Global Systems and Global Governance Flashcards
What is globalisation?
The process of the world’s economies, political systems and cultures becoming more strongly connected to each other.
What factors affect globalisation?
Flows of information, capital, products, services and labour between different countries
What are the three driving forces of globalisation?
New systems, technology and relationships between countries
How does new systems affect globalisation?
Systems include ways of working, procedures and methods that allow a particular function to be carried out
How does technology affect globalisation?
The Internet allows people from all over the world to access information
Aeroplanes allow people and goods to be transported around the world swiftly and efficiently
How do relationships affect globalisation?
In the past, most relationships involved one country winning and one country losing
Nowadays, relationships are based on trade and common rules that allow everyone involved to gain
How do financial systems promote globalisation?
It governs the flow of capital between countries
Financial deregulation by governments relaxed the rules about what banks were allowed to do - this removed barriers to capital coming in and out from a country
How have trade agreements promoted globalisation?
It has removed barriers to trade, making it more common and beneficial for both countries
This is done by removing tariffs for both countries
What does the World Trade Organisation do?
They govern global trade
They set rules on how countries can trade with each other and can negotiate trade deals and settle disputes
How has transport promoted globalisation?
Improved transportation (faster and larger trains, aeroplanes, ships etc…) has made it easier to move products around the world
Containerisation (same containers) has helped to reach this
How has communication systems improved global businesses?
The ability to communicate between two areas allow an increased flow of information
This has increased with the Internet, social media and email
How has management and information systems promoted globalisation?
They have increased the efficiency of companies
Supply chains have now become global
Large companies benefit from economies of scale
What are economies of scale?
Buying in bulk or making lots of the same product can reduce the price of the individual item
What is outsourcing?
A company pays another company to do work to save money
For example, a call centre may be used for customer services instead of creating a new one
How has security promoted globalisation?
Trade makes war less likely as countries become interdependent
Countries can work together to improve security e.g. NATO by deterring common enemies
What is interdependence?
The relying of a country on another
What is economic interdependence?
Countries rely on each other for economic growth e.g. oil is produced by a country and sold to another. This means that a country relies on the oil and the other country relies on the money
What is political interdependence?
Countries are dependent on each other to solve issues that cannot just be addressed by one country e.g. refugees were taken into many countries in the Ukrainian War in 2022
What is social interdependence?
There is a greater connection between people living in different countries e.g. in 2015, there were 244 million migrants - these people build relationships with people from other countries
What is environmental interdependence?
Every country in the world is dependent on the rest of the world to look after the environment e.g. the Chernobyl disaster in 1986
What benefits come from the unequal flows of people?
People move towards places with more jobs
People move to escape war and famine
Remittances are sent home to their families, creating economic growth in the developing country
What inequalities come from unequal flows of people?
People moving for economic reasons are not usually the poorest in society
It is easier for people in the developed world to migrate
Developing countries experience the ‘brain drain’
Differences in pay between migrants and locals can cause conflict
Many are made to work in dangerous conditions for little pay e.g. several thousands migrants have died building facilities in Qatar for the 2022 FIFA world cup
What is a remittance payment?
Money sent back to families or home communities from working in a developed country
What is the ‘brain drain’?
Skilled people leave a developing country in the search for work and take their knowledge with them
What benefits come from flows of money?
Remittance payments, foreign aid, FDI and income from trade all contribute towards a country’s wealth
Foreign aid can improve living standards and local infrastructure
What inequalities come from unequal flows of money?
Foreign aid can create dependency on another country
Foreign aid can find its way to armed groups and fund conflicts
Companies may pressure governments to pass laws that make it cheaper to invest there e.g. cutting environmental regulations or weakening laws on working conditions
What is neo-liberalism?
Governments thought the economy would work better without state intervention so barriers to trade were removed, government spending was cut and companies were privatised
What are the benefits of neo-liberal ideas?
Increased free trade leads to development within countries and lowered conflict between some countries
What are some of the disadvantages of neo-liberal ideas?
It tends to concentrate wealth in the hands of a few e.g. large businesses
It could lead to more conflict if there are disagreements
Governments and TNCs may argue that free trade is the best way for a country to develop, promoting poor working conditions and environmental degradation
How have unequal flows of technology been beneficial?
Concentration of technology e.g. Silicon Valley has rapidly improved healthcare and communications
How has unequal flows of technology produced inequalities?
