Global Interactions Flashcards
Food miles
A measure of the distance food travels from its source to the consumer. This can be given either in units of actual distance or of energy consumed during transport.
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 though the more rapid and widespread diffusion of technology
What is global shift?
Under global shift, manufacturing industries at first and more recently services have relocated in significant numbers from developed countries to selected developing countries
What are the Asian Tigers?
South Korea
Taiwan
Hong Kong
Singapore
Would a country with higher tariffs be more or less globalised ?
It would be less globalised
What is Foreign direct investment ?
Overseas investments in physical capital by transnational corporations
Emerging markets
Developing countries that are experiencing the fastest rate of growth in the global economy
What are the three big financial centres of the world ?
London
New York
Tokyo
Impacts on LEDCs of the 2008 global financial crisis (statistics)
- In 2009, World Bank estimated 2 million kids have died as result
- March 09 report by UNESCO estimated 390million poorest Africans have suffered income decline of 20%
- IMF said world’s poorest 22 countries needed additional $25billion in 2009
Mongolia: part of the global periphery // what are the root causes of it economic problems?
- From 1923 the country’s economy was heavily subsidised by the Soviet Union
- Mongolia had high literacy levels, basic health care + education + full employment
- The speed of Soviet Union’s collapse + loss of financial support lead to significant economic problems
Mongolia: part of the global periphery // what percentage of people live in poverty?
35% Mongolians live in poverty
Mongolia: part of the global periphery // In what ways is Mongolia a typical developing country ?
- Highly primary product dependent
- Collapse of mining revenues due to 2008 global recession has caused acute financial problems
- 1/3 population live as nomadic herders
- In recent years, drought + unusually cold winters have decimated livestock, destroying the livelihood of hundreds of thousands of households.
- Many have moved to the capital where they live in impoverished conditions
Mongolia: part of the global periphery // impact of global financial crisis
- has meant a fall in demand for most commodities, resulting in significantly lower products
- from mid-2008 to Jan 2009, copper prices fell by 64%
- government revenue has declined with falling commodity prices
- this has resulted in the trade balance swinging from positive to negative
- considerable government cuts are being implemented, but will have a disproportionate impact on poorest sections of society
- domestic banking system has very limited capacity to finance government due to its small size
Mongolia: part of the global periphery // why has the value of remittances from Mongolians working abroad fallen?
- The economies of foreign countries have also contracted
- This has reduced the flow of vital income for many families with inevitable impact on local economies.
- More + more Mongolians are returning home, but cannot find employment
Mongolia: part of the global periphery // how have livestock herders been affected by falling prices of cashmere?
- The economic situation has seen demand for expensive cashmere products decline, leading to a 33% fall in cashmere prices in Mongolia in 2008.
- The fall in demand and prices means many herders have struggled to repay loans they have taken out.
- Some herders are now forced by banks to sell their livestock to repay the loans.
Are LDCs very affected by interactions between the core and periphery ?
- The least developed countries (LDCs) are the most marginalised in the world and have been relatively unaffected by the interactions between global core and periphery.
- Where effects have been felt they are as likely to have been negative as positive.
Diffusion definition
The spread of a phenomenon over time and space
Intermodal transportation definition
Transporting freight by using 2 or more transportation modes. This is made possible by transportation terminals linking different modes of transport
Friction of distance definition
As the distance from a place increases, the interactions with the place decrease, usually because the time and costs involved increase with distance
Distance decay definition
The reduction in the amount of movement or spatial interaction between 2 places the greater the distance they are apart
Time-space convergence definition
This process concerns the changing relationship between time and space, and notably the impacts of transportation improvements on such a relationship
Time-space divergence definition
When the journey time between places increases due to congestion, lower speed limits or other limiting factors
Supply chain definition
The movement of products from a manufacturer to a distributor to a retailer and any points in between
Deregulation definition
The lifting of government controls over an industry which usually results in greater competition and lower prices for consumers
Energy pathways definition
Supply routes between energy producers + consumers // they may be pipelines, shipping routes or electricity cables
Chokepoints definition
A point at which traffic or other movement can easily become blocked
Name 2 examples of the friction of distance and distance decay
- The reduction in commuting with increasing distance from a city
- The decrease in support for a sports team as the distance from the stadium increases
Why does the friction of distance tend to be less in richer countries?
