Global Governance Flashcards
Why has the global economy and society altered significantly in recent years
As a result of the process of globalisation
What are attempts to manage and govern human affairs on a global scale seen as
Controversial or in need of better awareness
What did Kofi Annan, former Secretary-General of the United Nations say of globalisation
‘It has been said that arguing against globalisation is like arguing against the laws of gravity’ this
In the late 1960s, who predicted the advent of a ‘global village’
Canadian Philosopher Marshall McLuhan
What is a ‘global village’
A ‘flat world’ where the world has been transformed into a ‘village’ by the almost instantaneous transmission of information, facilitated by improvements in ICT - Marshall McLuhan 1960
What is the existence of a ‘global village’ reflected by
The increasingly international manner in which organisations would operate
What 3 ways organisations operate
By thinking globally (not within national boundaries)
By acting globally (being present in many countries)
By making ‘planet-wide’ decisions.
What is the notion of the global village perhaps exaggerated by
The fact that many obstacles to trade remain and in some sectors globalisation has barely begun
What has slowly the process of globalisation down, albeit temporarily
The 2008 global financial crisis
What set backs has their been to recovery from the 2008 global financial crisis
International conflicts
What has international trade given rise to
A ‘world economy’
In a world economy, what is affected by global events
Prices, supply and demand
When did trade start growing enormously
Since the Second World War
In manufactured goods alone, how much has trade grown by from 1956 to 2013
From US$100 billion to $19 trillion
What are capital flows
The movement of money for the purpose of investment, trade or to produce goods/provide services. Usually regarded as investment into a production operation
What is international trade
The exchange of capital, goods and services across international borders. Inbound trade is defined as imports and outbound trade as exports
What is labour
Factor of production defined as the aggregate of all human physical and mental effort used to create goods or provide services
What is globalisation
” the growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and through the more rapid and widespread diffusion of technology” - International Monetary Fund (IMF)
What is a global system
Refers to any organisation, groupings or activities that link different parts of the world. TNCs for example, operate in 2 or more counties, therefore linking their economies
What are the dimensions of globalisation
Economic - Social - Political - Technology Envionrmental
What is the economic dimension/form of globalisation caused by
The growth of TNCs and by the growth in international trade.
Increase in free trade.
Faster, cheaper transport.
Global marketing.
What is the social dimension of globalisation caused by
The impact of Western culture, art, media, sport and leisure pursuits around the world - ‘westernisation’.
Migration.
Global communications networks.
What is the political dimension of globalisation caused by
The growth of western democracies and their influence on poor counties
decline of centralised (communist) economies (though communist political control is still strong in China and Russia)
Globalisation involves flows and movements, examples of these flows
Information, technology and capital.
Products and labour.
Services and global marketing.
What are the patterns of globalisation
Production, distribution and consumption
According to the KOF Index of Globalisation, 2002, what percentage of total globalisation was economic globalisation
36% (characterised by long distance flows of goods, capital and services)
According to the KOF Index of Globalisation, 2002, what percentage of total globalisation was social globalisation
38% (characterised by spread of ideas, information, images and people)
According to the KOF Index of Globalisation, 2002, what percentage of total globalisation was political globalisation
26% (characterised by the diffusion of government policies and development of market economies in former communist states)
What are the most globalised countries
Include many European countries, Canada, Australia and New Zealand
Which countries have large economies but are not as globalised as other places
USA, Russia, China
Examples of the least globalised countries
Include many from sub-Saharan Africa, countries in conflict like Afghanistan and some low income countries like Nepal and Myanmar
What are the five flows which affect globalisation
Capital flows. Technology flows. Raw material flows. Manufactured goods flows. Labour flows
What is the pattern of global capital flows in the world
Mainly, and traditionally, from more developed, HICS is to LICS. Although, it’s no longer as clear cut
What is the pattern of global technology flows in the world
Mainly and traditionally from the more developed HICs to the less developed LICS. Although changing world economic patterns have resulted in some NEEs becoming centres of technology development
What is the pattern of global raw material flows in the world
Mainly and traditionally from LICS to HIC. But patterns of trade have become more complex as poorer countries invest in manufacturing activity and attempt to rebalance their economy
What is the pattern of global manufactured goods flows in the world
Mainly and traditionally a movement of high value manufactures from the more developed HICs to LICS, and low value manufactures from the LICS to the HICs, although this is no longer as clear cut
What is the pattern of global labour flows in the world
Some are high skilled moving to HICs and others are unskilled who more to HICs to look for work
What did international migration increase by between 2000 and 2015
Over 40%
What does capital mean
All money that moves between counties which is used for investment (e.g in land and physical capital), trade or production
How can globalisation lead to uniformity
Through the recognition of international brands. E.g Starbucks is familiar to the Uk high street but also around the world
What are the factors of production that are an ongoing cause and consequence of globalisation
Land - all natural resources provided by the earth like minerals and water
Labour - human resources available in any economy. Quantity and quality are keeps to any producer.
Capital - any physical resource that can be regarded as man-made aid for production like machinery, buildings and factories (physical capital) and investment finance to provide the capital.
Enterprise - human capital describing those who take the risk of establishing businesses and organising the production of goods or services.
In the late twentieth century, what did deregulation of world financial markets mean
That the activities of financial institutions such as banks, insurance companies and investment companies were no longer confined within national boundaries
What is BRIC
An acronym used to identify a group of four contour is - Brazil, Russia, India and China whose economies have advanced rapidly since the 1990s
What is Diaspora
A large group of people with a similar heritage or homeland who have moved and settled in places all over the world
What is leakages (economics)
Refers to a loss of income from an economic system. It most usually refers to the profits sent back to their base country by transnational corporations - also known as profit repatriation
What is MINT
An acronym referring to the more recently emerging economies of Mexico, Indonesia, Nigeria and Turkey
What does the rapid growth of large medium-income economies like the BRIC and MINT mean
There is now a continuum of development, so more regions of the world might be envisaged as ‘core’
Why do people move less easily around the world than money
Because of restrictions on immigration
Why has there been a phenomenal rise in he numbers of migrants crossing the borders
To seek better employment opportunity
Where has much of the labour flows been from to where
Developing countries in South Asia, Africa and Latin America to the richer areas of North America and Europe.
Another major destination for the movement of labour has been around the oil-rich Gulf States.
What are the Gulf states
Kuwait Qatar Bahrain Saudi Arabia United Arab Emirates
Why has there been a major increase of labour movement to the Gulf Stated
The construction boom has provided plentiful employment opportunities
What are the 5 key factors about the movement of labour
Despite increase in cross-border movements, most migrants move over short distances within the same region or between neighbouring regions.
North America, Europe and the Gulf countries in Western Asia attract migrants from furtherest afield.
Bulk of economic migrants moving between continents are not the poorest but those with some education and finance.
Largest regional flow of labour in the world is in Asia.
Over the past 25 years, more people have migrated from Asia to North America and Europe but also both the Gulf States and Tiger economies of south east Asia have become attractive destinations for those seeking employment.
Between 2005 and 2010 how many workers moved from South Asia to West Asia
5 million
What are remittances becoming
An increasingly important source of income for developing countries. Unlike FDI, remittances did not dip significantly during the global financial crisis of 2008-09 according to the World Development Indicators and World Bank Estimates
What is the global flow of people (as said by the circular diagram) in Southeast Asia
Balanced. There’s a lot of migration between countries within the regions. Outflows are largely of Filipinos and Vietnamese to the Middle East and North America
What is the global flow of people (as said by the circular diagram) Central American countries
Moving to the USA
What is the global flow of people (as said by the circular diagram) in sub-Saharan Africa
Much of the movement occurs between neighbouring countries
What is the global flow of people (as said by the circular diagram) in a South Asia and Western Asia
The largest inter-regional flow is between south and west Asia. Nearly 5 million have migrated from India, Pakistan and Bangladesh to the Gulf stages of Qatar, Bahrain, Saudi Arabia and the UAE
What are remittances sometimes referred to on maps
‘Rivers of gold’
What are the top ten remittance corridors in the world
United States -> Mexico. (22.2$bn) UAE -> India (13.8$bn) Hong Kong -> China (13.5$bn) United States -> China (12.2$bn) United States -> India (12$bn) United States -> Philippines (10.1$bn) Saudi Arabia -> India (5.3$bn) United States -> Vietnam (4.2$bn) Britain -> India (4.1$bn) Japan -> China (4.1$bn)
What is the international flow of products facilitated by (especially for developing countries)
By the reduction in costs of trade, which includes transaction, tariffs and transport and time costs
How have transaction costs been reduced
By the improvements in flows of data and the ease with which capital can be transferred to pay for transaction
How has transport and time costs been reduced
By the process of containerisation which has enabled more complex and long distance flows of products, as does air transport which can speed delivery and reduce costs of more valuable or perishable cargo.
What is the most obvious regulatory barriers to trade
Tariffs
What has encouraged the reduction of tariffs in global trade
The World Trade Organisation (WTO)
What is containerisation
A system of standardised transport that used large standard-size steel containers to transport goods. The containers can be transferred between ships, trains and lorries, enabling cheaper, efficient transport
What is protectionism
A deliberate policy by government to impose restrictions on trade in goods and services with other countries - usually done with the intention of protecting home-based industries from foreign competition
What is a tariff
A tax or duty placed on imported goods with the intention of making them more expensive to consumers so that they do not sell at a lower price than home-based goods - a strategy of protectionism
What are devices
Economic activities that are traded without the production of material goods, for example, financial or insurance services
What can the flow of services by divided into
High level services
Low level services
What is a high level service
Services to businesses such as finance, investment and advertising
What is a low level service
Services to consumers such as banking, travel and tourism, customer call centres or communication services
What do services such as banking, insurance and advertising depend on
Communication and the transfer of information
Why can services such as banking, insurance and advertising serve the needs of customers worldwide
Because they are footloose and can located anywhere and have advancing technology
Where have high-levels services been increasingly concentrated
In cities in the more developed world such as London, New York and Tokyo, which are the major centres of global industrial and financial control
Which other cities have become major global financial centres
Frankfurt.
Toronto.
Zurich.
With the empowerment of East Asian economies, Hong Kong, Singapore, Seoul and Shanghai also.
Where is the European Central Bank of the Eu Located
Frankfurt
Why has a growing number of transnational service conglomerates emerged
They are seeking to extend their influence on a global scale
Examples of transnational service conglomerates
HSBC Holdings in banking and financial services, Omnicom (US) in advertising and TUI Group (Germany) in travel and tourism
What has been a trend of the flow of services
The decentralisation or low level services from the developed to the developing world e.g call centre operations have moved from the UK to India where labour costs are generally 10-20% lower than in the Uk
What is a conglomerate
A collection of different companies or organisations which may be involved in different business activities but all report to one parent company - most transnational corporations are conglomerates
What are economies of scale
The cost advantages that result from the larger size, output or scale of an operation as savings are made by spreading the costs or by rationalising operations
What are flows of information government by
The movement of people through migration and by the speed of data and communication transfers.
What are examples of information flows
Transfer of cultural ideas, languages, industrial technology, design and business management support
Digitisation and satellite technology has transformed flows of information, what are they now supported by
Improvements to global telephone networks, making communication cheaper and easier.
Mobile telecommunication technology.
Email and the internet, which enables large amount of information to be exchanged instantly across the globe.
Live media coverage available on a global scale because of satellite technology.
What should the importance of information flows not be underestimated
Because of their contribution to the expansion of knowledge-intensive goods and services. These industries need the exchange of ideas and flows of expertise to flourish
Example of a knowledge-intensive good and service
Those which have an intensive research and development (R&D) component and use highly skilled and educated labour e.g high tech products such as semi-conductors, pharmaceuticals, computer technology and business services such as international law, accounting and engineering.
What is marketing
The process of promoting, advertising and selling products or services
What happens when a company becomes a global marketeer
It views the world a one single market.
creates products that fit the various regional marketplaces.
Usually develops a recognisable ‘brand’.
Employs one marketing strategy to advertise the product to customers all over the world.
What is the ultimate goal of global marketeers
To sell the same product, the same way, everywhere
What does having one marketing campaign on a global scale generate
Economies of scale for the organisation which reduces their costs
How much has the availability of manufacturing jobs in the UK declined by since 1980 to 2012
From around 6,000 to about 3,000 (around 50%) though decline has now steadied and productivity is rising again
Globalisation created a new international division of labour, what are the two recognisable groups
Highly skilled, highly paid, decision making, research and managerial occupations which, on a global scale, are largely concentrated in more developed countries.
The unskilled, poorly paid assembly occupations, which tend to be located in developing countries that have lower labour costs.
In the last 40 years, what has happened to many counties that were considered LIC
They have become newly industrialised counties (NICs) due to the simple division of labour undergoing radical changes
What have NEEs/NICs developed
Their own industrial and commercial bases and their own TNCs which have spread their wings globally
The pattern of newly emerging economies
Started with the four Asian ‘tiger’ economies of Hong Kong, Singapore, South Korea and Taiwan.
These were followed in succession by the BRIC economies (the most rapid and prominent being China)
And more recently the so-called MINT economies.
Development has come to these new ‘cores’, particularly south east Asia and Latin America.
In 1954, what percentage of manufacturing was concentrated in the industrialised economies of Western Europe, North America and Japan
95%
In 1954, where were the manufactured products largely consumed
In the countries of origin
Why has decentralisation occurred
As a result of foreign direct investment by transnational corporations (TNCS) into those developing countries able to take on manufacturing tasks at a competitive price.m
What has encouraged many TNCs to relocate the production side of their business abroad
Lower land and labour costs, as well as incentives offered by governments in developing counties
What is known as a global shift
The filtering down of manufacturing industry from developed countries to lower wage economies
What has the transfer of technology made by TNCs enabled
Counties in the developing world to increase their productivity, without raising their wage to the same level as developed dourness
Consequences of global shift
Decentralisation in the richer countries and a loss of jobs in the manufacturing sector
What percentage of manufacturing jobs are located in the developing world
more 50%
What percentage of exports from developing countries to the developed world are manufactured goods
60%
What are the factors that caused decline in manufacturing in developed counties
Global shift.