Developed countries can afford the latest technology, increasing their access to information and services due to better communication infrastructure - this gives developed countries an advantage
Repressive governments of less developed countries have used weapons technology sold to them by developed countries to stop protests from their own people
Where is coffee grown?
In hot, wet areas close to the equator
Coffee production is dominated by countries like Brazil, Vietnam, Colombia, Indonesia and Ethiopia
What are the issues with coffee production?
The plants are susceptible to a range of diseases e.g. bacterial blight and coffee leaf rust which prevents growth
Insects and other pests can harm the growth of the plants
Farmers use fertilisers and pesticides but these are often imported into the country and so can be expensive
What is trend for coffee production and consumption?
It is mainly produced by less developed countries and consumed by developed countries
What country is the largest coffee producer?
Brazil is the largest coffee producer (20%)
It has around 300,000 coffee farms and produces around 2.5 million tonnes per year
What country is largest importer of coffee?
The USA is the largest importer (20%)
How much of the price of the coffee goes to coffee farmers?
Around 7 - 10% because they sell the unprocessed bean which is low value
TNCs receive the majority of the profits by roasting the beans
What movement helps farmers receive a fair wage?
Fairtrade
How does Fairtrade help coffee farmers?
They work with the farmers to maintain environmental standards and prohibit forced labour and child labour
They have set up a minimum price which has to cover all of the farmer’s costs
How has the Fairtrade movement grown?
The number of producer organisations grew from 175 in 2002 to 329 in 2011
It also grew from around 15,000 tonnes to 80,000 tonnes per year
What is the Fairtrade premium?
Extra money that allows infrastructure like schools, farm machinery and computers
What is a TNC?
Companies that operate in two or more countries
What percent of global trade was linked to TNCs?
80%
What is Access to Markets?
How easy it is for countries or companies to trade with one another
Do developed or developing countries have greater access to markets?
Developed countries as they have more money to invest so they can avoid the high tariffs imposed by developing countries by opening factories within them
Why do developing countries have less access to markets?
They may rely on loans that depend on them removing trade barriers and increasing access to their markets
What can increase access to markets?
Being a member of a trading bloc
What is a trading bloc?
It is where member countries have access to the markets of all the other member countries
Why are trading blocs better for HICs?
They have access to lots of wealthy buyers
Why are trading blocs worse for LICs?
They are less likely to be in a trading bloc and therefore will have to pay high tariffs to export their goods to those markets
What is the SDT?
Special and Differential Treatment agreements - these let the least developed countries bypass developed countries tariffs e.g. the EU’s 2001 Everything but Arms Agreement
What are the advantages of an SDT?
The profits allow the less developed countries to diversify the range of industries they have e.g. by introducing manufacturing or tourism sectors
What are the disadvantages of an SDT?
They have a negative impact on developed countries by allowing cheap imports into the country
Some people think that setting up trading blocs are more effective at improving market access
What are the economic impacts of having differential access to markets?
It is hard for countries with poor market access to establish new industries
This makes them dependent on selling low-value primary products e.g. agricultural goods that tend to fluctuate in price
Countries with higher access to markets tend to see more economic growth because they can trade more
What are the social impacts of having differential access to markets?
People in countries with better market access tend to have higher-paid jobs, increasing their standard of living
Countries with less access to markets have less money available for education and healthcare so quality of life is generally lower
Less developed countries use child labour or harsh working conditions to make sure they get some profits
Who benefits more from trade: developed or developing countries?
Developed countries as they produce processed goods so they can sell for a higher price
What does trade create?
Trade increases interdependence between countries e.g. the financial crisis in 2008 increased rates of unemployment in many countries
How do TNCs connect countries?
They connect it through their spatial organisation - they create a global supply chain because the different parts of either business (from manufacture to retail) are located in different countries
Where are TNCs headquarters located?
HQs are usually in big cities in developed countries e.g. New York
Where are the Research and Development (R&D) facilities located?
Located in towns and cities where there are highly educated people, often in the same country as the headquarters
Where are the factories located?
They are often located in less developed countries where the manufacturing costs (e.g. labour, material and land) are lower e.g. Nestlé has a factory in Bangladesh
How do TNCs make links between countries and companies?
By expanding their operations to gain more control over their markets
What is a merger in terms of TNCs?
It is where two companies (usually of a similar size) agree to become one bigger company
BP and Aramco merged in 1998, creating stronger links between the countries where the two companies operate
What are acquisitions?
An acquisition is when one company buys another (usually smaller) company
For example, Ford bought Volvo Cars in 1999
How are sub-contractors used in relation to TNCs?