In general, the friction of distance is less in rich countries than in poor countries due to the usually poorer level of accessibility in the latter. It also tends to be less in urban areas than in rural areas
What is the effect of time-space convergence?
Time-space convergence means that the friction of distance is being reduced
What is time-space convergence a direct consequence of?
Time-space convergence is a direct consequence of transport innovation
What are some restrictions that societies place on time-space convergence? (Time-space divergence)
- speed limits on motorways
- air traffic control limitations
- high usage of infrastructure leads to congestion + longer travel times
What percentage of the world’s population owns a mobile phone?
60%
What percentage of people in Africa had a mobile phone in 2008 compared to 2000? What is one of the main reasons for this increase?
In 2008, 28% of people in Africa had a mobile phone compared with just 2% in 2000
An important reasons is money transfer services which allow people without bank accounts to send money by text message
Why did world airline passenger traffic fall by 3.1% in 2009?
Due to the 2008 global financial crisis
Name and describe an airline hub
- Hartsfield-Jackson Atlanta International Airport has been the world’s busiest airport since 2000
- It serves 90 million passengers a year
- It has 151 domestic + 28 international gates
- Is the main airline hub of Delta Air Lines, Air Tran Airways and Atlantic Southeast Airlines
Why is the creation of hub airports important?
The creation of hub airports has been instrumental in extending the connectivity of air transport
What percentage of air travel globally is for tourism?
Today tourism is the major source of demand, accounting for 70% of air travel globally
What are manufacturers doing to reduce the environmental impact of air transport?
Manafacturers are producing:
- cleaner aircraft to help reduce emissions
- better navigation systems
- improved use of on-board energy
- optimisation systems for taxiing and descending
What percentage of UK air passenger traffic is at Heathrow?
Heathrow accounts for almost 30% of all UK air passenger traffic
What are arguments against the 3rd runway at Heathrow?
- The 260,000 extra flights a year anticipated from the third runway would make the airport the UK’s largest source of carbon emissions
- Dash hopes of meeting the UK’s climate change targets and solving local air pollution problems.
What are the targets of the new plan Heathrow 2.0?
Heathrow 2.0 sets a wide range of targets to tackle carbon emissions, illegal levels of local air pollution, and noise
- The airport will use 100% renewable electricity from April 2017
- Aim to get 35,000 more people a day using public transport rather than arriving in cars by 2030 and double that by 2040.
What is the economic value of building a 3rd runway at Heathrow?
- Heathrow is the biggest single site employer in the UK, with 72,000 working at the airport
- Large number of independent firms rely on Heathrow for their business
- The airport has been described as ‘the UK’s gateway to the global economy’
- Strong relationship between Heathrow + financial companies operating in the City of London
- If 3rd runway is not built, Heathrow may lose business to competing airports e.g. Paris + Amsterdam
What is the cheapest way of moving heavy and bulky goods?
Water transport
Why are many shipbuilders planning on scaling up to 16,000 and 22,000 TEU vessels?
could reduce average transport costs by up to 40%
What are 2 potential disadvantages of scaling up to 16,000 and 22,000 TEU vessels?
- larger ships are more vulnerable to a decline in world trade because they have much higher financial break-even points
- Rotterdam is only port in Europe that can accommodate a ship of such size
Internet penetration rate (definition)
The percentage of the population in a country or world region with access to the Internet
Digital divide (definition)
Refers to the gap between people with effective access to digital and information technology and those with very limited access, or none at all
Green data centres (definition)
Data centres that are much ore efficient at cooling computers compared with traditional data centres
What is the fastest-growing mode of communication ever?
Internet
It took just 4 years for the Internet to reach 50 million users
The Horn of Africa // why was the lack of fibre-optic cables such a problem?
- In 2009 the Horn of Africa was one of the last populated areas of the Earth without a proper connection to the internet
- Instead of fibre-optic cables, which allow cheap phone calls and fast internet, its 200million people relied on satellite links
- This made international phone calls + internet overpriced + v slow
The Horn of Africa // what happened in June 2009?
