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