TNCs can use foreign companies to manufacture products without actually owning the businesses
For example, Nike subcontract a clothing company to make the clothes for them, linking the countries of the TNC and the subcontractor’s country together
How does FDI increase linkages between TNCs and Countries?
All mergers, acquisitions and subcontractors all lead to an FDI increase in the area
What are the two ways TNCs gain more control over their markets?
Vertical Integration
Horizontal Integration
What is vertical integration?
When a company takes over other parts of its supply chain
For example, Shell owns every part of its supply chain, from extracting and refining oil to selling it to consumers at petrol stations
What is horizontal integration?
When a company merges with or takes over another company at the same stage of production
For example, Disney took over PIXAR in 2006 - both were film production companies making family-oriented films
Why do TNCs organise production?
To take advantage of a global supply chain, giving them economies of scale so they get the most value from the whole of their supply chain
Where do TNCs in the primary industry often invest in?
They invest in counties with natural resources they can extract
Shell acquired fellow oil company BG Group to gain access to oil reserves in Brazil and Australia
Where do TNCs in the secondary industry often invest in?
They invest in countries with low labour costs and cheap land, especially where governments encourage investment in tax breaks
They also invest in countries with a large market for their products
Where do TNCs in the tertiary industry often invest in?
TNCs in the tertiary industry often invest in countries with a well-educated population
For example, Aviva has invested in France, Canada and India
Where else do TNCs invest?
They invest in countries with weak labour and environmental regulations as they can cut costs, increasing their profits
What is intra-firm trading?
One division of a TNC trade with another part of the TNC
Intel assembles some of its microchips in Costa Rica but sells them to the USA
What percentage of international trade is made up of intra-firm trading?
30-50%
How does intra-firm trading give a lot of power over global trade and smaller businesses?
The prices are decided by the company management and not the market
What is the multiplier effect?
When one impact creates many other impacts
For example, by opening a new factory, a corporation creates jobs for the people, meaning they have more money to spend, helping local businesses and governments through taxes
When is the multiplier effect created?
When TNCs invest in a new country
What is global marketing?
When one marketing strategy is used to advertise a product all over the world
How do TNCs gaining knowledge of local markets help them sell products?
They can slightly change their products to suit different cultures
For example, McDonald’s sells the McSpicy Paneer burger in India
What is the aim of a TNC through marketing?
To create a brand that is recognised globally e.g. Coca Cola
Consumers will still buy the product without continued marketing
What is international trade?
International trade is the import and exports of goods and services between countries
How has the volume of global trade increased dramatically between 1980 and 2008?
Its value has increased nearly 8 times
How is the pattern of global trade changing?
Developed countries remain the biggest global traders, but some emerging economies are catching up
China is now the largest exporter of goods in the world, largely due to its rapid growth in the manufacturing sector
How is the pattern of global trade changing in developing countries?
It is increasing, but the growth is slow
In 1995, African countries accounted for 2% of world trade whereas, in 2010, they accounted for just over 3%
The poorest 49 countries in the world make up around 10% of the world’s population but only account for 0.4% of global trade
How has the rise in fair trade increased?
Since the 1970s, nearly a thousand fair trade producer groups have been set up in less developed countries
What are foreign investors attracted to?
The size of the market (how many people they can sell to), the stability of the market (e.g. not in a war zone), the possibility of extracting resources (e.g. mines in Africa) or the ability to access financial services
How has the volume of FDI changed between 1996 and 2016?
The volume of FDI has risen dramatically from about $400 billion in 1996 to nearly $1500 billion in 2016
How has the pattern of investment changed?
Until the 1980s, developed countries mainly invested in other developed countries. Since the 1980s, developed countries have begun investing more in emerging economies and developing economies e.g. China, India, Brazil and Mexico
Emerging economies now invest heavily in less developed countries e.g. China invests a lot of money in countries in Africa and South America
What is ethical investment?
When a person, company or group only invests in areas that are considered socially responsible - e.g. companies that cause environmental or humanitarian harm are generally avoided by ethical investors
The amount of ethical investment by US companies almost tripled between 2005 and 2016
What are international laws?
Rules that are established by countries through international agreements that are legally binding
Examples are human rights, labour standards and trade regulations
What are norms?
Accepted standards of behaviour - there are usually consequences for countries, companies or individuals who don’t follow them
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 out their differences.
Examples are the UN, the WTO and the International Criminal Court
What does global governance try to promote?