Outmoded production methods.
Products at the end of their life cycles.
Poor management.
Why are manufacturing jobs in developed countries starting to rise again after a steady decrease
Foreign TNCs invest in deindustrialised regions to try and reverse the trend of decline
What are the 5 factors that affect the location choice of entrepreneurs of some of the largest manufacturing companies
Lower costs.
Availability of skilled and educated workforce.
The opportunity to build new plant with the latest and most productive technology.
Government incentives in the form of tax breaks or enterprise zones to entice companies to invest and relocate.
Access to larger markets without tariff barriers, enabled through trade agreements.
What is a maquiladora
A manufacturing operation (plant or factory) located in free trade zones in Mexico. They import materials for assembly and then export the final product without any trade barriers
What is the most global manufacturing industry
The vehicle industry
Where is product consumption most predominant
The richer countries of the developed world
What is the pattern of manufactured goods trade
Products being manufactured in NEEs are largely exported to HICs (Countries in Europe, North America and Japan) but the pattern is changing
Example of a product manufactured in an NEE and exported to a HIC
Dyson, a U.K. Based vacuum cleaner manufacturer, moved the manufacture and assembly of its products to Malaysia but still sells the bulk of its vacuum cleaners in the Uk and Europe
Why is the pattern of manufactured goods trade changing
As NEEs develop, their populations are becoming more affluent and starting to demand similar consumer products to those being exported from their own counties.
Different patterns for distribution and consumption are likely to appear, where will there be a definite shift
From west to east as the centre of gravity of economic activity (consumption and production)
What do forecasts for the future patterns of distribution and consumption suggest
That consumption will drive trade patterns more than production location decisions and so the fastest growing trade route will be between India and China.
As Asia becomes more competitive a growing share of the regions export will be to other counties in Asia.
Western companies specialising in finance have enormous potential to benefit from the expansion of trade in financial services in the Asia-Pacific region.
How long has the breadth and depth of links between nations and trading groups been increasingly
30 years
Why have links between counties grown significantly
Because of the development of digital computer technology and particularly since the advent of the Internet, which has enabled speedy and 24/7 global communications.
The emergence of English as the accepted global language of business has also eroded barriers.
A number of other technologies, systems and relationships have evolved to support globalisation as well.
Why is ours a distinctively digital age
Due to there being few or no boundaries for the constant flow of days
How many mobile phone subscriptions are there in the world
7 billion
How many internet users are there globally
3 billion
What are the 10 factors that have combined to accelerate the pace of globalisation since the 1990s
Communications. Transport. Collapse of corporations. TNCs. Capital/ investment. Global marketing. Travel. Containerisation. Migration. Trade.
Why has an increase in communications accelerated the pace of globalisation
The increased availability of ICT and mobile phones and the Internet revolution.
Why has an increase in transport accelerated the pace of globalisation
There is faster transport by air, road and rail meaning you can cross borders much easier
Why has the collapse of communism accelerated the pace of globalisation
More counties are able to develop market economies
How has there been an increase in TNCs accelerated the pace of globalisation
Through mergers and expansions e.g PC world and Currys.
Why has an increase in capital/investment accelerated the pace of globalisation
Through the increasingly capital mobility
Why has an increase in global marketing accelerated the pace of globalisation
There’s been a rise in the significance of global ‘brands’ like McDonald’s
Why has an increase in travel accelerated the pace of globalisation
There’s an increased business, personal and tourism travel which spread cultures more widely
Why has an increase in containerisation accelerated the pace of globalisation
As vast quantities can be shipped globally at a low cost there’s an ease of transporting the goods
Why has an increase in migration accelerated the pace of globalisation
Ideas and information can be spread via people
Why has an increase in trade accelerated the pace of globalisation
The role of the WTO has been to increase free trade and trading groups like EU and NAFTA
What does footloose mean
Describes an activity, such as an industry, that can be placed at any location without having to consider factors such as raw materials and transport
What is one of the economic objectives of most governments
To increase exports from their country
What will governments at a national level have
Trade departments whose function will be to ease and facilitate exports
Example of a national governments trade department and its function
The UKs government have the UK trade and Investment (UKTI) department. They offer support and advice on all aspects of trade to encourage businesses, especially first-time exporters to trade their goods overseas
In some larger developing counties with less developed infrastructure like Pakistan, what are exporters encouraged by governments to use
Dry ports, located inland and nearer to their business
What do dry ports do
Save the exporter time and transport costs as all shipment arrangements and customs documentation are completed locally before the goods are shipped to a seaport such as Karachi
In the past what was trade hindered by
Problems in exchanging finance for goods and exchange rate concerns
What did deregulation of financial markets allow
Arrangements for the removal or relaxing by governments of barriers to the movement of finance
What has allowed for the removal or relaxing by governments of barriers to the movement of finance
Deregulation of financial markets.
Communications technology has also removed these concerns and made international trading easier and faster, even for smaller enterprises.
What has high-speed electronic trading systems and global exchange connectivity meant that
Financial transactions between importers and exporters can be completely quickly and securely
What is a cartographic representation map
One where, for example, the numbers of people with Internet access globally and are in proportion within each nation
What transport techniques have been used to help ease internationals trade
Increased size of aircraft; integrated air traffic networks.
Growth of low-cost airlines and air freight companies.
The use of standardised containers - by sea, rail, road and air.
Handling and distribution efficiencies.
Computerised logistics systems.
High speed rail networks
What security issues does the trading community face
Supply chain security, crime and anti-terrorism, food and bio-security, fiscal and anti-smuggling
Example of an initiative that has been introduced to alleviate security threats in trading communities
The World Customs Organisation (WCO) and more regionalised measures such as an EU initiative to introduce a ‘secure operator’ quality label, awarded to operators meeting EU minimum standards of security
Why do governments feel they cannot leave the trade ‘stable door’ open
In response to terrorist incidents of recent years
What have security measures on trade as a result of terrorist incidents done
Tightened up security for the benefit of business and have in some way facilitated trade, arguably though their piecemeal introduction and lack of cohesion have had the opposite effect, by increasing costs and creating delays for the shipment of goods.
What has the evolution of improved transport and communication systems led to
A production revolution which has transformed how companies manufacture products and distribute them worldwide.
What do new processes of high volume production enable
Substantial economies of scale (cost reductions) on a global level
To benefit from the cost advantages of new processes of high volume production, what do globally minded companies have to invest in
Large production and assembly plants capable of exploiting technology’s economies of scale (for example, robotics in the automotive industry).
Global marketing and distribution networks to ensure that sales keep pace with the increase in production.
Globally capable management.
What are organised within global value chains
investments in international production, distribution and management
What is a global value chain
Where different stages of the production process are located across different countries
What does the global production network of any internationals organisation cover
The spatial inter-relationships necessary to support worldwide flows of information, raw materials, components, sub-assembled parts and finished products.
Why do corporations in different industries and economies sectors organise their global production networks in different ways
In order to gain and maintain a competitive edge
What is the production network of the flash fashion industry
It is reliant on sufficiently fast transport from a cluster of suppliers (mainly Asia) to enjoy the short lead times necessary to be present in geographically disparate markets
What is the production network of computer manufacturers like apple and dell
They both coordinate a production network that spans the Americas, Europe and Asia, and are reliant on outside suppliers for various components and peripherals.
What is the production network of the automotive industry
Relies on components or sub-assembled parts arriving simultaneously for final assembly in large-scale production plants. E.g Renault still builds most of its vehicles in France buy each vehicle has thousands of comprehend supplied from all over the world, such as the batteries for the electric-powered Renault Zoe, which are supplied by a Korean Manufacturer.
What has the remote management of production and distribution lines been enabled by
Information technology.
Internet giving businesses: virtually free telecommunications and video conferencing.
Integrated ICT management systems that facilitate greater visibility of shipment control at each stage of passage.
What are integrated ICT management systems usually supplied by
Third-party service providers such as GT Nexus, Wang and Unisys
What do ‘just-in-time’ (JIT) technology and lead production management mean
Greater efficiency in the supply chain for manufacturers, ensuring that the correct supply of components arrives when they are needed and costs are cut by reducing the quantities of goods and materials held in stock.
What is the principle underlying JIT technology
That production is ‘pulled through’ by specific customer orders, rather than ‘pushed through’ to build up stock.
What 4 things are involved in JIT
Producing and delivering finished goods ‘just in time’ to be sold.
Sub-assembled goods ‘just in time’ to be assembled into finished goods.
Parts ‘just in time’ to produce sub-assembled goods.
Materials ‘Just in time’ to be made into parts.
What 3 things have systems that are designed to enabled remote management and increase cost efficiency led to
A spatial separation between higher-order business activities (such as research and development, design and engineering, marketing and advertising) which are based at corporation headquarters and stratum hubs around the world and lower-order accursed (such as production and assembly) which are based either at low production-cost locations or in proximity to large markets for the finished goods.
Global corporations increasingly focusing on a few key strategic activities and extensively outsourcing non-strategic activity.
Rapid growth of the logistics and distribution ‘solution’ industry, increased competitiveness between service providers within this industry and the rise of logistics as a profession.
Since when have trade agreements been formed
The 1950s
Why do counties join together to form trade blocs
In order to stimulate trade between themselves and to gain economic benefits from co-operation
What forms can trade groupings take
Free trade areas.
Custom unions.
Common markets.
Economic or monetary unions such as the European Union (EU)
What is the ‘Eurozone’
The monetary union of the EU where there is a common currency - the Euro
How is the UK a member of the EU
Economically and politically but not monetarily
How are trade blocs not exclusive
Many other regional agreements exist and some overlap as many states are members of more than one agreement
What do trade agreements usually allow
Free trade between group members in a free trade area as trade barriers are eliminated among the participating stages. However common external tariffs or trade restrictions will exist around the group member states
Example of a trade agreement that is not regionally based
The Organisation of Petroleum Exporting Countries (OPEC). Its made up of members mainly from the Middle East but also from South America and Africa. Its focus is on he trade of oil globally, which is the single most important traded commodity.
On a global scale, what are three advantages to nations which group together as trading entities
Improved global peace and security and reduce conflict.
To increase global trade and co-operation on trade issues.
To help members develop their economies and standard of living.
Regionally, what are eleven advantages to nations which group together as trading entities
To compete on a global level with other trading entities.
To have a bigger representation in world affairs.
To allow freedom of movement of trade.
To allow people seeking work to move between countries more easily.
To negotiate trade advantages as a group with other groups.
Possibility of developing a common currency to prevent currency fluctuations and simply transactions.
Support particular sectors of a national economy (for example, agriculture within the EU)
To share technological advances.
To raise standards in education and healthcare across the region.
To spread democracy, human rights and possible political and legal intergration (the EU)
For remote regions or declining industrial regions to receive support from the larger organisation.
Example of remote regions or declining industrial regions receiving support from the larger organisation.
The EU Regional Fund helps regions such as southern Italy and Western Ireland
Why can a number of disadvrages of trade agreements arise
Because they lead to more economic, social and political integration
4 disadvantages of trade agreements
Some loss of sovereignty - decisions are centralised by what some see as an undemocratic bureaucracy.
Some loss of financial controls to a central authority such as a bank.
Pressure to adopt central legislation.
Certain economic sectors are damaged by having to share resources.
Example of some loss of financial controls to a central authority such as a Bank because of trade agreements
European Central Bank, overseas monetary policy in the Eurozone
Example of Pressure to adopt central legislation because of trade agreements
In Europe, Bosnian ruling in soccer transfers, food standards and labelling
Example of certain economic sectors are damaged by having to share resources because of trade agreement
The Uk sharing its traditional fishing groups with other EU nations such as Spain and France
How can trade deals be assessed
By looking at how successful they are in reducing barriers such as tariffs
In 2011 what did the rich Organisation for Economic Co-orperation and Devlelopment (OECD) group do
Studied 55 regional trade agreements to discover if barriers to agricultural produce were lowered.
Deals between rich and emerging economies has lifted the number of goods that are traded duty-free from 68% to 87% over the previous 10 years.
In duty-free deals between emerging economies the proportion had advanced from 28% to 92% which demonstrates that regional trade agreements can lower these barriers.
What are the major trade blocs
NAFTA - North America free trade Agreement.
MERCOSUR.
EU - European Union.
ASEAN (AFTA) - Asian Free Trade Area.
What countries are in NAFTA
Canada, Mexico, USA
What countries are in MERCOSUR
Formed in 1991.
Argentina, Bolivia, Brazil, Ecuador, Paraguay, Peru, Urguay, Venezuela (Bolivia and Equador are associates awaiting full membership)
What counties are in the EU
Australia, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmarks, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Solvenia, Spain, Sweden and the U.K. (Brexit)
28 countries, 19 in the Eurozone
Which countries are in ASEAN (AFTA)
Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam
What are the smaller trade groups of developed countries
EFTA - European Free trade Association.
Which counties are in EFTA
Iceland, Liechtenstein, Norway, Switzerland
What are the smaller trade groups of developing counties
Pacific Alliance.
CARICOM.
UEMOA - west African economies and monetary union.
SADC - South African development committee.
Which counties are in the Pacific Alliance
Formed in 2011.
Chile, Columbia, Mexico, Peru (Costa Rica, Panama, Guatemala have applied to join)
Which counties are in CARICOM
Caribbean community : 20 countries
Which counties are in UEMOA
Benin, Burkina Faso, cote de d’lvoire, Mali, Niger, Senegal, Togo
What countries are in SADC
Angola, Botswana, Dem. Rep. Of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mazambique, Nambia, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe.
What is a loose knit trade group
SAARC - South Asian Association for Regional Co-operation
Which counties are in SAARC
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
Example of OPEC counties
Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezula
2 in South America, 4 in Africa, 3 in Asia.
What does the global distribution of major trade blocs look like
See Hodder page 293
What does the core/periphery model show
The salient flows of more between richer areas and emerging markets in the ‘periphery’. These flows assist emerging economies to develop, reduce disparities between the core and the periphery and ‘lubricate’ the worlds economy. It provides some good examples of economic interdependence.
