GLOBAL GOVERNANCE Flashcards
What is free trade
Trade between countries, free from governmental restrictions such as trade blocks and tariffs
What are tariffs
A tax imposed on imports of goods by the government of a country, makes foreign goods more expensive so more of the countries goods are bought
What’s a trade block
An arrangement among a group of Nations to allow free trade between member countries but to impose tariffs on other countries that may want to trade with them
Which countries remain the largest exporters?
High income countries
They continue to dominate global exports.
Which emerging economy is noted as the world’s largest exporter?
China
China has significantly increased its export capacity.
What percentage of world merchandise trade is attributed to developing economies?
41%
This reflects a growing presence in global trade.
How do low income countries (LICs) compare in terms of trade growth?
Slowest growth among all economies
While LICs are trading more, their growth rates lag behind.
What proportion of global merchandise and commercial services exports do least developed countries (LDCs) account for?
Less than 15%
This highlights their limited role in international trade.
What does the Gini index represent and how can it be used?
The Gini index represents the level of inequality within a country. And can be used to compare inequality across different counties.
What is the range of the Gini index?
The Gini index ranges between 0 and 1.
Often written as a percentage from 0 to 100.
What is the formula for the Gini index?
Gini index = Area A / (Area A + Area B)
What is the Lorenz Curve?
The Lorenz Curve graphically represents income distribution and helps to calculate the Gini index.
What happens to the Gini index as inequality increases?
As inequality increases, the Gini index gets closer to 1.
1 represents perfect inequality.
What does a Gini index closer to 0 indicate?
A Gini index closer to 0 indicates greater equality. 0 represents perfect equality.
What are the roles of the IMF and World Bank?
Regulate global finance and support economic stability.
IMF: Regulates financial flows and stabilizes economies.
World Bank: Provides financial aid to developing nations and funds development projects.
(Like funding top-down development projects Luke the hydroelectric dam in Zambia)
What does the WTO (world trade organisation) do?
Manages global trade and facilitates trade negotiations.
Aims:
Supervise international trade.
Act as an arbitrator in trade disputes.
Negotiate trade agreements.
What challenges does the WTO face?
Developed nations (USA, EU, Japan) wanted larger trade deals.
Developing nations resisted opening markets to Western goods.
Emerging economies pushed for tariff reductions.
What was a successes for the WTO
2013 Bali Agreement: First major multilateral trade agreement in nearly 20 years.
What is outsourcing?
Companies outsourcing there manufacturing from HICs like Europe to LICs to reduce manufacturing costs and labor/wages are cheaper.
What are some negatives of outsourcing?
. Deindustrialisation
. Loss of jobs
. Structural unemployment
What are unequal power relations in global systems?
Wealthier countries generally have more power and, therefore, influence on global systems. HICs have close relations and groups like the G8 that drive global economic and political systems.
They also have more influence through intergovernmental organizations like the UN, IMF, and World Bank, which help stabilize development.
What are negatives of HICs having more influence?
Developing countries have less influence and depemd on the decisions of wealthy countries which may not benifit them
What’s geopolitical conflict usually due to?
Usually, due to disputes over resources, territory, or ideology
Why is China investmenting in Africa, particularly Zambia?
To extract raw materials and energy resources.
70% of Zambia’s exports are copper, a key interest for China.
Investments in Zambian copper mines and transport infrastructure.
What are the drawbacks of China’s investment in Zambia?
Unequal power relations: China hasn’t helped Zambia develop its own copper-processing industry.
Zambia has to sell raw copper to other countries (e.g., UK) for processing, then buy it back.
This reduces Zambia’s profits and increases reliance on wealthier nations.
How has China contributed to zambias infrastructure ?
Developed the Tazara railway for copper transport.
Provided 10,000 Chinese workers, boosting Zambia’s workforce.
Built the Kariba Dam, supplying hydroelectric power to the copper industry.
What are the drawbacks of China’s investment in Zambia?
Unequal power relations: China hasn’t helped Zambia develop its own copper-processing industry.
Zambia has to sell raw copper to other countries (e.g., UK) for processing, then buy it back.
This reduces Zambia’s profits and increases reliance on wealthier nations.