- In Kenyan port of Mombasa, Kenya’s president plugged in the first of 3 fibre-optic submarine cables
- Cable cost $130million, mainly at Kenyan government’s expense
- Brought faster connection to Kenya, Burundi, Rwanda, Uganda etc..
The Horn of Africa // why have fibre-optic cables been so good for economy?
- East Africa has many young English-speakers only an hour or two ahead of Europe’s time zones
- Has been able to compete with India and Sri Lanka for back-office work for Western companies (e.g. call centres)
How much of the material on the Internet is in English?
About 60% of the material on the Internet is in English
To what extent are computers and the Internet responsible for human-made carbon dioxide emissions?
Computers and the Internet could be responsible for as much as 2% of all human-made carbon dioxide emissions. At this level it would be on par with the aviation industry
By how much will emissions from computers rise by 2020?
The Climate Group, an international environmental coalition, estimates that total emissions from computers will rise by 280% by 2020
Name a technical advancement that is reducing the environmental impact of computers and the Internet
An increasing number of organisations are using GREEN DATA CENTRES which are much more efficient at cooling computers compared with traditional data centres. With green data centres the energy needed to send each megabyte of data across the net is about 30% less each year
In what ways have developments in ICT been vital to the expansion of civil society both within and between countries?
- ICT has allowed cheap, reliable + almost instantaneous communications around the world, permitting the sharing of information on an unprecedented scale
- Civil society organisations are steadily + successfully applying ICT to the promotion of improved human development
- Has meant the flow of information is more balanced and not just from a government to its citizens
Profit repatriation (definition)
Returning foreign-earned profits or financial assets back to the company’s home country
Trade deficit (definition)
When the value of a country’s exports is less than the value of its imports
Why have many countries felt the need to increase their hard currency reserves?
- These are important to cover foreign debts
or to use in case of emergencies - Since 1990, LEDCs have increased their reserves from 3 months worth of imports to more than 8 months. They have done this because of increased uncertainties in a more globalised economy
Why do democratised developing countries appear to attract more foreign capital than undemocratic countries?
Because their democratic institutions can provide a secure and profitable environment for investment with protection of property rights and social spending on human capital
Give an example of profit repatriation
When the Volkswagen Group earns profits anywhere in the world, it takes a share back home to Germany, after converting it into euros
Why may a repatriation of profits be bad for host countries?
The repatriation of profits represents an outflow of a host country’s limited foreign exchange resources and has a negative impact on the country’s balance of payments.
The poorest developing countries are usually the worst affected because they will often offer very favourable tax exemptions + financial incentives to attract foreign investment
How does FDI need to be invested to bring benefits to the host country?
To bring benefits, FDI needs to be channelled into productive rather than speculative activities
The power of governments to influence the quality of investment has been steadily declining. Now a significant proportion of FDI is made up of companies:
- buying out state firms
- purchasing equity in local companies
- financing mergers or acquisitions
What do many say is the main economic problem for developing countries?
Many poor countries are currently paying back large amounts in debt repayments to banks, lending agencies + governments in MEDCs whilst at the same time struggling to provide basic services for their populations. An ever increasing proportion of new debt is used to service interest payments on old debts.
In what way can loans be positive?
Loans can help countries expand their economic activities and set up an upward spiral of development
Why do loans often lead to little tangible improvement in the quality of life for the majority of the population?
- Banks frequently lend irresponsibly to governments known to be corrupt
- Often such loans lead to little tangible improvement in the quality of life for the majority of the population, but instead saddle them with long-term debt
- If such countries had been companies they would have been declared bankrupt
New loans to LEDCs have often only been granted when they agree to very strict conditions under ‘structural adjustment programmes’ which have included:
- Agreeing to free trade measures which have opened up their markets to intense foreign competition
- Severe cuts in spending on public services such as education + health
- The privatisation of public companies
What is the aim of The Heavily Indebted Poor Countries (HIPC) initiative ?
- First established in 1996 by IMF and World Bank
- Aim is to provide comprehensive approach to debt reduction for heavily indebted poor countries
- To qualify for assistance, countries must pursue IMF + World Bank supported adjustment + reform programmes
- By early 2008, debt reduction packages had been approved for 33 countries, 27 of them in Africa
What proportion of global remittances originate in the US?
