the Atlantic
- improved/ larger port facilities in China allows more access points for trade (traders can carry goods cheaper)
- standardised container shipping - un/loading faster - lower costs and more efficient
- cheaper/larger planes make it more possible to travel world (RyanAir)
- high speed railway networks, eg Eurostar creates easy/cheap access to Europe
One development in transport that has contributed to the growth of trade (3)
- cheaper air travel for goods
- makes lengthy supply chain financially possible
- as goods manufactured in China can be moved long distances
What is the EU?
- 28 member states
- 510 million population
- standard set of laws, free movement of people, goods and capital
- helps establish peace
- common trade policies
- monetary union
- supranational decision making
Difference between inorganic + organic FDI, give examples
Organic - expanding operations in another country, eg Nissan into Sunderland, creating jobs and increasing supply
Inorganic chain - eg, BA buying vue,OMG, leads to job losses
Why do some countries allow FDI?
- Economic gain
- creates competition for local industries
- allows migrants which adds to workforce and greater cultural diversity
Free trade policies generally mean
No tariffs
Which causes market growth
Eg, Tesco gained 75 million more customers in 04 when 20 new countries added to EU
Free market liberalisation
Thatcher in 1980s believed in law of unintended consequences
- involved promoting free markets and reducing government intervention in the economy
- creation of competition in once restricted markets, leading to higher output lower prices and greater output
Advantages of trading within a trade bloc
- countries excluded have to pay higher tariffs
- trade blocs facilitate business development
- some countries will specialise knowing they can sell in trade bloc
- inefficient producers within bloc can be protected
- trade bloc influence global trade as non members may want to invest (eg, Japan investing in the UK)
Key principle of FDI
- countries want FDI
- FDI brings capital money into the country
- FDI created jobs, incomes and increases taxes and spending power for workers
- FDI means infrastructure, so other British companies benefit
Size of Pakistan’s IMF bailout
6 billion dollars
Came with a set agreement of how they had to spend their money too, which could limit prosperity, meaning they would return to the IMF(austerity)
What is protectionism?
Restrictions on imports into a country to a;low home industries to grow without competition
Tariffs, quotas
How does attracting FDI create cumulative causation?
- companies invest set up branch factories and start exports
- other companies arrive
- growth of employment, income and tax
- government spending increase
- supply chains develop, eg, Imdaad and technology is exchanged
What is a SEZ?
Special Economic Zone
- no tariffs, low corporate taxes
Example: In the 1960s President Suharto of Indonesia created the Jakarta Export Zone with attractive legal and economic conditions designed in consultation with US and European TNCs.
How can national policy changes create globalisation
Eg, UAE embraced the gulf cooperation council
- build infrastructure: jebel Ali port, metro, al makhtoum airport, jumeriah lakes towers housing, etc
- subsidise potentially unprofitable businesses eg, Emirates airlines
Also China open door policy 1978
What is glocalisation?
Adapting global goods and services to local areas to adapt to their cultures and values to increase sales here.
Eg, Abercrombie and Fitch stopping advertising half naked models in the Middle Eastern regions
Jebel Ali facts
- has its own judicial system
- 1225 companies with 14-18% growth per year
- 1billion dollars of new development planned
Dubai metro opens until…
1 am and has been extended to Jebel Ali from city centre and wirport
UAE is building a
Railway network to connect the 6 states of GCC
Worlds __ busiest port
9th, allowing for a faster and higher flow of imports
Imdaad is making building projects more
Eco friendly, more attractive for potential companies as renewable energy sources are more sustainable
1.1 overall
- world is starting to deglobalise, so we need to understand if we want to fight for neoliberal globalisation
- involves flows between increasingly global villages
- involves widening and deepening global connections and flows
1.2 overall
- accelerated by technology, institutions and neoliberal mindset, across 19th,20th and 21sr century - contributing to a shrinking world
Main drivers of 21st century globalisation
- mobile phone
- internet
- social networking
- electronic banking
- fibre optics
- free markers
Key changes to globalisation
• 2/3 of flows are intraregional
• NB for goods, it’s only 1/3
• Europe has the highest amount of intraregional flows.
Why? The EU.
• Connectivity between regions is increasingly rapidly.
• Emerging economies still lag behind (24% of international internet traffic)
• Only exceptions are Israel, Slovenia and UAE
• Low usage = high prices.
WTO
• Replaced GATT in 1995
• GATT was created after World War 2 to build ‘free trade’
• sets the global rules of trade, 4 roles:
- conductor, tribunal, monitor and training.
- wants trade liberalisation
World Bank
• They lend money and give grants all around the world to fund economic development and reduce poverty
• tend to require recipients to adopt trade liberalisation and open up
E,g - have $470 mil loan to Philippines for a poverty reduction programme
IMF
• aims to maintain stable global finance system - which promotes free trade and globalisation
- they have to agree to run free market economics and allow outside investment – e.g. Sierra Leone.
• has b even criticised for promoting a western model of economic development which works well for their interests.
TNC investment and globalisation
• TNCs search for resources / markets / production sites / finance / news
• They want to create demand and brand recognition
• Some TNCs facilitate globalisation e.g. investing in the :
• Growth of global hub airports, e.g. Heathrow create networks of trickle down subcontracting e.g. LSG SkyChefs
• Role of transport TNCs e.g. Deutsche Bahn creating networks of associated companies
1.3 overall
– Political and economic decision making are important factors in the acceleration of globalisation
Negatives of a trade bloc
• You lose some sovereignty,
• e.g. human rights legislation
• E.g. health and safety legislated
• E.g. consumer protection, climate change treaties.
Interdependence–
• Economic problems in one country spread to another.
• You have to compromise and concede
You have to compete with foreign companies, e.g. Air France/KLM, Lufthansa
• Your own companies might go out of business
• But competition creates lower prices and more
efficiency
how does FDI encourage TNC growth
• Free Market liberalisation –Came from Reagan and Thatcher in the 1980’s who believed governments impede economic development,
• They believed in allowing “trickle down” , and allowed London to become a financial hub
Tesco
Gained 75 million customers when accession 8 in 04 occurred
1.4 overall
TNCs globalise, Such as JEBEL ALI where huge economic change has transformed Dubai
Possible problems in Jebel Ali
• With economic globalisation comes cultural globalisation – but UAE resists cultural dilution
• Glocalisation is necessary to create good will with the host country – but does that dilute the brand
The 21st century has been dominated by
Rapid development in ICT and global communication:
- mobile phones
- internet
- social networking
- electronic banking
- fibre optics
these lowered communication costs and contribute to time space compression
China open door policy - pre policy
- under Mao Zedong, communist china switched off from global economy
1978 what happened in china
- Deng Xiaoping introduced open door policy - slowly introducing economic liberalisation and opening up to FDI
- SEZ were created on the coast, like pearl river delta zine and Shanghai economic zone, rapid inflows of FDI
Impacts on exports of china policy
Soared from $2 bil in ‘80 to $200 bil in ‘00
- china joined WTO in 01, so other countries now have lower tariffs on their exports too
FDI restrictions in some sectors of china
Cokes attempted acquisition of Huiyan juice was blocked in 2008
