Global interdependence Flashcards
What are the interactions between countries
- Trade
- Cultural
- Movements of labour
- Foreign Investment
- Political/Political organisations.
- Immigration
6 Key trends emerging in world trade
Emergence of developing economies
Slowing of China’s Economy
The rise in protectionism
The Worlds trade intensity ratio is also rising and is now at a rate of 30%
Trade overall is growing at a rate of 2.5x that of the worlds real GDP
Regionalisation: Especially in Europe
Largest Trade Groups
- Manufactures
- services
- Fuel+Mining
- Agriculture
Largest Merchandise Trade Groups
- Manufactures
- Duelist Mining
- Agriculture
3 largest Groups of Services
- Transport
- Commercial services
- Travel
what are the factors affecting international competitiveness?
Relative inflation rates
Exchange rates
Infrastructure spending
government regulations
real unit labour cost
what are the economic indicators:
Trade intensity ratio
foreign investment
cross border debt
Political Indicators
- Increasing number of FTA’s
- Member nation to UN
- Growth and membership of international organisations such as the WTO
social Indicators
Phone usage
tourism
immigration
what are the government drivers of globalisation
- Trade liberalisation
- Creation of trading blocs
- Privatisation in previously state-dominated economies
- Shift to open market economies from closed communist systems in eastern Europe and Asia Political and economic convergence
- Increased openness to trade and foreign investment. Integration and deregulation
- The influence of international organisations to faster globalization
what are the market drivers of globalisation
Market Drivers:
• Convergence of lifestyles and tastes
• Increasing travel creates global consumers
• Establishment of world brands – the multinational organisation (corporation)
what are the Competitive/Cost Drivers of globalisation
- Increased levels of foreign investment (>10% = foreign ownership)
- Economies of scale
- Growth of global production networks making countries interdependent in – global supply chains, global production webs.
- Increased formation of global strategic alliances – airlines. – eg emirates +Qantas
- Continuing push for economies of scale. – the longer the level of production the lower average cost of production
- Accelerating technological innovation – process and production innovation
- Advances in transportation – super tankers and bulk carriers.
- Emergence of newly industrialised countries (NIC) with productive capability and low labour costs. To compete, businesses seek to set up in countries which offer incentives, such as government subsidies and cheaper labour costs; the consequence is a shirft inmanufacturing from developed to developing countries
- International division of labour. Outsourcing of telecommunications, computing, IT, accounting and finance to offshore locations with cheap skilled sand semi-skilled labour (call centres)
what are the Technology Drivers of globalisations
- Internet access – e-commerce
- Communication – Mobile phone usage/network coverage.
- Modern communications technologies allow vast amounts of capital to flow freely and instantly throughout the world.
the positives of globalisation
- Higher levels of employment
- International division of labour
- Increased standards of living
- Foreign Direct Investment
- Access to new markets
- Economies of scale
- Access to finance
- Technological innovation
the negative of globalisation
- Pollution
- Not everyone’s standards of living improve
- Child Labour
- Health issues
- Economic contagion
- Volatility of capital flows
- Structural unemployment
- Equity Distribution.