1/3 of global remittances originate in the USA
For the majority of Somalis, what has been the single most important source of income since the country’s economy collapsed in the 1990s?
For the majority of Somalis, remittances sent back by relatives + friends working abroad has been the single most important source of income since the country’s economy collapsed in the 1990s
Why do countries apply for funding from the IMF?
Countries usually apply for funding from the IMF when they are unable to obtain it from other sources
What is the aim of IMF money?
IMF money is designed to prevent the disruption to the international financial system that would occur if a country didn’t meet its commitments to other nations
In 1960 a branch of the World Bank called that International Development Association (IDA) was formed. What does the IDA do?
The IDA lend only to nations with a very low per capita income. For such countries, loans are interest free and allow long repayment periods
Critics of the World Bank argue that the conditions attached to World Bank loans have:
- Crippled economic growth in recipient countries
- Hindered development
- Promoted dependency
- Increased poverty
- Rich nations use the World Bank to run other countries for the benefit of their merchant banks
Has the WTO been an overall success?
Yes, today average tariffs are only a tenth of what they were when GATT (WTO’s processor) cam into force and world trade has been increasing at a much faster rate than GDP
What is the key problem with the WTO?
In principle every nation has an equal vote in the WTO. In practise, the rich world shuts the poor world out from key negotiations
Maquiladoras (definition)
Assembly plants in Mexico, especially along the border between USA + Mexico, to which foreign materials and parts are shipped, and from which the finished products are returned to the original market
Ethnographic (definition)
An ethnography is a type of case study that focuses upon the cultural patterns that develop within a group
Time-space distanciation (definition)
The stretching of social systems across space and time
Migrant culture (definition)
The attitudes and values of a particular society to the process of migration
What are the 3 main reasons for the labour migration from Mexico to USA
- Income gap has been powerful stimulus to movement // emigration tends to surge during periods of wage decline in Mexico
- Weak growth in Mexico’s labour demand has resulted in high levels of unemployment + underemployment
- In virtually every aspect of quality of life, conditions are better in USA
How many people does Mexico send to USA each year?
Mexico sends up to 500,000 people (half of its net population increase) to the USA each year
How many immigrants in USA are from Mexico?
30% of legal immigrants in USA are from Mexico
50% of illegal immigrants in USA are from Mexico
Why did the American government allow the recruitment of Mexican workers as guest workers in the first half on the 20th Century?
- Guest worker programme began when US farms faced a shortage of labour during periods of war
- US farmers were strong supporters of Mexican labour as the increased supply of labour kept wages low + contributed to higher land prices
Why did the American government end the Mexican guest worker ‘bracero’ programme?
- Trade unions + many religious groups were against the programes
- Congress agreed that the inflow of Mexican workers was holding down the wages of US farm workers and ended the programme
What was the Immigration Reform Control Act passed by Congress in 1986?
- Imposed penalties on American employees who knowingly hired illegal workers
- Aim was to discourage Mexicans from illegal entry
- Also legalised 2.7million unauthorised foreigners, of which 85% were Mexican
By 2006, how many Mexican-born people were living in USA?
By 2006 there were an estimated 12 million Mexican-born people living in the USA // 11% of the population
In 2005 what was the median income for Mexicans in USA?
In 2005 the median income for Mexicans in USA was $21,000 (just over half that for US-borns) but still much more than the median income in Mexico
How does assimilation of Mexicans in USA work?
- Economic assimilation tends to occur first
- Whilst most migrants from Mexico would be in the low=-skills category, their children + grandchildren may gain higher qualifications
- Such economic mobility results in greater social contact with the mainstream population
- Eventually more people from migrant population get involved in politics + the migrant community gains better political representation
In the USA the Federation for American Immigration Reform argues that unskilled newcomers:
- undermine the employment opportunities of low-skilled US workers
- have negative environmental effects
- threaten established US cultural values
What was the impact of the 2008 global recession on employment in USA?
