GG - Globalisation

Question 1

Globalisation

Answer 1

The process of the world’s economies, political system and cultures becoming more strongly connected to each other

Question 2

What are the three main forms of globalisation?

Answer 2

Economic - long distance flow of goods, capital and services
Social - the spread of ideas, information, images and people
Political - diffusion of government policies

Question 3

What was the major reason for economic globalisation?

Answer 3

Growth of TNCs and international trade

Question 4

Describe the pattern of political globalisation

Answer 4

Growth of western democracies and their influence on poorer countries
Decline of centralised economies

Question 5

What would happen if there was no globalisation?

Answer 5

There would be no interaction between countries

Question 6

What would happen if there was complete globalisation?

Answer 6

The world would act as a single community

Question 7

As the world becomes more globalised, countries are becoming more ————

Answer 7

Interdependent

Question 8

What system is used to ‘measure’ globalisation?

Answer 8

The KOF Index of Globalisation
Introduced in 2002

Question 9

Give the most, not as and least globalised countries

Answer 9

Most globalised - Canada, Australia, New Zealand
Not as globalised - USA, China, Russia
Least globalised - many from sub-Saharan Africa, those nations in conflict e.g Afghanistan

Question 10

What is a global system?

Answer 10

Any organisation, group or activity that links different parts of the world
E.g TNCs that operate in more than two countries economically link them together

Question 11

What are the dimensions of globalisation?

Answer 11

Flows of capital, labour, products, services and information
Global marketing
Patterns of production, distribution and consumption

Question 12

Describe flows of information in globalisation?

Answer 12

Information such financial data or current news can be spread across the world quickly
Development and rapid spread of email, the internet and social media mean it is easier to communicate between different countries
Increased flows of information are making the world more interconnected

Question 13

Describe flows of capital in globalisation

Answer 13

Historically, capital was mostly invested within a country
Over time capital investment in foreign countries (FDI) has increased
Improvements in information and communications technology has encouraged flows of capital as it can instantly be moved around the world via the internet
Capital flows are usually from more developed countries to less developed countries but this becoming less clear cut

Question 14

What is foreign direct investment (FDI)?

Answer 14

FDI is the capital invested in foreign countries

Question 15

Give evidence for foreign direct investment (FDI) increasing

Answer 15

Global FDI has increased from $400 billion in 1996 to nearly $1500 billion in 2016

Question 16

Describe flows of products in globalisation

Answer 16

Historically, manufacturing industries were located in more developed countries with the products being sold in the country they were made in
The flow of manufactured goods is now usually a movement of high value manufacturers from the more developed countries to the less developed countries and low value manufacturers from the less developed countries to the more developed countries
In recent decades manufacturing has moved overseas due to lower labour costs overseas and then the product is imported to the country it is sold in
Therefore, manufacturing in international trade is increasing

Question 17

What is the direction of the flow of raw materials (usually) and why is this slowly becoming less common?

Answer 17

Raw material flows usually from less developed countries to more developed countries but poorer countries have started to invest in manufacturing activity to rebalance their economies

Question 18

Describe the flow of services in globalisation

Answer 18

Improvements to ICT mean that services can locate anywhere in the world and still be able to meet the needs of customers anywhere else in the word
During the 70s and 80s there was deregulation and opening up of financial markets to the rest of the world so it was easier for banks and other financial institutions to do business in other countries
High level services tend to be concentrated in more developed countries

Question 19

Capital

Answer 19

Money that is invested - it is spent on something to produce an income or increased profit

Question 20

Services

Answer 20

Economic activities that aren’t based on producing material goods e.g banking and insurance

Question 21

Describe the flows of labour in globalisation

Answer 21

More people are moving abroad. Some because they have to due to conflict and some because they are moving to more developed countries where there are better job opportunities and working conditions
When people move they bing aspects of their culture with them so countries become more connected

Question 22

What is the ‘brain drain’?

Answer 22

Where highly skilled workers with a high level of education move away from their home in less developed countries to more developed countries for better job opportunities - meaning the population remaining in the less developed country has less skilled workers

Question 23

Describe global marketing

Answer 23

Products are sold all over the world instead of just in one country so it is cheaper (economies of scale) to use one single marketing strategy for the whole world (treating it as one single market) to advertise it to people across the world
Can increase global brand awareness as it is identified with one name and logo
Regional markets may need some adaptation as different countries have various laws and attitudes

Question 24

What is financial deregulation?

Answer 24

Where governments around the world relaxed the rules on what banks were allowed to do e.g they were able to charge people more for their services so they could invest in a greater number of businesses , barriers to capital coming in and out of a country removed

Question 25

What is the global trade system?

Answer 25

A system that governs the flows of products between countries

Question 26

How do governments control which products come into a country and at what price?

Answer 26

Tariff - taxes on the products coming in
Non-tariff barriers - rules on the quality of products coming in
Quotas - restrictions on the amount of products coming in

Question 27

To make trade cheaper, countries can enter into a —— ————

Answer 27

Trade agreement

Question 28

What is a trade agreement?

Answer 28

One country agrees to remove controls of trade in exchange for the other country doing the same, benefitting both countries’ companies and consumers
E.g the North American Free Trade Agreement (NAFTA)

Question 29

What is a bilateral and multilateral trade agreement?

Answer 29

Bilateral agreement - trade agreement between two countries
Multilateral agreement - trade agreement between several countries

Question 30

What is the world trade system?

Answer 30

Governed by the World Trade Organisation (WTO)
Established in 1955 and sets rules on how countries can trade with each other e.g eliminating unfair tariffs between countries
Acts as a forum to negotiate trade deals with each other and settle trade disputes

Question 31

How have transport and communication systems improved global business?

Answer 31

Improved transportation systems e.g rail network, ships etc mean that people and products and easily travel
Uniform metal containers introduced in the 1950s which allowed more goods to be loaded onto ships
Communications satellites were first launched in the 1960s which allow relatively cheap wireless communication between two devices across the world
Optic fire cables use signals of light to transmit more information than any other cable

Question 32

Economies of scale

Answer 32

The cost advantages that result from the larger size, output or scale of an operation as savings are made by spreading the costs or rationalising operations

Question 33

What new ways of working have made countries more efficient?

Answer 33

Global supply chains to minimise costs - finding the cheapest place for manufacturing, supplying etc
Economies of scale
Temporary contracts allows companies to take on workers only when they are required
Outsourcing - when a company pays another company to do work to save costs e.g rather than developing their own call centre

Question 34

How does trade make war less likely?

Answer 34

Global trade means that countries have relationships with each other and there is more interdependence so conflict between them is less likely (it is not in their best interest)
E.g the EU was set up as a post-war effort to bring greater levels of peace to Europe
E.g by working together countries can help increase security such as the North Atlantic Treaty Organisation (NATO) to deter countries’ common threats

Question 35

What is a transnational corporation (TNC)?

Answer 35

A company that operates in more than 1 country