What does the Frank and Wallerstein core-periphery model assume of global power
It is concentrated in the hands of the relatively small block of developed nations (the core regions)
What are periphery regions
Countries seen as less developed, exploited and suffering from lack of investment, outmigration and leakage
What are the flows of finance and capital from the core regions to periphery regions
Remittance payments.
Foreign direct investment, especially into large emerging markets.
Capital flows of foreign aid; bilateral/UN aid.
What are the flows of finance and capital from periphery regions to core regions
Labour and migration.
Repatriation of TNC profits.
What are the flows of finance and capital from core regions to IMF and the World Bank
Many counties fund the International Monetary Fund and world bank through loans
What are the flows of finance and capital from IMF to core regions
Repayment of loans
What are the flows of finance and capital from periphery regions to IMF and World Bank
Loan repayment
What are the flows of finance and capital from IMF to periphery regions
Loans to stabilise economies.
Low interest loads to LDCs.
What are the flows of finance and capital from world bank to periphery regions
Development loans.
Disaster relief loans.
What is foreign direct investment (FDI)
Investment made mainly by TNCs (occasionally by the government) based in one country, into the physical capital or assets of foreign enterprises
How may the investing company in FDIs make its investments
By setting up a subsidiary company, by acquiring shares or through merger or joint venture, by opening a new branch of their business or investing in local infrastructure
What is repatriation of profits
TNCS investing in overseas production will normally take any profit made from that investment back to their home country headquarters. This is sometimes called an economic leakage. The majority of these flows return to companies in richer countries
What is AID
Important source of financial support for poor countries, it can take many forms
What provides aid
Can be provided through the UN (multilateral) from contributions made by a number of richer countries (sometimes known as Official development assistance (ODA)
can be provided bilaterally from one government to another, usually with mutual co-operations applied.
Can also be supplied in the form of technology and expertise via NGOS or as food and relief during times of disaster.
What is the impact on the country of origin because of migration
Exacerbates disparities as the less developed nations lose their most skilled and talented labour, who will pay taxes and spend much of their earnings in their destination country (although they habitually send remittances back to their origin country)
What is remittance payment
These are transfers of money made by foreign workers to families in their homes. They have become the second most important source of income in developing countries, above international aid but below FDIs
Which country receives the most remittance payments from their diaspora
India
What do global systems reflect
The increased economic, political, social and environmental interdependence that exist in the contemporary world
What are most global systems supported by
International political organisations which have been established to provide stability or consensus across nations
Which two global institutions is the global financial system largely facilitated by
The World Bank and the International Monetary Fund (IMF)
What does the World Trade Organisation (WTO) oversee
international trade and access to markets
What has led to more international summits and establishment of support structure such as the Intergovernmental Panel on Climate Change (IPCC)
Concerns about the global environment
What have global systems and supporting organisations helped to do
Improve co-operation, stability and development
What are some limitations of global systems
They are often still led by the more powerful nations with vested interests, chasing them to steer and influence the pattern of change for their own advantage. This can lead to increased inequality, conflict and injustice as less developed nations are limited in how they are able to respond.
What does the IMF and world bank do
Support the structure of the worlds economic and financial order
What is the role of international financial institutions like the world bank and IMF
By regulating and acting as intermediaries in the flow of international capital to support the structure of the worlds economic and financial order
When were international financial instructions established
At the end of the Second World War
Why were international financial institutions established
In an attempt to steady the global economy and provide financial stability
What does the IMF act as
A Regulator of financial flows and stabiliser of the system
What does the World Bank act as
A provider to support for less developed countries and aims to reduce poverty
What are the 5characteristics of the IMF
Oversees the global financial system.
Offers financial and technical assistance to its members.
Provides loans if it will prevent a global economic crisis - last resort.
Has a total of 2,300 staff from 185 member countries and always elects a European managing director.
5 Characteristics of World Bank
Promote economic development in developing countries.
Provides long term investment loans to reduce poverty.
Encourages start up private enterprises in developing countries.
Acquired financial resources by borrowing.
Is a larger organisation witty 7000 staff from 185 countries and always has an American president.
Why was the World Bank critiqued
For funding major ‘top down’ projects like a large multi-purpose dan to provide Hydro-electric power in less developed counties, which did not reduce poverty
Since the 1990s, What has the World Bank tried to do
Support more ‘bottom up’ sustainable development projects
What is a bottom up approach
When local people are consulted and supported in making decisions to undertake projects or developments that meet one or more of their specific needs
What is a top down approach
When the decision to undertake projects or developments is made by a central authority such as the government with little or no consultation with the local people whom it will affect
What does the world trade organisation deal with
The global rules of trade between nations. It is the global institution responsible for international trade
What are 4 roles of the WTOs
To supervise and liberalise trade by reducing barriers.
To act as an arbitrator sorting out trade problems between member governments.
To negotiate to reach agreements that become legal ground rules for international commerce.
To provide stability by giving trading nations confidence that there will be no sudden policy change
When was the WTO first established and why
1995, it is the successor to the General Agreement on Tariffs and Trade (GATT)
4 characteristics of the WTO
Over 160 members.
Over 3/4 of these are developing or least-developing countries.
The WTO is run by its members and all decisions are taken by consensus.
The WTO holds a series of ‘rounds’ of talks on particular issues like the Doha Talks.
What is interdependence
Countries relying on each other
What are the Doha Talks
Most recent round of WTO talks starting in 2001 in Qatar’s capital. They talk of issues of reforming trade in agricultural produce, especially between advanced and developing economies. Talks on these issues continued at the Doha Round in Geneva in 2008.
What were the hopes for the Doha Talks in Geneva (2008)
Tariffs could be reduced by 30%.
A reduction could be made in subsidies paid to produce farm products.
By richer, developed countries adhering to these reductions, it would mean:
A benefit in trade for developing countries.
Reduced prices of food for consumers in HICs.
Fairer process for farmers in emerging economies.
What were the three problems with the Doha Talks
The USA, EU and Japan insisted that, in return for them agreeing to the criteria, the larger trading nations of developing economies (Brazil China and India) would open their markets to western manufactured goods. This led to dispute.
Emerging nations insisted on larger cuts in farm subsidies and tariffs paid to protect farmers in the USA and EU.
The Doha Trade talks eventually collapsed in Geneva because of disagreement, mainly between the USA, China and India who would not compromise on the size of Tariffs.
(Since then further efforts to reach an agreement have stalled)
In the Doha Trade Talks why would they not compromise on the size of Tariffs
USA would not allow China to use ‘safeguard clause’ which allowed developing nations to improve emergency quotas on importants
What were the successes of the Doha Talks
A year in Geneva a separate agreement was reached between EU and Latin America about the trade of bananas. This bilateral agreement gave a little more hope that the Doha Round might be re-invigorated.
Further success achieved in 2013 in Bali:
Multilateral trade agreement called the ‘Bali Package’.
159 WTO members agreed on a ‘trade facilitation’ deal to primarily speed up the movement of traded goods to reduce costs by removing red tape in customs procedures.
What did Successs in the Doha Talks in Bali give
Hope that multilateral agreement as achievable
Why is there still disagreements on trade in agricultural produce between richer nations and emerging economies
The former is unwilling to compromise on tariffs they impose on imports nor on the subsidies they offer to domestic producers
What is a bilateral agreement
An agreement on trade or aid negotiated between two countries or two groups of countries
What is a common markets
A group formed by countries in geographical proximity in which trade barriers for goods and services are eliminated (this may eventually apply to removing any labour market restrictions, as in the EU)
What is a customs union
A trade bloc allowing free trade between member states with a common external tariff to trading countries outside the bloc e.g EU
What is a multilateral agreement
An agreement negotiated between more than 2 countries or groups of countries at the same time
How is there unequal flows in global systems
The main flows of workers are, predictably, from developing countries towards wealthier regions
4 positive effects of labour movement
Reduced unemployment where there is a lack of work - opportunities to seek work elsewhere.
Reduced geographical inequality between workers (for example, Eastern Europeans working UK)
Addresses important skill and labour shortages (for example the UK has recruited nurses from the Far East)
Some workers return to their country of origin with new skills and new ideas.
4 negative effects of labour movement
Countries find it difficult to retain their best talent - attracted away by higher wages ‘brain Drain’.
Loss of skilled workers causes a training gap.
Outsourcing of production from high-wage economies causes unemployment in more developed countries.
With greater movement of labour there is a greater risk of disease pandemics.
What is outsourcing
A cost saving strategy used by companies who arrange for goods or services to be produced or provided by other companies, usually at a location where costs are lower - ultimately it provides jobs and investment in one country but often takes them away from another.
What is the practice of outsourcing largely
One directional - taking manufacturing or service jobs from high wage economies in Europe and North America and having them undertaken by a sub-contracting organisation in a lower wage economy such as China.
What are the 3 negative consequences of outsourcing
Loss of jobs
De-industrialisation
Structural unemployment
What is the de-multiplier effect
Loss of jobs has a knock on effect in communities, especially where one larger employer has outsourced. Unemployment means there is less spending in the local economy, so shop workers, lose their jobs and services close down
How is de-industrialisation a consequence of outsourcing
The closure of manufacturing companies because of outsourcing eventually leads to the closure of local suppliers. Areas go into decline with derelict factories etc
How is structural unemployment a consequence of outsourcing
The skill set of local workers is no longer compatible as the jobs they trained for have now moved abroad. They are often ill-equipped for the new types of work that enter their local economy. They need to be retrained and it may take a generation before a new work force with the skills required for the local economy emerges.
What is usually needed to retrain workers
High investment from government
In theory, what should globalisation increase
Prosperity for all and make the planet more equal in terms of income distribution
What are the two measures of inequality to consider with globalisation
The difference between richer countries and low income countries and whether the difference between the two is increasing or decreasing.
The inequality in income that exists within each country and how this is being affected by globalisation.
How is globalisation reducing inequality
Through the transfer of capital and income from richer to poorer economies
How is globalisation increasing inequality
It may be increasing inequality within countries as richer members of societies cope better with the change in jobs and technology
What is closing the gap between developing countries and rich-world countries
Communication and transport increase the integration of economies, the development continuum has become more condensed
Where are the fastest growing economies
Asia although countries in sub-Saharan Africa have a large gap to make up in living standards, their economies are now growing more quickly than most developed economies
Between 1985 and 2014, have much did the GDP per capita for the USA increase by
X3
Between 1985 and 2014, have much did the GDP per capita for the UK increase by
X4.3
Between 1985 and 2014, have much did the GDP per capita for Japan
X3.2
Between 1985 and 2014, have much did the GDP per capita for Brazil increase by
X7.1
Between 1985 and 2014, have much did the GDP per capita for China increase by
X25.9
Between 1985 and 2014, have much did the GDP per capita for India
X5.4
Between 1985 and 2014, have much did the GDP per capita for Nigeria increase by
X9.2
What is the percentage economic growth rate, 2014 for the USA
3.2% which is expanding above the trend of developing countries having an increasing GDP
What is the USAs economic growth rate driven by
Ultra accommodative monetary policy, consumer and business spending, housing recovery, boost to consumption from lower oil prices
What is the percentage economic growth rate, 2014 of Japan
1.8%
In Japan, what did the delay of consumption tax in 2017 remove
Importance obstacle to growth
What is the percentage economic growth rate, 2014 for China
7%
What does China remain a key driver for global growth
It has a 7% growth of economic rate - higher than all others - even though it is a gradual slowdown as economic rebalancing progresses
What is the percentage economic growth rate, 2014 for the UK
2.5%
What provides support for the percentage economic growth rate for the Euzozone accelerating gradually, but remaining subdued with the recovery weak and uneven
Cheap oil, weaker euro, better credit conditions and a committed ECB provide support
What measures levels or inequity or income distribution within a country
The Gino co-efficient/ index
What is the Gini co-efficient
A measurement of internal disparities of wealth that is between 0 and 1 - zero would mean everyone in a place had the exact same income (perfect equality) But the closer a country is to 1, the greater the inequality
Which countries are usually more unequal than rich ones
South Africa
What is the Gini Index for South Africa
0.60 (pretty unequal)
What is the Gini coefficient based on
A Lorenz curve, which shows how much of a country’s income is received by various percentages of the population
How to work of the Gini coeffecient
It is the ratio of the area between the line of complete equity and the Lorenz curve to the area of the triangle between the line of complete equality and the axes.
A/(A + B) (where a is between the two lines and B is underneath the Lorenz curve)
What does the Gini index show within many developing economies
Inequality has worsened
What did Sub-Saharan Africa’s Gini index rise by between 1993-2008
9%
What did China’s Gini index rise by in the last 20 years
34%
Where do the majority of people live
In countries where income disparities are larger than they were a generation ago
Main exception to the trend of an increasing Gini index
Latin America, which was previously the most unequal continent, has seen a fallen Gini co-efficient in the past 10 years
Why does the general increase in inequality not just apply to developing regions
Many counties including Britain, Canada and even egalitarian Sweden, have seen a rise in the share of national income taken by the 1%
Globally, the numbers of wealthy people have increased significantly. What is the cause
It is a part of a much broader rise in disparities
What is the paradox of inequality increasing while there also being a rise in the share of national income caused by
Outsourcing
Investment
How does outsourcing cause the paradox of inequality increasing while there also being a rise in the share of national income
TNCs based in developing countries often employ skilled workers and pay high wages. A report from the OECD found that average wages paid by foreign transnational are 40% higher than wages by local firms. By contrast, unskilled areas (particularly in rural areas) tend not to have such opportunities leading to inequality
How does investment cause the paradox of increasing inequality while there also being a rise in the share of national income
Those with some money to begin with will gain from investment and benefit more from growth, whereas those with no money stay rooted in poverty. Only wish further development will equality increase.
What does a sense of the world as one community allow governments to do
Work together on common goals as globalisation leads to greater political stability
Who outlined the idea of the ‘Golden Arches Theory of Conflict’
Thomas Friedman - US writer on globalisation
What is the Golden Arches Theory of Conflict
‘No two countries that both have McDonald’s have found a war against each other since each got its mcdonalds’.