The recent global economic crisis saw unemployment rise to about 10%, the worst it had been for 25 years
Impacts of migration to USA on Mexico
- high value of remittances, which totalled $25 billion in 2008 // as a national source of income this is only exceeded by oil exports
- reduced unemployment pressure, as migrants tend to leave areas where unemployment is particularly high
- lower pressure on public services
- changes in population structure with emigration of young adults, esp. males
- loss of skilled + enterprising people
- migrants returning to Mexico with changed values and attitudes
San Agustin in Oaxaca, Mexico + Poughkeepsie in New York // how did the link between the 2 communities begin?
- Began with migration of a lone Oaxacan to Poughkeepsie in early 1980s
- Mexican population of Poughkeepsie, predominantly male, grew to over 100 in the next decade
- Most Oaxacans found employment as undocumented workers in hotels, restaurants, building workers…
- Remittances transformed village life in San Agustin
San Agustin in Oaxaca, Mexico + Poughkeepsie in New York // how did they main a high level of connectedness?
- Migrant community kept in daily contact with family + friends via telephone, fax, videotape: communications technology that was rapidly being introduced to San Agustin
- Rapid migration between 2 communities facilitated by jet travel + systems of wiring payments
- Classic example of time-space distanciation // the stretching of social systems across time + space
San Agustin in Oaxaca, Mexico + Poughkeepsie in New York // how did migrants display continued village membership?
Migrant remittances were used not only to support the basic needs of families, but also for home construction, the purchase of consumer goods and for financing fiestas
San Agustin in Oaxaca, Mexico + Poughkeepsie in New York // what was the main point of conflict between the migrants and the home community?
- The main point of conflict was over the traditional system of communal welfare that requires males to provide service + support to the village
- This was increasingly resented by some migrants who saw ‘their money as their own’
- The traditionalists in San Agustin cited migration as the major cause of the decline of established values + attitudes
San Agustin in Oaxaca, Mexico + Poughkeepsie in New York // It was found that a migrant culture had become established in San Agustin for 4 main reasons:
Economic survival
Rite of passage for young male adults
The growing taste for consumer goods and modern styles of living
The enhanced status enjoyed by migrants in the home community
Supply chain management (definition)
The control of materials, information, + finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer
Back office industry (definition)
Offices of a company handling high-volume communications by telephone, email or letter. Such low to medium level functions are relatively footloose and have been increasingly decentralised to locations where space, labour + other costs are relatively low
The components of businesses typically outsourced include:
Information technology Human resources Facilities Real estate management Accounting Customer support + call centre functions
How does outsourcing allow companies to focus on their core business?
- Acquiring logistics expertise internally can be expensive + time consuming
- Using a logistics provider can greatly reduce capital expenditure
- e.g. no longer the need to purchase + maintain a transportation fleet, equipment + distribution centre
- High quality ICT gives manufacturers the ability to see their inventory as it moves through the supply chain
Which country’s FDI inflows recorded the largest increase globally in 2008?
India’s FDI inflows recorded the largest increase globally at 46% in 2008, even as global FDI flows decreased
Give an example of periphery to periphery outsourcing
Mauritius is a growing service exporter to Europe, particularly to France. Several Mauritius companies that provide BPO services to France have opened up their own offshore centres in nearby Madagascar. Here the services of French-speaking workers are acquired at much lower costs
Why do so many companies outsource to India?
- Labour costs are much lower
- Many developed countries have significant ICT skills shortages
- India has a large + able English-speaking workforce (50million English speakers in India)
- Early success of outsourcing to India has has a cumulative effect resulting in more + more outsourcing business coming into the country
What is the reason for the development of rural outsourcing?
- A company called Rural Shores has begun looking to rural India for an untapped pool of eager office workers
- With much lower rent + wages than other similar centres in cities, the company says it can do the same jobs as many outsourcing companies at half the price
- A majority of the workers are the children of famers + often the first generation to finish high school
How much is India’s software industry worth every year?
Worth more than $1 billion each year
What has India’s software industry grown based on?
It has grown based on low costs but high quality products
How fast has India’s software industry grown?
It has grown at a rate of 46% (twice rate of USA)
How many people does India’s software industry employ?
It employs over 150,000 people
Why has India’s software industry advanced much further than China’s?
- Low cost professionals
- High quality levels
- Time-zone advantage with both USA and Europe
- After USA, India has largest number of English-speaking scientific manpower