How is China expanding its wealth and influence?
China is an emerging economy and is expanding its wealth and influence by investing in other parts of the world.
How do migrant workers contribute to economic stability?
. They fill essential jobs
. Address labour shortages
. Skilled workers help maintain economic growth.
How does money flow in global systems support economic development?
. Migrant workers send remittances
. Foreign investments improve infrastructure and jobs
. TNCs drive social and economic growth.
How do ideas from HICs benefit LICs?
. HICs share successful strategies for economic and social growth
. New business models like outsourcing reduce costs and improve services, plus create jobs in LICs
How does technology help LICs develop?
LICs build industries through technology, leading to new factories and employment opportunities.
What challenges do migrant workers face?
. They often experience exploitation
. Poor working conditions
. Social or health issues due to economic migration.
How do global financial systems create inequality?
. Aid can be mismanaged
. TNCs profit from LICs without fair reinvestment
. Low wages highlight income inequality.
How can global ideas disadvantage LICs
LICs may feel forced to adopt HIC policies that may not benefit them, like not joining trade agreements will put them at a massive disadvantage.
How does technology contribute to inequality?
Research is done in HICs while manufacturing is outsourced, LICs rely on outdated technology due to costs, and automation in HICs reduces job opportunities.
What do unequal power relations do?
It’s enable some States to drive global systems to their own advantage and directly influence geopolitical events.
How do counties gain power relations over other countries?
Counties gain superpower status through economic, military, culture, and technological dominance over many countries. Can be done through ‘soft power’ (cultural influence and diplomacy) or ‘hard power’ (use of military force and economic trade policies )
Geographically, where do most countries trade?
With neighbouring countries, as this reduces transport costs.
What is trade?
Buying and selling of goods and services
What are tariffs?
A tax put on imports to encourage people to buy goods from their own country
What is an import licence?
A document issued by a national government authorizing the importation of certain goods from a specific source
What are subsidies?
Grants or allowances usually awarded to a domestic producers to reduce their costs and make them more competitive to compete with imported goods
What are sanctions?
Restrictions on exports implemented for Political or economic Reasons by countries and international organisations to maintain international peace and security
What are embargos?
The involved partial or complete prohibition of commerce and trade with a particular country usually put in place the political not commercial reasons
What are regulatory restrictions?
Restrictions placed on imports based on obstacles such as quality or standard of goods or how they’re produced.
E.g. EU put restrictions on child labour made products
What is comparative advantage?
One country specialise in producing in exporting goods that they can produce more efficiently at lower costs.
What is aglomeration?
Some Industries trying to cluster in geographical areas as sharing of regional skills and information saves costs.
What does market strength do?
A strong affluent growing market draws in exporters because there’s a potential to grow and increase volume of sales
What effect do political alliances have on trade?
Political Alliances are important in determining which countries cooperate and trade with each other conversely conflict may lead to sanctions or embargos.
What are trade agreements?
An international treaty on trade conditions for products and services between countries, which is a result of collective bargaining contracts, defines the trade rules
What does the WTO do?
The world trade organisation tries to remove barriers to trades like tariffs, trying to persuade nations to reduce tariffs.
What is a free market?
A system of buying and selling goods and services that isn’t really under control of the government.
What are free trade areas (FTA)?
Trade barriers between the member countries are eliminated but each member country maintains its own tariffs against countries that aren’t members
What is Customs Union?
Same as free trade areas
(trade barriers between member countries or eliminated but tariffs against countries that are members are maintained) but common countries impose a common tariff against non-member countries outside the Bloc.
What is a common market?
Same as Customs Union
(where trade barriers between member countries that are eliminated and a common tariff is set against non-member countries)
but also, there’s a free flow of goods, services, capital, and labour between the countries with no restrictions.
What is an economics / monetary union?
Can take different forms but members operate as a common market trade (barriers between countries or eliminated, a common tariff is imposed against non-member countries and there’s free flow of good, services, capital and labor with no restrictions) with the additional integration of a common tax system/currency.
What influences patterns of trade?