The theory has been disproved on a number of occasions but it makes a legitimate point about economic integration decreasing the likelihood of armed conflict between countries
What are some causes of conflict
Shortage of water, food and energy resources bought about by global growth may lead to conflict between nations in some regions
How has globalisation not brought equal prosperity to all
Some groups may feel a sense of injustice or ideological opposition to the richer nations driving the process, this may give rise to civil conflict within countries and rapid global communications can hasten the spread of such conflicts
Example of conflict spreading
‘The Arab Spring’ sparked in Tunisia in 2010 but quickly spread across North Africa and the Middle East
What can trade be used as a ‘weapon’ in conflict between
Nations or between trade blocs
Example of trade becoming a ‘weapon’ in conflict
In 20”6, the UN Security Council imposed trade sanctions against Iran because of its refusal to suspend its uranium enrichment nuclear programme. This severally harmed Iran’s integration into the world economy until it was recently resolved. Russians supposed backing of separatists in Ukraine has brought sanctions against them from the EU and the USA.
What do analysts argue of the ongoing political battle between Russia and the West
It is a feature of increased ‘nationalism’ that is actually slowing down globalisation
What is international trade
The import and export of goods and services between countries
Why is international trade inevitable
Since no country has everything it needs and materials and resources are unevenly distributed
What do most economists and geographers agree on
That nations are better off when they buy and sell from one another
What is the theory behind comparative advantage
It suggests that countries should specialise in providing goods and services that they excel at producing. They trade these for things they are not good at producing. It is easier to make these exchanges if there are fewer barriers. So in theory, production should increase in each country, and globally, because each country is doing what they do best.
Why do most nations trade
Because of the notion of comparative advantage
When is it easier to trade
When there are fewer barriers
Why is comparative advantage good for both parties involved
The foreigner producer is able to sell more and make increased profits and the consumer has access to products that might not be available domestically or better meet their needs.
What is bad about the theory behind comparative advantage
It is only a theory production and real trade is more complex
How is international trade contentious (controversial)
Aas foreign products might be bought in cheaply but the (more costly) domestic seller loses a sale
Why do counties exert their political and economic power globally
To ensure that they gain a sale from foreign trade whilst other counties lose out
Why did trade remain limited for much of the 20th century
Becsuse of regulations, protectionism and high transportation costs
What is a barrier to trade
A government-imposed restraint on the flow of international goods or services, they can be used as protectionist straggles or as a means to affect diplomatic relations
What is the most common barrier to trade
A tariff - a tax on imports
What has free trade eroded
The practice of protectionism
Why do governments in developed and developing counties impose free trade
To protect their established or emerging industries
Besides tariffs, what are the 5 barriers to trade
Import license Import quotas Subsidies Voluntary expose restraints Embargoes Trade restrictions
What is an import license
License issued by a national government authorising the importation of goods from a specific source
What are import quotas
Set a physical limit on the quantity of goods that can be imported into the country
What is a subsidies
Grants or allowances usually awarded to domestic producers to reduce their costs and make them more competitive against imported goods (export subsidies are also used by the government to encourage domestic producers to sell their goods abroad)
What is a voluntary export restraint
A diplomatic strategy offered by the exporting country to appease the importing country and deter it from imposing trade barriers
What are embargoes
Involves the partial or complete prohibition of commerce and trade with a particular country. They are usually put into practice for political rather than commercial reasons
What are trade restrictions
Other import restrictions may be based on technical or regulatory obstacles such as the quality standards of goods being imported or how they are produced e.g the EU attempts to put restrictions on the imports of goods knowingly produced using child labour
When did the value and volume of trade start to increase dramatically
Since WW2
What is international trade (exports) expanding faster than
The worlds economic output (measured by GDP)
What is not yet a reality about free trade
The idyll of it breaking down barriers between counties at different stages of developing
Example of how global systems provide greater opportunity for international conflict
Global trade in arms sales or the increasing use of social media to influence the status quo
In a global war, what makes international trade difficult
Increased risk and cost as components and raw materials may become in short supply.
What would the knock on effects of global war
Increased risks and costs make international trade difficult.
Components and raw materials may become in short supply.
The devastating effects on the economies of individual counties.
Businesses that rely on international trade would not supply and those that do not support regional or international war risk losing business.
What do the causes of conflict not always follow
Logic/reason
What are the advantages of international trade
Comparative advantage. Economies of scale. Purchasing power. Fewer domestic monopolies. Transfer of technology. Increased employment.
In a nutshell, what is comparative advantage
A country specialises in producing only those goods that can be produced efficiently and at the lowest opportunity cost (e.g the Unbrella city) w
How is economies of scale an advantage of international trade
Producing a narrowing range of goods and services means that a country can produce in higher volumes and at a cheaper cost per item/unit
How is purchasing power an advantage of international trade
Increasing trade results in increased competition that lowers prices and allows consumers to be able to buy more for their money
How are fewer domestic monopolies an advantage of international trade
Domestic prices may be kept high when a single firm controls a large proportion of the domestic market (25% or greater), as there is less competition. Imports from overseas competitors help to lessen this effect
How are transfers in technology an advantage of international trade
Application of new technologies is incentivised as this may lead to design improvements and cost savings as well as supporting innovation and enterprise.
How is increased employment an advantage of international trade
Increased production for export is likely to result in increased employment. In turn, as a result of the multiplier effect, more jobs will be created across the whole economy.
What are the 6 disadvantages of international trade
Over-specialisation
Product dumping
Stunted growth or decline of local and emerging industries
Protectionism and tariffs
De-skilling
Exploitative and labour-intensive industries
How is ‘over-specialisation’ a disadvantage of international trade
If demand falls or if the same goods can be produced more cheaply overseas, then production needs to shift to other products. Specialised production centres tend to be less flexible and less able to diversify e.g single commodity economy - ‘banana republic’ in the Caribbean
What is a ‘Banana republic’
Describes a political unstable country with an economy dependant on the exportation of a limited resource like bananas
How is ‘product dumping’ a disadvantage of international trade
Profit lines can be dangerous tight, even to the point where goods are sold at a potential loss. Dumping refers to exporting at a price that is lower in the foreign market than the price charged domestically
How is ‘stunted growth or decline of local and emerging industries’ a disadvantage of international trade
New home-grown industries may find it difficult to grow and become established when faced with existing foreign competition, where costs are lower
How is ‘protectionism and tariffs’ a disadvantage of international trade
A country/ government may protect important domestic industries by imposing additional taxes and tariffs on imported goods and/ or encouraging exports
How is ‘de-skilling’ a disadvantage of international trade
Traditional skills and crafts may be lost when production technology replaces manpower. So-called ‘screwdriver jobs’ may dominate
How is ‘exploitative and labour-intensive industries’ a disadvantage of international trade
The biggest cost for most industries is labour; this is particularly true for consumers manufacturing industries. By squeezing this cost, even if working conditions are compromised, profit can be maximised
What does globalisation affect the volume and pattern of
International trade and investment
How much has the volume of global trade increased by since 1980s
Dramatically, the value increased 8 times between 1980 and 2008
Why did regional trade agreements emerge (RTA)
With an increase in the mobility of factors of production, especially capital because of free market ideas at the end of the 20th century which saw a push to remove existing barriers to international trade
Due to the emergence of RTAs what was trade framework strengthened by
The general agreement on Tariffs and Trade (GATT) (1947)
In 1995, what was GATT removed by
The World Trade Organisation (WTO) which confined the work of gradually lowering trade barriers to international with free trade as its aim
What has happened to average trade tariffs after the emergence of the WTO
They have shrunk
What has world trade increased at a faster rate than and what has happened to the flow of product
Global economic growth and the flow of most products have eased
What has happened as a result of the global economic crisis of 2008-09
Global agreements have become increasingly difficult to reach.
International trade flows are still expanding but at a slower rate.
What usually happens to trade during major recessions
It stalls which can cause a setback to economic aspects of globalisation
What is protectionism
Some countries limit trade using tariffs and non-tariff barriers to shield their industries from forming competition
What is free trade
The removal of barriers to international trade
Why was the WTO set up
To increase trade and help resolve trade disputes between member countries
What are the four 4 rules that the WTO set about how countries should trade with each other
- Countries can’t give another country special access to their market without doing the same for every other country in the world. However, there are exceptions e.g counties can give special access to members of their trade bloc.
- Counties should promote free trade e.g by removing as many barriers to trade as possible.
- Countries should act predictably in their trading e.g by not raising tariffs on particular products once a deal has been reached.
- There should be fair competition - one company or country shouldn’t get an unfair advantage over rivals
What is happening to the pattern of international trade
It is changing
Which counties remain the biggest global traders
Developed countries e.g the G7 counties
Which counties are a part of G7
USA Germany Japan U.K. Canada Italy France
What percentage of trade do the G7 account for
Nearly 50%
What is the dominance of developed countries being the biggest global traders being challenged by
Emerging economies - which account for a growing share with China accounting for the largest growth
When did China overtake Japan as the leading Asian exporter
2004
When did China join the WTO
2001
When did China overtake the USA as the worlds leading exporter
2007
When did China overtake Germany as the worlds leading exporter
2009
What is trans-Pacific trade growing faster than
Trans-Atlantic trade
What is the pattern of international trade for LICs
They are becoming bigger traders, but growth is slow.
Between 1993 and 2013, what happened to the share of BRICs countries’ exports in world trade
It increased markedly
In 2010, what percentage of world trade did African counties account for
3%
In 1995, what percentage of world trade did African counties account for
2%
What percentage of global trade do the 49 poorest countries account for
0.4%
What percentage of the population do the 49 poorest counties account for
10%
What are the differences in global trade exaggerated by
The type and limited range of exports from LICS
What products tend to dominate LICS trade
Low value primary products such as crops or raw materials.
What are the issues of single product economies
They are vulnerable to market price fluctuations and may have limited options for generating other sources of friend income if a natural disaster strikes or if tastes and fashions chance
What is the forecast for 2020 and the pattern of global trade
World trade in goods will total US$36 trillion and services US$6 trillion.
Intra-regional trade within Europe will be worth more than Asian intra-regional trade despite the more rapid growth of the later.
Asia-Pacific region will experience the fastest growth in global trade.
Some growth in sub-Saharan African countries as they develop and possibly become points of the assembly of finished goods.
Europe will be the most important market for sub-Sahar’s exports.
Machinery and transport sector, including consumer electrical products, will make the largest contribution to trade.
What is FDI an important source of funding for
Development in all counties, especially the least developed economies wanting to catch up.
What makes it difficult to ‘jumpstart’ economic growth in a country
Without an injection of capital
What are the four main attractions that pull in investment
Size of the market (how many people they can sell to)
Stability of the market.
Plentiful natural resources.
Ability to accessed financial services.
How much has the volume of FDI risen by from 1996 to 2016
From about $400 billion to nearly $1500 billion, but the distribution is far from equal
What does FDI largely mirror
The changes in world trade e.g while China was the worlds largest recipient of FDI in 2014, Singapore and Brazil were ranked 4th and 5th. FDI flows do developed countries as a whole dropped by 14% compared to 2013, mirroring the small but significant shift in world trade from HICs to LICS.
How has the pattern of investment changed over time
Until the 1980s developed countries many invested in other developed countries. Since then, developed countries have begun to invest more in emerging economies and developing counties
Pattern of investment for emerging economies
They now invest heavily in developing counties e.g China now invests a lot of money in counties in Africa and South America
What are the two categories that countries with the greatest share of FDI as a proportion of their national income fall into
Counties known for natural resource development - like Mongolis. These have attracted investment from large mining corporations.
Countries known for financial business services - like Singapore.
What is fair trade
A social movement whose goal is to help producers in developing countries achieve begged trading conditions and to promote stability, the movement focuses mainly on agricultural based products but goods may also include handicrafts of valuable materials like gold
What is the trade of fair trade products traditionally
Products exported from developing countries to richer nations
What do fair trade supporters argue
That those producing the commodities do not get an equitable deal from the organisations they supply the produce to. These may be TNCs,C food processing companies or buyers from supermarkets in developed counties.
Why are buyers able to force down the prices of individual suppliers
Because suppliers have little market influence and are extremely reliant on the income from their goods
What do members of the fair trade movement advocate
The payment of higher prices to producers, as well as helping them to achieve improved social and environmental standards.
What do international fair trade organisations do
They organise producers into cooperatives to combat their produce. This gives them more influence in governing market conditions and the power to negotiate bigger deals with buyers or to supply direct.
What mark signifies to ‘ethical consumers’ that a product in fair trade
The Fair Trade Certification mark
Example of an alternative trading organisation
Traidcraft
What do alternative trading organisations, such as Traidcraft, do
Focus on the Application of fair trade. They are retailers who buy directly from suppliers at a fair trade price
What is the conflicting main goals of free trade and fair trade
Free trade: to increase nations economic growth
Fair trade: to empower marginalised people and improve the quality of their lives.
What is the conflicting focuses of free trade and fair trade
Free trade: trade policies between countries
Fair trade:’commerce among individuals and businesses
What is the conflicting primary benefitters of free trade and fair trade
Free trade: multinational corporations, powerful business interests
Fair trade: vulnerable farmers, artisans and workers in less industrialised countries
What is the conflicting criticisms of free trade and fair trade
Free trade: punishing marginalised people and environment, sacrificed long term
Fair trade: interferes with free market, inefficient and too small scale for impact
What is the conflicting major actions of free trade and fair trade
Free trade: counties lower tariffs, quotas, labour and environmental standards.
Fair trade:’businesses offer producers favourable financing, long term relationships, minimum prices and higher labour and environmental standards
What is the conflicting thing producer compensation is determined by of free trade and fair trade
Free trade: market and government policies
Fair trade: living wage and community improvement costs
What is the conflicting supply chain of free trade and fair trade
Free trade: includes many parties between producer and consumer
Fair trade: includes fewer parties, more direct trade
What is the conflicting key advocates of free trade and fair trade
Free trade: WTO, World Bank, International Monetary Fund
Fair trade: Fairtrade Labelling Organisations International, World Fairtrade Organisations
What is ethical investment
A form of ethical consumerism where investors make a deliberate choice to invest capital based on the activities of the firm or organisation they are investing in e.g some choose to eliminate certain industries from their investment plans such as firearms.
What is ethical investment usually seen as
A socially responsible choice and most investors make their decision based on environmental or social concerns.