Growth and stability
How does global governance promote growth and stability?
Countries must abide by common rules
Trade rules set by the WTO aim to increase global trade
The World Bank gives development loans to less developed countries to increase economic growth
The WHO combats epidemics, increasing social stability
UNESCO helps to ensure the benefits of scientific advances are shared amongst all countries
What are some problems with global governance?
Countries sign up to international laws and institutions voluntarily - if a country doesn’t sign up, they are not legally bound to the treaty
It can be difficult to make countries and TNCs comply with the rules
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
How can global institutions create inequalities and injustices?
There are conditions to receiving a loan from the IMF or World Bank e.g. less developed countries may have to implement free trade policies
Economic groups like the G7 strengthen the power of developed countries, rather than encouraging equality between them and less developed countries
Members of security institutions e.g. the United Nations Security Council can abstain from resolutions e.g. between 2011 and 2016, Russia and China abstained from several resolutions to intervene in the Syrian Civil War
Why was the United Nations set up?
It was set up in 1945 to establish and a peaceful and fair world
What are the four main principles of the UN?
To maintain global peace and security
To develop friendly relations between nations
To use cooperation to solve international trade problems
To bring countries together to settle disputes
How many members are there in the UN?
193 different countries so it has a lot of authority
How has the UN promoted growth and stability?
The UN Millennium Development Goals have helped reduce the number of people living in poverty, increased the number of children in primary schools and reduced child and maternal mortality rates
UN peacekeeping missions can help end wars e.g. peaceful elections were held in Cote d’Ivoire in 2015 after years of civil war
How has the UN promoted inequalities and injustices?
Developed countries hold the power over decisions taken at the UN - many of the global issues tackled by the UN affect African countries the most, but there is no permanent seat on the Security Council for these people
At times, the UN has been ineffective e.g. in 1995, UN peacekeepers failed to protect 8,000 people in south-east Europe when they were massacred by Bosnian Serbs
On what scales do decisions made by global institutions affect?
International, national, regional and local
On which scales do NGOs operate?
They operate on a range of scales to monitor and support institutions for example some NGOs lobby for national governments to create laws
What is the main threat to Antarctica?
Fishing and whaling
What species does over-fishing threaten?
The Patagonian Toothfish
Antarctic krill is the most fished creature (200,000 tonnes in 2013), having a knock-on effect in the food chain
Why is it hard to make sure fishing quotas are followed?
The ocean is so large and lots of illegal fishing takes place
What other species are affected by fishing by getting caught in fishing lines?
Albatrosses and Petrels
What is happening to the whale population currently?
It is increasing, but slowly due to them being slow breeders
When was commercial whaling banned?
1982
Why does some whaling still take place?
For ‘scientific reasons’
Japan, Iceland and Norway do not agree to the ban on whaling
What was set up by the International Whaling Commission in 1994?
A whale sanctuary in the Southern Ocean around Antarctica
What benefits does globalisation bring?
Integration
Development
Stability
Economic Costs
How is integration beneficial?
It allows countries to pool their resources to solve global issues that are too great for a single country to deal with
How is development beneficial?
FDI brings capital into a country which can be used to improve education and infrastructure
This can attract further trade and investment, leading to further development
Global institutions like the world bank can direct resources to help countries develop further
How is stability beneficial?
Countries are becoming more interdependent, which discourages any actions that would upset global stability because of the negative consequences for all countries involved
How is economic growth beneficial?
Participation in global trade allows countries to profit from their natural resources and specialist industries, generating wealth.
Countries can also gain products and services that they would be unable to produce themselves.
Greater access to money and products improves people’s standard of living
What disadvantages are there of globalisation?
Inequalities
Conflict
Injustice
Negative consequences on the environment
How are inequalities a negative of globalisation?
Low skilled workers in developed countries struggle to find work when businesses move out, creating a greater rich/poor divide
Developed countries have greater access to capital and technology, giving them an advantage
How is conflict a negative of globalisation?
Developed countries have intervened in conflicts to ensure their supply of natural resources like oil
Cyberwarfare is becoming a new source of conflict
How is injustice a negative of globalisation?
Improved transport and communications systems have made human trafficking easier
Many people in less developed countries have to work in sweatshops to make products for people in developed countries
How is globalisation bad for the environment?
Global trade increases the volume of GHGs produced
Access to resources causing deforestation and overfishing
The abundance of cheap products around the world means people can afford to be more wasteful, creating lots of landfill