. Comparative advantage (specialised in producing goods efficiently)
. Geopolitical relations
. Agglomerarion (companies clustered in regions)
. Proximity (neighbour countries)
. Market size/ strength
Factors affecting the volume of international trade:
Factors that affect a countries access to markets
○ technology
○ transport costs
○ security
○ border control
○ communication systems
○ management and information systems
○ trading relationships
○ trading blocs and agreements
○ wealth and economic development
○ geopolitical relations
○ global financial relations
○ government policies
How can differently in wealth affect countries access to markets?
Countries with less wealth have less access to markets. HICs can often afford to pay higher tariffs for higher profits, but LIC’s struggle to pay the high tariffs and can’t save money through outsourcing, reducing access to markets
What are trade group agreement advantages?
○Economies of scale (cost savings from larger market size)
○Attracts investment due to larger market opportunities
○Opens borders to new technology
○Elimination of trade barriers improves trade and production
○Employment: People can move easily between member countries
○Common currency makes transactions easier
○Political benefits: Promotes democracy and human rights
○Social benefits: Raises standards in healthcare, education, etc.
○Resource sharing enhances economic efficiency
What are the disadvantages of trading group agreements?
○trade diversion (shifting trade to less efficient member countries)
○loss of sovereignty
○ potential for conflicts with the World Trade Organization (WTO), which promotes free and open trade among all member countries.
These conflicts can arise over tariff reductions, etc.
What are benefits for TNCs of them opperation in another country?
Lower costs due to cheaper land and wages
Access to new resources and markets
Fewer regulations on environment and labour
What are the problems/ costs for TNCs of them opperating in another country?
Ethical issues (sweatshops, environmental damage)
Reputation damage
Social and environmental concerns
What are benifits for the host country of TNCs operating in them?
Generates jobs, income, and introduces new technology
Workers gain new skills
Improves energy, transport, and infrastructure
What are the probelms/ costs for the host country of TNCs operating in them?
Poor working conditions and low wages
Exploitation of resources
Negative impact on environment and culture
What are the benefits for the country of origin of a TNC opperationg in a different country?
Cheaper goods for consumers
Specialization in management and financial services → higher-paying jobs
What are the problems/ costs for the country of origin of a TNC opperationg in a different country?
Loss of manufacturing jobs
Deindustrialization
Abandoned factories and economic decline in some areas
Why does a TNC opperate in more than one country?
○ to find the lowest cost location for their production
○ take advantage of foreign exchange rates that make exports cheaper
○ exploit a mineral or other resources available in other countries
What’s vertical integration (TNCs)?
An arrangement where the supply chain of a company is owned completely by that country (from raw materials to finished product) e.g. BP
What’s horizontal integration (TNCs)?
A company diversify its opperations by expansion, merger, or takeover to give a broader capability of the same stage of production
What is outsourcing?
Subcontracting part of business opperations to other companies e.g. different countries (cheaper)
What’s offshoring?
Relocation part of the business overseas e.g. for the advantage of lower costs or access to international markets.
What is globalisation?
A process of international integration and where national economies, societies, world views, products, ideas, and cultures become increasingly integrated globally through trade, communications, transport, and immigration.
What are elements of globalisation?
○ Economic - cause by growth if TNCs, increased trade, faster cheaper transport
○ Cultral/ social - caused by migration, global communication networks
○ Political - caused by growth of western democracies (influence on less developed countries)
How can we measure globalisation?
The KOF index measures a countries globalisation looking at - economic (36%- flows like trade/finance)
- social (38% phone minutes, information flows, cultural proximity e.g. no. McDonald’s)
- political aspects (26% no. International organisations that the countries involved in)
What does the exam mean by dimensions?
Characteristics
What are the dimensions of globalisation?
Flows of capital, labour, products, services, and information; global marketing; patterns of production, distribution, and consumption.
What is flows of capital?
All money that moves between countries
Describe this model:
Describe the model with core regions (HICs), periphery regions (LICs) and the IMF and Wolrd Bank
What are the dimensions of globalisation ?
Flows of capital, labour, products, services, and information; global marketing; and patterns of production, distribution, and consumption
Why are there flows of labour?
○ rise in international migrants to move to richer areas to work
○ send remittances back to their country
○ they want a better life and better jobs