When did ethical investment start to grow
1990s
What do many people argue about world trade
It is a game played out between international powers who pick terms of trade at the expense of developing countries
What are terms of trade
Refers to the cost of goods that a country has to import, compared to the price at which they can sell the goods they export
Example of a term of trade
HICs importing primary products from LICS and turn these into manufactured goods for export to world markets - the value of the product increases as it passes through HICS
Generally, What has happened to the price of manufactured products compared to primary products in the last few decades
They have increased whereas primary products have fluctuated
Due to the fluctuation of primary product prices compared to the steady increase of manufactured products, what do LICS need to do in response
Export increased volumes of primary products to purchase the manufactured goods they require
What are the terms of trade for LICS
Often uncertain and less favourable
What has offered some regions, particularly Africa, an improved terms of trade
The rapid industrialisation of China (but this is not an equal power relationship)
In the last 20 years, what has there been a dramatic increase in demand for
Metal from emerging economies of east Asia, particularly China
What has been developed to meet the growth in demand for metal
Metal suppliers that were previously uneconomic to exploit have been developed
What have the frontiers for metal extraction shifted from
North to south - for the advanced markets and developed economies to those that are emerging and developing
Where is the global shift of metal trade, despite political risks, particularly apparent
In Africa
What do New mines (metal extraction) in Africa result in
More investments and jobs and, in turn, increased government revenues.
What are the impacts of metal extraction in Africa
New mines.
New trade routes.
Geopolitical implications of increased African-Asian cooperation are also significant.
What does China argue about its economic policies
They offer a ‘no strings attached’ route to development
What do critics point to in China about their metal extraction routes
The Unfulfilled Chinese promises of development assistance, flooding of cheap Chinese foods into African local markets and working practices that are unsafe and unethical
What has been one consequence of global systems
Has been to bring countries together into trading blocs
What are trade blocs
Associations between different governments that promote and manage trade. They remove trade barriers between members while keeping common barriers to counties who aren’t part of the bloc
Why are many trade blocs regional
It makes it easier for counties to trade with their neighbours
What are some trade blocs based around
Specific industries e.g some of the main oil exporting counties are members of the Organisation of the Petroleum Exporting Countries (OPEC) which aims to standardise prices to prevent counties undercutting one another with cheaper
What do Special Economic Zones (SEZs) do
They increase the volume of trade with emerging economies in less developed counties while keeping barriers to the rest of the country
What are SEZs
Areas that have different trade and investment rules to the rest of a country e.g companies investing there may pay lower taxes on land and goods.
What do opponents of the trade blocs argue
That by offering unfair advantages to members counties, they restrict the development of s global economy. The advantages of the largest trade blocs are increased further as any similar trade agreement between LICS are weaker and achieve limited advantages
What do trading organisation attempt to do
Encourage trade of different types from different counties. They attempt to govern and set rules of trade
What are 7 trading organisations
WTO
Organisation for Economic Cooperation and Development (OECD)
Organisation or Petroleum Exporting Countries (OPEC)
G8
G20
World Bank
International Monetary Fund (IMF)
What is the Organisation for Economic Cooperation and Development (OECD)
Global ‘think tank’ for 30 of the worlds wealthiest nations
What is the OPEC
Consists of 11 states who supply 40% of the worlds oil. Tries to regulate the global oil market to ensure a good fair price
What is the G8
The group of 8 (Canada, France, Germany, Italy, Japan, Russia, UK, USA) represents 65% of the worlds trade and meets annually to discuss economic development.
When was the G8+5 formed
2005
Which countries were added in the G8+5
China India Brazil Mexico South Africa
What is the G20
Includes all of the (finance) leaders to the G8+5 countries plus South Korea, Australia, Turkey, Saudi Arabia, Argentina, Indonesia and also the leader of the EU. It also includes representatives of the World Bank and IMF. Like the G8, the G20 discusses the global economy and methods to encourage economic growth
Briefly, what does the World Bank do
Promotes investment globally and provides loans for counties under certain conditions
Briefly, what is the IMF
Standardises financial relations and aims to promote global monetary and exchange stability by monitoring the global economy and encouraging the growth of international trade. It can force counties to privatise (sell off) government assets, which are then bought by large TNCS, and opens up trade in return for refinancing debt
What are the main trading entities
The EU and USA (part of NAFTA)
What does ASEAN also form
The Asian Free Trade Area
While China is a member of APEC, what else is if
A major economic force and trading entity in its own right
Why have tensions arisen between trading entities
They all want to ensure the best deals for their citizens, workers and businesses (including TNCs)
Typically, what do developed counties export to LICS and NEEs
LICS- machinery, medicine
NEEs- cars, chemical
Typically, what do emerging economies export to LICS and HICs
LICS- manufactured goods
HICS- machinery, clothes
Typically, what do LICS export HICS and NEEs
NEES - crude oil, minerals
HICS- food, tobacco, crude oil
Where does most trade in the world take place
Between developed counties
In 2013 what percentage of global product trade did imports and exports between the US and EU account for
30%
What do many products exported by developed counties require
Lots of money and expertise to make
Who is the EUs second largest trading partner, after the US
China
Which country does the EU import the most goods
China
In China and India what has grown significantly to make them important to global trade
China’s manufacturing sector and the highly educated population has grown Indias service sector
Why has trade between emerging and less developed countries increase
China’s manufacturing sector relies on lots of energy, so it needs oil e.g Angola
Who are Bangladesh’s largest trading partners
Bangladesh mainly exports to the US and EU and imports from China and India
What do most less developed counties mostly trade with
Emerging economies and developed countries (this one the most)
Who is the largest trading partner for many counties in sub-Saharan Africa
The EU
What kind of economy has the USA traditionally been
A protectionist economy, lagging behind in entering any formal trade agreement
While the USA has traditionally been a protectionist economy, what is it now attempting to do
Negotiate trade agreements that will place it at the ‘core’ of the international trade. Large trade agreements are in the process of negotiation
What are the two large trade agreements in the process of negotiation in the USA q
Trans-Pacific Partnership (TTP)
Transatlantic Trade and Investment Partnership (TTIP)
What is the Trans-Pacific Partnership (TTP)
Free trade agreement being negotiated by 12 counties (USA, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam)
What is a criticism of the TTP
The negotiations lack transparency
Why will the TPP be one of the most I protect trade agreements globally
As this region has seen the most rapid growth in trading
What do the topics being negotiated in the TTP extend beyond
Traditional trade matters
On which subjects does is the TTP believed to set binding rules on
Investment Patents and copyright Financial regulation Labour and environmental standards Trade in industrial goods and agriculture
What is the Transatlantic Trade and Investment Partnership (TTIP)
New trade deal being negotiated behind closed doors between the USA and EU
What is the aim of the TTIP
Of liberalising ‘one third of global trade’.
To reduce the regulatory barriers to trade for business including food safety law, environments legislation, banking regulations and the sovereign power of individual nations.
In 2014, what did the European Commission state of the TTIP
It has the potential to boost the EUs economy by £120bn euros, the US economy by 90bn euros and the rest of the world by 100bn euros
What has been the criticism of the TTIP
Lack of transparency around the wide-ranging talks has been critiqued and their content has been leaked to the media several times.
Criticised by unions, NGOs and environmental pressure groups, all of who, fear access to markets for TNCs will be promoted over existing EU laws that protect health, the environment and minimum labour rights.
In 2015, what did the BBC report of the TTIP
That food safety had become a stumbling block in the talks
During the TTIP talks, what will have to occur to ratify negotiated agreements
All members of the EU will have to vote on the agreement
What is their concern over in the TTIP
Whether individual national governments will have any power to veto a deal
Because of the complexity of the TTIP negotiations, when are they expected to be concluded
2019-2020
Why was the G20 group established in 1999
To give a voice to the major developing economies (including BRIC) who felt that the WTO was not fully serving their interests
What is the Group of 77 and China
A forum established in 1964 when China was seen as a less developed economy.
What are the aims of the Group of 77 and China
Represent the interests of the worlds poorest counties.
Help development in these counties.
Reduce poverty and disease and improve human rights.
What is the importance of China’s role in the Group of 77 and China
China has a common interest, with the poorest 77, in reducing poverty.
China hopes to increase its influence in world affairs by being part of this group.
The group needs a powerful ally to effect international cooperation and change.
What has China’s phenomenal economic growth rate in the last 25 years been based on
The expansion of manufacturing of consumer goods for richer ‘Western’ counties, particularly those in Europe and North America
China’s influence as a large NIC has not been confined to industrial expansion in China, where else has it affected
The increased confidence of being an economic superpower has enabled investment in other parts of the world including Africa.
Why are there not many Western-based TNCs in African counties
Many are wary of investing in African counties, especially those with a recent history of civil war
What have Chinese entrepreneurs seen a lack of development in many African counties as
An opportunity for investing in resource development and increased trade
What is China’s role in Africa
Varied. One clear objective is to extract a range of primary resources including metal to support industrial expansion in China. However, there is evidence that China’s investment in Africa is helping some of the poorer countries to develop infrastructure, healthcare and education
What is the classification of Latin America
Newly emerging
Why will Latin Americas relationship with other trading entires be important in the future
As it is an emerging economy, much like China
What are the 2 distinctive trading blocks of Latin America
MERCOSUR and Pacific Alliance
What is MERCOSUR
Traditional customs union, operates similarly to the EU. It allows free movement of labour between member states. Nature of its produce allows trade globally but tends to view the EU and USA as its main markets.
What is MERCOSUR sometimes called
‘Common market of the South’
What is the key difference between MERCOSUR and the Pacific Alliance
Pacific alliance has been more open to bilateral agreements with other nations and trading entities and it sees the Asia Pacific and the USA as its main market.
What will counties in the Pacific Alliance be a part of
The TTP agreement (Trans-Pacific Partnership)
In terms of what has the Pacific Alliance been growing quickly
In terms of individual economies and volume of trade
What is the possibility for the Pacific Alliance and MERCOSUR in the future
They could join to form one Latin American Union which would be a major player flows lot
Example of trade bloc and regional governance
The European Union
How does the EU have a unique institutional set-up
It allows for regional governance as well as economic cooperation
When was the EU founded
After WW2 - the origins were based on a simple premise - that countries who trade with each other (become economically interdependent) are less likely to be in conflict
Besides the huge trade bloc (or single market) what are the other aspects of the EUs work
Legally binding treaties, agreed by all member countries, governs life for 500 million EU citizens.
175 million citizens have a single currency - the Euro.
EU policies cover every aspect of our lives, from human rights to the environment.
When do the benefits and drawbacks of membership to the EU no longer apply
Only be exiting the EU via a referendum (e.g the Uk in 2016)
What has the institution of the EU delivered
Half a century of relative stability, peace and prosperity for its member states
What is the chain of the EU
European council -> European Commission -> European Parliament -> council of the European Union -> member states
What does the European Council in the EU do
Sets the EUs overall political direction and priorities.
What is the European council made up of
The heads of state or government of EU member countries
What is the European Commission of the EU
An executive body that is responsible for proposing and implementing EU laws, monitoring treaties and the day-to-day running of the EU.
Who appoints members of the European Commission
EU national governments
Who does the European Parliament of the EU represent
500 million EU citizens and is directly elected by them
What does the European Parliament of the EU do
Adopts the laws proposed by the European Commission. Shares power over EU budget and legislation with the council of the European Union.
What is the Council of the European Union
Represents the government of member counties and promotes / defends national interests. The government ministers share power over EU budget and legislation with the European Parliament
What do the member counties of the EU do
Implement the laws passed by the EU. The commission ensures that the laws are properly applied and implemented
Why did Greece come close to leaving the EU in 2015 (Grexit)
Because it had debts of over 4 billion euros, including over 3 billion to the European Central Bank
When did Greece first apply to the EU but got rejected
In 1975
Why was Greece first rejected from joining the EU
That membership would ‘pose serious problems for both Greece and the EU community… And a substantial economic programme is needed to enable Greece to accelerate the necessary structural reforms’
When did Greece join the EU
1980 in a so called ‘Mediterranean expansion’
When Greece joined the EU, what happened
Increasing amounts of money were spent by a government funding a massive inefficient and unsustainable public sector (public sector wages doubled in a decade and accounted for 40% of the total economy)
How was the sending of money to Greece paid for
Partly by increasingly taxes (although the widespread tax evasion remained) and also government borrowing
When did the situation in Greece become so challenging that they wanted to leave the EU
The global financial downturn of 2008
When did Greece run out of money and need bailout by the IMF and the EU
2010
How much euro bailouts did the IMF and EU provide Greece in 2010
110bn euros followed by a further 109bn in 2011
Why was the use of the euro in Greece part of its financial downfall
If Greece still had its own currency, it could have been devalued to make its exports more competitive and its imports less so. This is not possible with the euro.
How did Greece try and combat its financial struggles
By increasingly efficiency - reducing the wage bill by increasing unemployment (nearly 28% by 2013)
Why did other countries, such as Germany, benefit from the financial struggles of Greece
Due to increased experts to Greece, even though it has been heavily involved in the financial bailouts
How many people migrated from the Middle East to Greece in 2015
More than 1 million (this didn’t help them with their recovery)
What did an EU directive in April 2016 aim to do
Stem the flow of migrants, despite protestations from the UN High Commissioned for Refugees (UNHCR)
What are the benefits for Greece staying in the EU
Greece imports nearly 50% of its food and 80% of its energy from abroad and consequently benefits from being part of the European free market.
Any ‘Grexit’ would drastically change Greeces trade balance and might cause bankruptcies and high inflation with an associated huge knock on social cost.
Greece would find it difficult to borrow further and would therefore have to pass on increased living costs to the population (everything would be more expensive)
What are the negatives of Greece staying in the EU
An independent Greece may be able to trade more felt and to take more advantage of its location and geography.
It would be free of EU legislation and control, and might be able to newly position itself as the regional trading hub and gateway into the Middle East, Balkans or Russia.
National needs might be set in a more sustainable and local way.
A Grexit would see the rerun of the drachma as currency and, with it, flexibility of exchange rates.
Imports may become more expensive but may, in turn, spur job growth and economic growth.
Who has the greatest access to markets
Developed countries
Why is it hard for less developed countries to access the market
Because developed counties often put higher tariffs on goods imported from less developed countries.
Developed countries also have more money to invest, so they can avoid high tariffs imposed by developing countries by opening factories within them.
LICS may also rely on loans that depend on them removing trade barriers and increasing access to their markets.
LICS outside trade blocs may have to pay high tariffs to export their goods to those in the trade bloc putting them at a disadvantage.
How does being a member of a trade bloc increase access to markets
Member countries have access to their markets of all the member countries
What do trade blocs of less developed counties have access to
A lot of wealthy buyers
What have Special and Differential Treatment (SDT) been a defining feature of
Multilateral trading systems for most of the post-war period
Why did SDTs become a feature of multilateral trade for the post-war period
There ware a growing number of newly independent nations and it was recognised that protectionist policies would exclude many developing countries from trading freely with more developed nations (they would encounter tariffs or quota barriers)
Who created the category of the least developed counties (LDC/LIC)
The UN General Assembly in 1971
Why did the UN General Assembly create the label of LDC
They wanted to provide least developed among the developing counties with special support measures to overcome their specific disadvantages
What support measures did the UN General Assembly include to help overcome the disadvantages of LDCs
Officials development assistance.
Preferential access to developed markets in trade agreements.
Provision of SDTs.
What did provision of SDTs enable some of the worlds poorest counties to do
Tackle structural handicaps that characterise LDCs, which are: a low level of income, a concentration on export of primary goods (commodities), vulnerability to export price volatility.
Engage in world trade on a more advantageous level by: providing incentives for export diversification, allowing more stable export revenues.
Promoting faster income growth and development.
What are the 5 arguments that were given for less developed counties to gain SDT agreements
- Special and differential treatment is an acquired political right.
- Developing counties should enjoy privileged access to the markets of their trading partners, particularly developed counties.
- Developing countries should have the right to restrict imports to a greater degree than developing counties.
- Developing counties should be allowed additional freedom to subsidise exports.
- Developing counties should be allowed flexibility in respect of the application of certain WTO rules, or to postpone the application of rules.
What is the phrase ‘access to markets’ about
How easy it is for countries and companies to trade with one another
What is international access to markets determined by
The extent of export and import barriers between two countries
What is access to markets affected by wealth
Wealth and being a member of a trading bloc
Example of trade preference scheme
The EUs Everything but Arms (EBA)
What is the trade preference scheme of the EUs Everything but Arms (EBA)
2001, to accept access for all products from LDCs (except arms and ammunition) on a duty-rescued, quota-free basis. Similarly, the Us extends duty-free treatment to nearly 2000 products from qualifying African countries
How has trade played an important role in the world
Promotes economic development in less developed countries.
Differential access has allowed many counties to diversify their economies, achieve economic take off and lift some of their population out of poverty.
Helped many counties to develop service and tourism industries, and in some cases manufacturing (less successful)
What are 5 problems of SDTs (special differential treatments)
Not all LDCs are members of the WTO and the time taken to acceded after application can be lengthy (8-10 years)
WTO trade talks (Doha rounds) have recognised that SDT measures need to be made more effective and operational.
Some of the lack of effectiveness of the SDT is due to the fact that LDCs are not fully aware of the, and, when aware, do not make productive use of them.
Some measures have not been tailored to the conditions prevailing in most LDCs.
Concern among richer nations that non-reciprocal and preferential trading agreements given to less developed counties will result in cheaper imports flooding markets and undermine their own industrial base (this has already happened with the growth of newly industrialising countries).
They are difficult to apply in a fair or standardised manner.
What has deferred some developed countries from participating in SDTS
The lack of reciprocity in the agreements
In many cases, what have SDTs been replaced by
Unilateral trade agreements between poorer counties and richer trading partners e.g Mexico was previously a beneficiary of preferential access to Canadian and US markets, but has arguably benefitted more as a member of NAFTA having to accept reciprocal arrangements with its co-members
What is expanding and deepening in Asia, Latin America and Africa
Sub-regional free trade areas and custom unions among developing countries
What is the benefit of the Sub-regional free trade areas and custom unions among developing countries
They greatly enhance the negotiating leverage of their members in trade negotiations and many offer more to least developed countries in the long term
Why is more international co-operation needed in differential access to markets
To address the shortcoming of differential access because it is clear that SDT agreements have a role in removing some of the inequalities in international trade
What are the three economic impacts of differential access to markets
It’s hard for counties with poor market access to establish new industries.
This makes them dependent on selling low-value primary products (e.g agricultural goods).
Counties with high levels of market access tend to see more economic growth because they can trade more.
Why is it hard for counties with poor market access to establish new industries
Because they face high tariffs when they try to sell abroad, making their products uncompetitive, and they may be undercut in their domestic markets by TNCs producing similar products more cheaply
Why is being dependant on selling low-value primary products a negative economic impact
They tend to fluctuate in price, so counties with poor market access often have low Gross National Income (GNI). This means they have less money to invest in industry, so their economic development is slow.
How is a country with high levels of market access that tend to see more economic growth a positive economic impact
The citizens are wealthier, they can afford to import a range of products and they can develop high-tech industries which boost their economy further.
What are the 3 social impacts of differential access to markets
People I’m counties with better market access tend to have higher-paid jobs.
Counties with less market access have less money a aisle for education and health care so quality of life is generally lower.
Much dangerous, poorly paid work has moved from developed counties to less developed counties.
How is people in countries with better market access having higher paid jobs a positive social impact
They get more disposable income, which increases their standard of living
What has better access to education I’m developed counties created
Better access to jobs for women and ethnic minorities, giving them more power to shape their own lives and societies.
Example of dangerous, poorly paid working, moving from developed countries to less developed counties
Sweatshops are crowded, dangerous factories, whose workers are paid little and work long hours and some sweatshops employ children
Example of trade benefiting developed counties more than developing countries
Many developing counties export primary products e.g copper ore which are processed in developing counties e.g into electronic components and exported at a higher price. The developed country makes more profit than the developing country. So wages are higher
What do trade and high level of market access mean
That a wide range of goods are available in developed countries which increases people’s standards of living
Example of trade creating interdependence between countries
If something goes wrong, other counties are affected e.g the financial crisis of 2008 increased rates of unemployment in many countries
What are TNCs
Companies that operate in more tha one country and play an important role in the global economy. They have grown in size and number
In 2013, how much of global trade was linked to TNCs
80%
What are many TNCs now
Truely global counties producing global products
What is a primary industry and an example of a TNCs
Extracting natural resources e.g Shell
What is a second say industry and an example of a TNCs
Making material goods e.g Toyota
What is a tertiary industry and example of TNC
Producing services e.g Aviva (insurance)
What do TNCs bring to a country
Investment, new technology and can promote culture (e.g McDonalds with western style fast food)
How can TNCs have a political influence
Political investment, the creation of jobs and provision of technology means they can have a political influence
How are TNCs one of the main driving forces behind globalisation
Because of the economic, political and cultural interaction that occur between counties where they operate
How do TNCS connect counties
Because of their spatial organisation they create a global supply chain. They also link companies and counties by expanding their operations
Why is mapping the geography of a TNC a Challegne
Because the largest firms might have offices, branch plants and retail outlets in almost every country of the world
What is the general rule of spatial organisation of a TNC
Headquarters in the country of origin. In developed counties they are in big cities which are well connected in terms of global transport and communications and there is a high supply of high skilled workers.
Research and Developement (R&D) facilities tend to be where there is a supply of highly educated people e.g scientists and engineers. They are often in the same country as the headquarters. Some TNCs have R&D facilities closer to the markets they are selling to, so they can make products that are specifically for that market.
Production takes place where costs are lower e.g labour, materials and land. Many TNCs have factories in the countries where their marker is. If a product is made in the country where it is sold the TNCs csn avoid paying import and export taxes and can reduce transport cost.
What do TNCs usually adopt
A hierarchical model or organisation and impose top-down decision-making. In other words, branch plants tend to be recipients of change rather than making decisions.
What can result in branch plants being vulnerable to sudden closure or job losses
TNCs tend to adopt top-down decision making so branch plants tend to be recipients of change rather than making decisions.
What is a merger
When two companies (usually a similar size) agree to become one bigger company. This helps links form between two counties where the two companies operate
What are the 4 ways TNCs create links between companies and countries
Mergers
Acquisitions
Using subcontractors
FDI
What is an acquisition
When one company buys another (usually smaller) company
How does TNCs using a subcontractor help create links between companies and countries
TNCs can use foreign companies to manufacture products without actually owning the business e.g Nike products are not always made in factories Nike owned. This links the countries of the TNC and the subcontracted company together
What can an FDI be
Involve mergers, acquisitions and using subcontractors e.t in HSBC acquire a bank in Indonesia they’re investing money there (that’s FDI)
What does TNCs maintaining strong links between all parts of their organisation allow
Them to control and coordinate economic activities in different countries and also between units of the same corporation in more than one country. In this way, the TNC can lessen the impacts of trade restrictions, such as quotas and negotiate more favourable terms of trade
What are the two ways that TNCs can gain more control over their markets
Horizontal integration
Vertical integration
What is horizontal integration
Involves improving links between different firms in the same stage of production. This usually occurs when a TNC acquires competitors in the same industry and uses common structures to make cost savings. It results in a smaller number of firms controlling a given sector of the market e.g In 2006 Disney took over PIXAR studios
What is vertical integration
Describes an industry when one company either owns or controls multiple stages in the production and distribution chain. This type of organisation gives the company significant economic advantages over competitors e.g increased bargaining power with end purchaser or nation stats. E.g Shell now owns every part of its supply chain from refining oil through to selling to consumers in petrol stations
What is the advantages for cooperations (such as Nike) choosing to source products from suppliers rather than directly employ factory workers themselves
Lower wage bills, the avoidance of costly bills for pension schemes and less stringent health and safety policies for workers. Gives greater flexibility to allocate resources and capital to brands.
What is vertical disintegration of production
When cooperations such as Nike source products from suppliers rather than directly employing factory workers themselves u
What gives TNCs economies of scale
They create global supply chain and means they get the most value from the whole supply chain
What are TNCs able to take advantage of by not having production units in the same place
Spacial differences in factors of production and government policies across all the countries in which they operate.they can choose least cost locations on a global scale.
What 10 things can TNCs exploit differences in the global supply chain
Costs of labour. Access to skilled workers. Cost/availability of raw materials. Cost of land and building. Availability of capital. Availability of tax incentives and subsidies. Government policies. Trade barriers. Environmental and labour regulations. Work ethic.
How can TNCs exploit the costs of labour
They may choose locations where there is investment in education so workers are easier to train
How can TNCs exploit access to skilled workers
Call centres are outsourced to India because of the high proportion on well-educated English speaking workers (also low cost)
In what sector is cost of labour most important
Secondary
In what sector is access to skilled workers most important
Tertiary
In what sector is the costs/availability of raw materials important
Primary
How can TNCs exploit the costs/availability of raw materials
Unexploited resources have been more available in developing economies and developed country reserves have been depleted. However, rising world prices and new technologies (e.g hydraulic fracturing, ‘fracking’, for oil/gas) can make access to raw materials viable in the home country
How can TNCs exploit the costs of land and buildings
Land can be cheap in places where deindustrialisation has occurred
How can TNCs exploit the availability of tax incentives and subsidies
Governments may encourage investment
How can TNCs exploit the trade barriers
By locating in a country they may avoid e.g tariffs
How can TNCs exploit the environmental and labour regulations
Weak regulations allow TNCs to cut costs
How can TNCs exploit the work ethic
For secondary industries, workers willing to work long hours, with few holidays in a non-unionised environment can be a locational advantage
What helps TNCs avoid paying taxes
They often have elaborate company structures, which sit beneath the overarching umbrella of their organisation
How do the government of some countries encourage TNCs
They give tax breaks that attract large corporations to rent employ offices in places thousands of miles away from their employees
How does taking advantage of locational factors, for TNCs, minimise exposures to risk
The flexibility of production and spreading of locational risks means that should e.g the local economic climate change or a nah real hazard occur, global operations are not seriously affected
Where have TNCs from emerging economies located production
In developed regions to give access to large markets
What 4 things encourage the growth of a TNC
Mergers and takeovers. Flexible workforce. Availability of finance to fund expansions. Globalised transport network. Technological developments.
How do mergers and takeovers encourage the growth of a TNC
They allow big businesses to buy out smaller competitors or increase their market share (leading to an eventual monopoly). E.g UK-based EMIs US$20 billion merger with Time-Warner created the worlds largest music firm
How does a flexible workforce encourage the growth of a TNC
Willingness to travel to jobs overseas or be retrained in situ e.g training of call centre employees in India for UK-based companies
How does the availability of finance to fund expansion encourage the growth of a TNC
TNCS from emerging economies have heavily invested overseas to increase their portfolios e.g the Indian Tata steel bought the Anglo-Dutch company Corus Steel in 2006 and Tat Mofors acquired the high-end Jaguar Land Roved and Daimler car brands from Ford in 2008
How does a globalised transport network encourage the growth of a TNC
Containerisation has revolutionised the movement of goods by creating a standard transport product that can be handled anywhere in the world - ships, trucks, barges and rail wagons are all designed to handle containers of the same shape and size
How do technological developments encourage the growth of a TNC
E,g refrigeration or freeze drying allows perishable fruit and vegetables for LICs to be transported to markets in HICs
How do TNCs take advantage of global marketing
They operate in many counties and have a lot of money to spend on advertising and have large marketing departments.
How do TNCs promote common patterns of consumption
By selling and marketing the same of a similar product everywhere - the aim of many TNCs is to create a brand that is recognised globally
What does a TNC having s recognisable brand mean
consumers will buy the product without continued marketing
Example of glocalisation
Cadbury made their chocolate sweeter in China and McDonals do not serve beef or pork at its Indian locations
What is glocalisation
Describes the process in which TNCs adapt what they offer their customers depending on where in the world they work, or at least market it differently. They do this by gaining knowledge of local markets and adjusting the marketing accordingly, and may change product to reflect national cultures
Which companies are the most successful in their glocalisation and why
Those with decentralised authority because the development of new products and services to suit a new marker is a costly exercise and must be informed by local knowledge and insight into the culture, to successfully tap into what buyers really want
What is intra-firm trading
When one division of a TNC trades with another part of the TNC e.g Technology TNC Intel assemble microchips in Costa Rica but sells them in the USA, to get products from Costa Rica to the USA, Intels Costs Rican subsidiary ‘sells’ them to Intel in the USA.
What impact does TNCs have on global trade
A big one
What is intra-firm trading counted in
Trade figures - belived to make up 30-50% of international trade
What are intra-firm prices are decided by
Company managment rather than the market, giving TNCs advantage over smaller businesses, and a lot of power over global trade
When a TNC invests in a new country, what does it create
A multiplier effect e.g opening a new factory creates jobs in the local area, which means people have more money to spend, which helps local businesses and governments (who can raise taxes)
What do TNCs make it easier for local companies to do
Trade as part of the global supply chain e.g Taiwanese company Foxconn is integral to several supply chains as it is the main manufacturer of devices for Apple, Microsoft and Amazon
What are positive impacts of TNCs on the host country
Increase employment and thereby raise living standards.
Improve levels of skill and expertise.
Foreign currency brought in, improving the balance of payments.
Socio-economic multiplier effect. This includes increased purchasing power (particularly in LICs) that, in turn, leads to demand for consumer goods and further economic growth.
Encourages a transfer of technology into the country e.g the growth of telecommunications.
What are positive impacts of TNCs on the country of origin
Development of higher-order jobs such as in research and development or management.
Overseas investment adds to income for the whole nation (via tax and other multiplier effects)
Wider share ownership - individuals and companies more willing to become involved in foreign investments.
What are negative impacts of TNCs on the host country
Many jobs are low skill in LICs.
Managerial positions tend to be brought in rather than developed locally.
Majority of profits are sent back to home countries.
Multiplier effect can also be negative, e.g on the environment; political muscle of TNCs can be too aggressive and corners can be cut in terms of health and safety and employee rights.
Poor working conditions.
Exploitation of resources and or environment.
Negative impact on local culture.
Investment may only be short-term and TNC may pull out at short notice.
What are negative impacts of TNCs on the country of origin
Workforce may need to relocate or make increased visits to operations overseas.
Loss of manufacturing jobs/ unemployment.
Deindustrialisation.
As a result of loopholes, cooperation (business) tax is not paid fully by all TNCs.
Speculative investments in TNCs for quick returns helped contribute to the global 2008 financial downturn.
What are the impacts of the TNC, on the TNC itself
They may benefit from lower costs and access to resources and markets. However, ethical issues such as the images of environmental damage or sweatshops can be detrimental to their reputation.
What is the race to the bottom
Many of the larger companies are relocating to places with lower labour costs and weaker legislation. Work involves long shifts in unbearable heat and many workers fail to earn enough to cover their basic needs
What is the aim of fair trade
Aims to pay farmers a guaranteed minimum price, offer fair terms of trade and pay an additional development premium for reinvestment in the local community
Across its history, what has Fairtrade sought to link
Organisations in the economic ‘North’ and ‘South’ e.g by enabling charities in HICs to help developing capabilities of cooperative and marketing organisations in LICs, that in turn advised, organised and in some cases lent seed money to disadvantaged producers
What was fair trade formalised as
4 international trade networks: fairtrade labelling organisations international, world fairtrade, network of European world shops and European fairtrade Association
When were the first fairtrade product sold
In the US in the law 1940s - at first its focus was on handicrafts
What have the governments of LICa advocated in international forums
Trade not aid
From the late 1980s, what did the labelling of fairtrade products boost
Consumer awareness and the influence of TNCs has significantly decreased
What has the credibility of fairtrade been strengthened by
The creation of an international monitoring system
What is FLO-CERT
The independent company with the job of inspecting and certifying producer organisations and auditing traders
What does the world trade in bananas demonstrate
A number of relevant points about trade, especially in primary commodities
What are the summary points for the world trade of bananas
Mass production in developing countries will have negative environmental consequences.
TNCs have a large element of control of markers and can influence political decisions
WTO will support free trade against protectionist activities or agreements at all costs, even if the protection may be to help development.
Geopolitical processes mean that trade disputes can escalate to trade wars between regional trading blocs.
Power and control of food production has shifted away from growers and towards retailers in high-income countries.
Supermarket price wars may ultimately decide how food is produced.
More ethical, sustainable consumer markets are growing but relatively slowly and only in places that can afford products bought at a higher price.
Who are the 4 main beneficiaries from the process of globalisation
Newly industrialising countries.
Transnational corporations.
International organisations.
Regional trading blocs.
What are newly industrialising countries
Some medium-income nations have developed rapidly as a result of inward investment and have emerged to become major economic powers competing with the richer developed regions of the world
What have TNCs from emerging economies become
Global powers
What are international organisations
Organisations such as the MF, the World Bank and WTO have all contributed to the globalisation of economies and have consolidated their position and control in world affairs
What are regional trading blocs
More trade agreements have evolved which benefit their members, though some would argue that it is at the expense of the nation state
In 2015, where were all the top 10 fastest growing economies
In Asia or Africa
What are the 6 benefits of free trade
Lower prices for consumers.
Greater choice.
Access to larger, wealthy markets for TNCs.
Greater economies of scale through increased specialisation.
Greater foreign competition may weaken domestic monopolies (e.g UK supermarkets)
Competition leads to greater innovation.
Access to cheaper raw materials for TNCs.
What are the 4 costs of free trade
The injustice of free trade not giving sufficient ‘protection’ to emerging industries in developing economies so they cannot compete with developed countries in the free market.
More developed economies are still protected by tariffs on agricultural imports.
The unjust exploitation of workers and poor working conditions.
Diseconomies of scale as a result of difficulties coordinating subsidiary companies.
What is one of the most significant disadvantages of globalisation
The increased risk associated with the independence of economies as a negative economic shock in one country can quickly spread to other countries
When is the risk of economic interdependence particularly prevalent
If it affects a country’s banking system e.g the 2008-2009 global financial crisis was initiated by the collapse of lending the US sub-prime
What social and ultralight impacts of globalisation
It has allowed greater sharing of ideas, lifestyles and traditions. People have greater access to foreign culture such as film, music, food, clothing and other goods and services that were not previously available domestically.
What has the over-standardisation of many goods and services led to
Increased cultural homogeny which has damaged individual traditions and means less diversity
What is access to foreign (mainly western) culture causing
The distinction between countries to fade
Why was glocalisation adopted
In a bid to offset critics of the standardisation of products on a global scale
What does the strategy of globalisation involve
Thinking globally but acting locally to reduce threats to cultural dilution - products are more likely to be successful when they are customised for the local market
How can increased awareness of global news and events be positive and negative
It can be positive in informing people of environmental issues such as climate change but can be used negatively e.g for propaganda purposes by terrorist organisations
What are the benefits of globalisation in affecting growth and development in developing countries
Become more diverse economies.
Creation of jobs increases taxes and spending power - can create a multiplier effect.
Higher value exports - not just low value primary products.
Investment brings improvements in infrastructure.
Investment generates jobs and improves living standards.
Transfer of skills, technology and capital.
Incentives to specialise.
What are the costs of globalisation in affecting growth and development in developing countries
TNCs profits taken from country (leakage).
Low pay by TNCs forces wages down.
Tax breaks or tax avoidance by TNCs.
Inequalities in incomes increase:
Small local producers suffocated by foreign investment.
Over-specialisation in one commodity or industry - vulnerable to changes in global demand.
Too reliant on TNC investment.
How is the worlds population putting increasing pressure on the earths finite resources
With greater movement and use of resources
What do environmentalists argue of globalisation
It is concerned primarily with economic costs and largely ignores environmental costs
What are the 7 environmental impacts of globalisation
More transpiration which increases greenhouse gas emissions.
Depletion or non-renewable resources.
TNCs outsourcing production to countries where environmental standards are less strict.
Weak or non-existent controls allowing pollution of the air, land, rivers and seas.
More waste from packaging.
IMF-enforced spending cuts reducing many nations spending on the environment.
Greater movement giving a higher risk of invasive specifies being introduced.
What is global governance
There is no widely agreed definition, many geographers describe it as a movement rather than an entity others refer to it as a concept. It is essentially an international process of consensus-forming which generates guidelines and agreements ‘governing’ the actions of these same players
How does the ‘Commission on Global Governance’ describe global governance
As the ‘sum of the many ways individuals and institutions, public and private, manage their global affairs’
Who are the so called ‘actors’ who manage global affairs in global governance
The range of so-called actors managing global affairs includes nation states, profit-making companies, international and regional organisations (such as the EU) and their participation in this process may be reactive or proactive
In short, what does ‘global governance’ refer to
The ways in which global affairs affecting the world are managed
Generally, in international relations, how are decisions made
By individual state governments, co-operations is usually negotiated between counties, which agree to abide by similar rules given in signed treaties or international laws
Why is global economic governance increasingly important for achieving sustainable development across all nations
Because the world is becoming more interdependent
Why is achieving sustainable development especially important of the global commons
Environmental sustainability is at the forefront of our concerns, not least our utilisation of the continent of Antarctica
What is a reactive action for a National Government
Legislate and invest
To implement international initiatives
Laws
Targets or agreements
What is a proactive action for a National Government
Libby for and contribute to international discussions
Votes and decisions
Example of a reactive action for a National Government
The U.K. Governments recent support for renewable energy sources, to reduce dependence on fossil fuels and climate-changing emissions is, in part, a response to new EU laws in dirty power stations
Example of a proactive action for a National Government
Some national governments have more influence than others on the UN Security Council, China, France, Russia, The UK and the USA are all permanent members of the UN Security Council and often take leadership roles in conflict resolution
What is a reactive action for a TNC
Compensate and adopt new codes of conduct or working practices imposed by legislation or socio-economic pressure
What is a proactive action for a TNC
Sponsor and support the work of NGOs and international organisations
Example of a reactive action for a TNC
In the wake of collapse of the eight-storey Rana Plaza building near Dhaka, in Bangladesh, clothing company Primark (part of the multinational company Assoicated British Foods) paid compensation and provided emergency aid to the victims of the disaster
Example of proactive action for a TNC
Tobacco companies sponsor anti-smoking NGOs within LICs,C for example in south east Asia, to publicise the health risks of smoking, thereby protecting themselves from the sort of las suits seen in HIC in recent decades
What is a reactive action for an international organisation
Respond to global events to offer advice to national governments and publicise the work of NGOs already on the ground
What is a proactive action for an international organisation
Sponsor, facilitate and publicise international issues and agreements to address them
Example of a reactive action for an international organisation
The WHO was late to offer guidance on how to contain the Ebola virus in the early stages of the recent epidemic in West Africa
Example of a proactive action for an international organisation
In 2013, the UNI Global Union, in alliance with leading NGOs, sponsored and crested the legally binding Bangladesh Accord on Fire and Building Safety, to protect working conditions in the ready-made garment industry. The accord has been signed by 200 clothing companies (from over 20 counties), leading to the inspection of 1500 factories in the first two years
In this increasingly economically integrated world, what do some argue
That governments are losing their influence and that corporations now have more power to control resources, capital and labour
What is the term ‘global governance’ used to describe in response to the acceleration of interdependence between counties
To name the process of designating laws, rules or regulations intended to manage global systems, for example the laws governing international trade
In recent years, what 6 international issues has global governance focused on
Reducing environmental problems Trade and investment inequities Civil conflict Human right violations Reduction of poverty Financial instability
What does NGO stand for
Non-government organisation
What does SDG stand for
Sustainable development goals
What does UNDP stand for
United Nations Development Programme
What does UNEP stand for
United Nations Environment Programme
What does WHO stand for
World Health Organisation
What does WSSD stand for
World Summit on Sustainable Development
What does WTO stand for
World Trade Organisation
What do a number of organisations take responsibility for
Promoting growth, stability and the development of all regions sustainably, both economically and environmentally
What are many of the organisations operating internationally connected to
The United Nations (UN) such as the United Nations Development Programma (UNDP)
Despite the existence of the UN, what is there no
‘World government’ with the political authority to exercise jurisdiction over executive, judicial, legislative or military affairs for the whole planet
What is the role of the UN
Mainly advisory; its purpose is to foster co-operation between state governments, rather than exerting authority over them
Why do international organisations such as the WTO and the WHO exist
To take responsibility for managing specific aspects of an increasingly inter-related world, such as regulating the rules of trade or dealing with international public health issues
Generally, what are the objectives of NGOs
Ensure justice and equality for people across the world or to campaign for environmental sustainability
What does the international strength and support for some organisations means
They have the authority to challenge the excesses of negative TNC impacts and of governments supporting them
What is the different roles of NGOs
Protection - providing relief to victims of disaster and assisting the poor ‘give a man a fish’
Prevention - reducing people’s vulnerability, through income diversification and savings ‘teach a man to fish’
Promotion - increasing people’s chances and opportunities ‘organise a fishermans co-op’
Transformation - redressing social, political and economic exclusion or oppression ‘protect fishing and fishing rights’
What are the UNDPs aims
To eradicate poverty and the reduction of inequalities and exclusion.
How many countries does the UNDP operate in
Over 170
What is the main work of the UNDP
Has been to lead the drive in meeting the Millennium Development goals (MDGs) which eight anti-poverty targets were set in September 2000 and world committed to achieve them by 2015.
What are members of the UN now in the process of defining
The Sustainable Development Goals for the next 15 years. The new agenda is to finish the work of the MDGs, leaving no countries behind
What is the aim of developing the Sustainable Developmenf goals
To strengthen post-2015 frameworks for: Development Disaster risk reduction Climate change Global sustainable development
When was the SDGs adopted by UN member states
At the Sustainable Development Summit in New York in September, 2015
What are the 17 sustainable development goals
No poverty Zero hunger Good health and well being Quality education Gender equality Clean water and sanitation Affordable and clean energy Decent work and economic growth Industry, innovation and infrastructure Reduced inequality Sustainable cities and communities Responsible consumption and production Climate action Life below water Life on land Peace, justice and strong institutions Partnerships for the goals
What are examples of international development agencies
The UNDP (SDGs) The WTO The WSSD The UNEP World summits on climate change
Why is the WTOs focus on the issue of trade and investment inequities
As a response to globalisation
While injustice has partially alleviated by some of the processes of globalisation, what has also happened
Injustice has Been accentuated in other ways
What does the WTOs commitment to liberalising trade mean
They are responsible, through negotiations, for combating explorative practices used by some countries and TNCs, and for removing the protectionist policies adopted by some governments and trading blocs
What was the Earth Summit
Held in Rio de Janiero in 1992. It was important in setting our Agenda 21, a voluntary action plan agreed by many governments to develop strategies for long-term sustainable development. 10 years after, the World Summit on Sustainable Development (WSSD) was developed
Who did the WSSD bring together
Thousands of participants, including heads of state, national delegates and leaders from NGOs and businesses
What difficult challenges did the WSSD focus the worlds attention and directed action towards meeting
Improving people’s lives and conserving our natural resources in a world that is growing in population, with an ever increasing demand for food, water, shelter, sanitation, energy, health services and economic security
Why were further UN conferences held after the WSSD
To help involve government leaders at the highest level, including Rio + 20 in 2012
Why were summits such as Rio + 20 held
To reinvigorate the global commitment to sustainable development.
To assess progress on sustainable Development goals and targets.
To advance international cooperation on sustainable development.
What does the WSSD Plan of implementation say of global governance
” good governance, within each country and at the international level, is essential for sustainable development”
What is the UNEP responsible for
Supporting a coherent struggle of international environmental governance
Since when has the UNEP been the leading global environmental authority
Since 1972 and has confined to grow stature alongside in reading concern about human impact on the global environment
What is UNEPS mission statement
’ to provide leadership and encourage partnership in caring for the environment by inspiring, informing and enabling nations and peoples to improve their quality of life without compromising that of future generations’
What is the UNEP mission statement a clear reference to
The original sustainable development definition given to us by the pre-Rio Brundtland Commission in 1987
What is UNEPs work now a part of
The UN-system preparations for the post-2015 UN development Agenda - the sustainable development goals
What is atmosphere, including global temperature, climate change and ozone depletion, one of
The global commons
What is the UNFCCC
The United Nations Framework Convention on Climate Change - the body responsible for overseeing negotiations on reducing greenhouse gas emissions between nations
What happened at the UN Paris Climate Summit in December 2015
A historic, legally-binding climate deal was stuck by world leaders, which will come into force in 2020. After nearly 20 years of disagreement (mainly between the USA and rapidly industrialising economies like China) since the Kyoto Protocol of 1997, all 187 counties at the summit will combine pledges and work together to combat this important global threat. The main aim is to hold global temperatures to a rise of 1.5*C in order to avert the worst effects of global warming and climate change
What are the key features of the Paris Agreement
All countries will voluntarily cut emissions.
A long term aim to reduce the net emissions to zero in the second half of the 21st century.
That richer developed counties, and some wealthy developing countries, will pledge $100 billion each year to help developing counties adapt to climate change.
A review mechanism to increase pledges every five years (if they are insufficient) to keep warming below 2*c.
A loss-and-damage mechanism for addressing losses that vulnerable counties face from climate change (such as rising sea levels and increasing storm intensity)
How can success in global governance and in regulating the extremes resulting from unchecked globalisation best be achieved
If there is clear communication and understanding of strategies at all scales from global to local (or vice a versa). This clarity is often provided by NGOs which operate across boundaries at all levels - the ‘Agenda 21’ has equally attempted to engage governments and individuals at all levels
As part of the globalisation process, how have NGOs expanded their scope
From local and national settings and have increasingly become ‘international’ organisations
In the 21st century why did NGOs emerge as a global force
To:
Democratise decision-making (for example, persuading governments to consider ‘bottom up’ approaches)
Protect human rights
Provide essential services to the most needy
What are the two types of NGOs
Operational and advocacy (campaigning) - both are funded by charitable donations but some also receive money from governments and others from businesses (though this may compromise their independence)
What is an operational NGO
Those providing front-line support services to the next (e.g Oxfam); tend to raise money for each project they undertake
What are advocacy NGOs
Those who focus on campaigns to raise awareness to gain support for a cause (for example, friends of the earth); derive money from donations and, in some cases, from membership subscriptions
In reality, who do NGOs increasingly partner with
Other stakeholders like governments and international organisations
What are NGOs becoming more and more important in doing
Supporting development
What are NGOs often
The only coordinated organisations to provide a voice for the poor of the world
Why have many NGOs such as Amnesty International and agree peace emerged
With greater communication and awareness of issues greater than individual counties as they draw together people focusing on global trade issues and do no tie themselves to the interests of any government
What are the integration benefits of globalisation
Globalisation allows counties to pool resources to solve global issues.
Greater integration of information and people create better understanding between people of different backgrounds or cultures.
What are the development benefits of globalisation
FDIs being capital into a country - this can be used to I,rocks education and infrastructure. This in turn csn attract further trade and investment leading to further development.
Global institutions like the world bank csn direct resources to help counties further.
What are the stability benefits of globalisation
As counties become more interconnected they become more dependent on one another. This discourages actions that would upset global stability because of the negative consequences for all counties.
What are the economic growth benefits of globalisation
Global trade allows counties to profit from their natural resources and specialist industries, generating wealth.
Counties csn gain products and services they would be unable to produce themselves.
Greater access to money and products improves people’s standards of living.
What are the inequalities costs of globalisation
Within counties - divide created between the rich and the poor - when companies move low-skilled jobs to developed countries, low-skilled workers in developed countries find it more difficult to earn money.
Between counties - developed countries have greater access to capital and technology, meaning they have an advance over less developed countries.
What are the conflict costs of globalisation
Developed countries have intervened in conflicts in order to secure access to natural resources like oil.
Cyber warfare- new source of conflict - counties, companies and individuals are dependant on the Internet, so attacks on their computer systems can have a large impact.
What are the injustice costs of globalisation
I rooted transport and communications system have made human trafficking easier.
Many people in less developed countries have to work in sweatshops to make products for people in developed counties.
What are the environmental costs of globalisation
Global trade increases the amount of transportation required, which means more pollution and greenhouse gas emissions.
Access to resources from around the world causes deforestation (e.g rainforests for oilseed plantations) and overfishing.
Global trade can lead to a race to the bottom, in which counties and companies ignore environmental impacts in order to produce cheaper goods.
The abundance of cheap products around the world means people can afford to be more wasteful, creating more landfill.
Example of a global issue that goes beyond the scope of national laws
National governments can’t tackle climate change alone or coordinate the response to a global disease epidemic
What three things have been formed to govern with global issues
Global norms, laws and institutions
What ads international laws
Rules that are established by counties through international agreements. They are legally binging. The laws cover human rights, labour standards, trade regulations
What are norms
Accepted standards of behaviour - there ads usually negstive consequences for countries, companies or individuals who don’t follow them e.g it is generally believed that people have the right to freedom of speech - counties that restrict this right may face international condemnation
What are institutions
Political and legal organisations. They exist to pass and enforce laws, decide whether a law has been broken, or act as a forum for different groups to discuss issues and sort of their differences. At the global scale, they include the United Nations, the World Trade Organisation and the International Criminal Court
How does global governance regulate global economic and political systems
By setting up rules counties and companies should follow, monitoring whether they follow the rules, and enforcing the rules if they aren’t followed. Enforcement includes taking a country or company to an international court, or imposing economic sanctions like withdrawing trade
How are global systems reproduced and spread
By setting rules, global governance makes everyone taking part in the global system act a certain way. This ensures that newcomers also act in that way e.g in 2011 South Sudan joined the UN, agreeing to follow the UN charter like all other member nations so the global system is spread
What are institutions also known as
Agencies
What are international instructions designed to provide
Growth (improving the economy or society) and stability (making sure there are no sudden changes in the economy or society)
How do the laws and norms that international institutions give greater stability
The rules enforced means that counties must abide by common rules. Gives greater stability becsuse countries know how other counties are likely to react in a situation, making conflict less likely.
What do trade rules mean
That counties cannot take advantage of each other
How does the WTO promote growth and stability
It aims to increase global trade through common rules - more trade leads to economic growth and rules make trade more predicitable, increasing stability.
How does the World Bank promote economic growth
They give development loans to less developed counties to increase economic growth
How does the World Health Organisation promote social stability
It combats epidemics
What does the United Nations Educational, Scientific and Cultural Organisation (UNESCO) try to ensure
That the benefits of scientific advances are shared amongst all countries
What are the problems with global governance
Counties sign up to international laws and institutions voluntarily - if a country doesn’t sign or formally approve of s treaty, then they are not bound by the laws that the treaty sets out.
It can also be difficult to make countries and TNCs comply with the rules e.g in 2016 China ignored a court ruling that claims over the South China Sea went against international law. Other countries have no brought economic sanctions against China, partly becsuse China is so important to the global economy.
Some people think that global institutions act for political reasons e.g it is alleged that some countries have used the international criminal court to remove people they don’t want in power in African nations.
What have some people argued make poverty and inequality in less developed countries work
Conditional loans (Structural Adjustment Programmes (SAPS) e.g to receive a loan from the IMF or World Bank, less developed counties have to implement free trade policies and cut government spending (often on education and health care)
Example of economic group that strengthen the power of developed countries, rather than encouraging equality between them and less developed counties
G7 (a forum for seven of the wealthiest developed counties)
What can members of security institutions do
Veto resolutions e.g between 2011 and 2016, Russia and China vetoed several resolutions to intervene in the Syrian War
Example of a security institution
United Nations Security Council
When and why was the United Nations set up
In 1945 to establish a peaceful and fair world
How many members does the UN have
193 members
Why does the UN have a lot of authority
Because practically every country in the world is a member
When counties join the UN, what do they have to sign
The United Nations Charter - this sets out the basic principles of global governance and the functions of the UN
According to the United Nations Charter, what are the UNs aims
To maintain global peace and security
To develop friendly relations between nations
To use cooperation to solve international problems
To bring countries together to settle disputes
What is the UN made up of
Several organisations e.g the UN Security Council is responsible for maintaining global peace and security and the General Assembly acts as a ‘Parliament of nations’ and makes decisions on a range of issues
How has the UN promoted growth
The UN Millennium Development Goals have helped reduce the number of people living in poverty, increased the number of children in primary school and reduced child and maternal mortality rates. In 2015. The UN set new targets for 2030 to promote confined sustainable development
How does the UN promote stability
UN peacekeeping missions csn help to end wars e.g peaceful elections were held in Côte d’lvoire in 2015 after years of civil war
How does the UN promote inequalities
Developed countries hold the most power over decision taken at the UN. Many of the global issues tackled by the UN affect African counties the most e.g refugee crisis, but no African country has a permanent seat at the UN Security Council, which makes the final decision
How does the UN promote injustice
At times the UN has been ineffective. E.g in 1995, UN peacekeepers failed to protect 8000 people in Srebrencia in south east Europe when they were massacred by Bosnian Serbs
Institutions operate at a range of scales, what do they need to do to ensure governance is effective
Interact
Example of an institution at a global scale
UN
Example of an institution at a international scale
European Union
Example of an institution at a national scale
UK Parliament
Example of an institution at a regional scale
Scottish Parliament
Example of an institution at a local scale
Local councils
Why do decisions made by global institutions affect
Institutions at the international, national, regional and local scale e.g in 2015, the UN passed the Paris climate change agreement. Institutions from the international level down to the local level had to change their policies to fit with the new agreement
What can decisions at the local level affect
Institutions at the global level e.g in October 2016, a regional government in Wallonia, Belgium temporality blocked a trade deal between the EU and Canada
Example of NGOs operating on a range of scales to monitor and support instructions
Some NGOs lobby for national governments to create laws e.g Greenpeace campaign for more environmental protection, whilst others act at a local scale e.g helping communities gain access to safe water
What does the ‘global commons’ refer to
Resource domains or areas that lie outside of the political reach of ant one nation state. It is a term used to describe supra-national ‘spaces’ in which common shared resources can be found
What are the four global commons that international law recognises
The ocean
The atmosphere
Antarctica
Outer space
What would some commentators argue is a new global common
Cyberspace as it meets the definition of a ‘global common’ by being a resource that is shared by all but not controlled by a single nation
What is included in cyberspace
The development of worldwide web, one of the main drivers of globalisation
What is international law in global commons guided by
The principle of the common heritage of mankind
What does the principle of the common heritage of mankind establish
That some localities belong to all humanity and that the resources there are available for everyone’s use and benefit. It includes taking into account future future generations and the needs of developing counties.
Historically, what has access to global commons resources been
Difficult (with the exception of fishing and whaling on the high seas)
Recently, what has given easier access to a range of resources in global commons
Advances in science and technology
What has put increasingly pressure on the global commons to provide resources for a needy and developing world
Greater scarcity of resources, especially minerals, fuels and foods
What do the changes of availability and accessibility of resources mean for the concept of common heritage
It is being put under increasing pressure
What is the ‘tragedy of the commons’
This concept explains why shared ‘common access resources’ of any type are likely to be overexploited. If individuals act independently and according to their self-interest, this will be contrary to the interest of their whole group becsuse the shared resource will become depleted
What has happened to the global fish stock
It has been overfished leading to depletion, marine pollution and loss of sustainability - the concept of ‘the tragedy of the commons’
What is it clear to see is needed to protect the commons from over-exploitation
The need for international law and clear rules of global governance
What is each of the global commons covered by
A number of international laws or treaties of one kind or another
What is the institution covering the high seas global common
The UN Convention on the Law of the Seas (UNCLOS)
What is the institution covering the atmosphere global common
The United Nations Framework Convention on Climate Change (UNFCCC), the Montreal Protocol on substances that deplete the ozone layer and the Kyoto Protocol which sets limits on carbon emissions into the atmosphere
What is the treaty covering the Antarctica global common
The Antarctic Treaty Systems (ATS)
What is the treaty covering the outerspace global common
The 1979 Moon Treaty which governs exploration and exploitation of its resources and the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space
