Global Systems and Global Governance Flashcards
What are some of the many dimensions of globalisation?
- Flows of capital
- Labour
- Products
- Services and information
- Global marketing
- Patterns of production
- Distribution
- Consumption
What is Globalisation?
Globalisation is the process in which national and regional economies, societies and cultures have become integrated through the global network of trade, communication, immigration and transportation
What are the 5 flows of globalisation?
- Flow of capital
- Flow of Labour
- Flow of goods and services
- Flow of information and marketing
- Patterns of production, consumption and distribution
What is the flow of capital?
The movement of money between countries for investments, trade or production.
List an example of the increasing flow of capital through globalisation?
Margaret Thatcher’s deregulation of the London stock exchange and the ensuing ‘big bang’ of 1986 which meant nations were no longer restricted by international boundaries
Explain Frank and Wallerstein’s core-periphery model?
Frank and Wallerstein’s core-periphery model distinguishes between a global core and global periphery, wherein the global core is where power in concentrated in a area of relatively powerful and developed nations. Periphery nations are less developed and have suffered from a lack of investment, exploitation which have been worsened by leakages and outwards migration
What is the drawback of Frank and Wallerstein’s core-periphery model?
The model has become largely outdated, with the rapid growth of BRICs and MINT nations.
What are all the flows of capital?
Foreign direct investment (FDI)
Repatriation of profits
Aid
Migration
Remittances
What is FDI?
investment made by TNCs or government into the physical capital or assets of another country
What is the repatriation of profits?
TNCs investing in overseas production will take back any profits to the country of their headquarters, called an economic leakage
What is aid?
Can be the multilateral (UN) or by a number of richer countries ODA (official development assistance) or bilaterally from one nation to another. This aid can come in the form of food, relief or capital in times of disaster by NGOs
What is migration as a flow of capital?
Outmigration happens from poorer -> Richer countries. This can exacerbate inequalities as poor nations lose their skilled labour and pay money into their destination countries.
Although they may send back remittances.
What are remittances?
Transfers of money made by foreign workers in their families back to their home countries. These can often be the second most important source of finance in developing countries, with FDI being the most notable)
What is happening to flows of Labour?
Labour flows are not as free flowing as other flows due to immigration controls. However numbers of international migrants are increasing as they seek better employment prospects for cheaper travel prices. This is an issue because international migrants are often not the poorest within a society, but those with some education.
What are the main/general migrant flows?
- Developing countries in south Asia, Africa, Latin America and war torn nations are travelling to richer areas like the EU or US
- Migration to oil rich gulf states are increasing where the construction boom has provided plentiful employment opportunities.
Explain current developments of the flows of products?
- Transportation costs have reduced by investments in flows of data and increased ease of capital transfers
- Transport times and costs reduced by containerization and increasing efficiency of air travel
- development of WTO has meant less tariffs have greatly improved the flow of trade.
What is the difference between high level and low level services?
High level services = Services to businesses like finances, investments and marketing - this is often concentrated in hubs like London and Tokyo, with growing trans national conglomerates emerging globally e.g. HSBC
Low level services = Services to consumers such as bankers, travel and tourism, customer call centers or communication services - These are moving from developed to developing countries. Many of these services are footloose and can be served to anyone, anywhere, anytime
How has digitisation and satellite technology impacted the flows of information and marketing?
- Improvements to global telephone networks
- Mobile communication technology
- Email and the internet
- Live media coverage on a global on a scale because of satellite technology
What is the emergence of global marketing?
When a company becomes a global marketer, it views the world as a single market and creates products that fit various regional differences, generating marketing economies of scale.
What are the 4 TIGER economies?
Taiwan
Singapore
South Korea
Hong Kong
Why has the decentralization of production occurred?
95% of manufacturing was concentrated in EU, US and Japan in 1954, but due to FDI, TNC’s and lower land and labour costs in conjunction with governmental incentives, there has been a global shift of production and manufacturing abroad
What is the consequence of the decentralization of production on the developing world?
- Manufacturing has fallen by 50% in the developed world since 1983, but this decline has steadied and productivity is increasing again
- More than 50% of manufacturing jobs are located in developing countries
What are the factors (other than lower costs) that affect the location choice of a business?
- Availability of skilled workforce
- Government incentives
- Access to large markets
- Access to most modern plants and most productive technologies
What are forecasts suggesting will happen to distribution and consumption?
- Consumption will drive trade patterns more than production to grow trade routes in India and China
- Asia becoming more competitive with a greater share of their exports going to other Asian nations
- Western companies specializing in finance will benefit from the development of financial services in the east Asian region.
What are the factors influencing globalisation?
- New technologies, communications and information systems
- Global financial systems
- Transport systems
- Security
- Trade agreements
How does new technologies, communications and information systems influence globalisation?
Information can be shared easily and quickly to billions of people
Mobile phones allow LIC’s to connect to other people and markets and trade using E/M commerce.
63.1% of the population (5 billion) now are internet users
How are global financial systems influencing globalisation?
Banks and financial services are linked across the world that allows the flow of lending and money
however leads to increased interdependence, making economies more vulnerable to global economic recessions
How have transport systems influenced globalisation?
Global transport network allows the movement of people and goods across vast distances, creating new opportunities and threates like the spread of diesease through transport
How has security influenced globalisation?
Traditional security measure have reduced in relative significance
High profile leaks of sensitive papers have brought cybersecurity to greater prominence.
How have trade agreements influenced globalisation?
WTO has liberalized trade by reducing tariffs and other customs barriers.
What are trade blocs and their significance?
Trade blocs and agreements ease the restrictions of trade between countries both bilaterally and multinationally, increasing economic interdependency, often creating worse recessions.
List some Trade blocs/ free trade areas?
EU - European Union
ASEAN - Association of South East Asian nations
OPEC - Organisation of Petroleum exporting countries
MERCOSUR - (South America)
NAFTA - North American Free Trade Association
List some other organizations linked with global trade?
WTO - aims to reduce tariff barriers
OECD - organization for economic cooperation + development is a global think tanks of the world’s 30 wealthiest nations
G7 - 7 countries that represent 65% of world trade
G20 - G7 in addition to 12 others and world bank + IMF representatives
World Bank - Promotes investment globally and provides loans for nations under certain conditions
IMF - International monetary fund standardizes global financial relations to create stability by encouraging global trade and enforcing privitisation if needed.
How has transport contributed to globalisation?
- Larger aircraft and integrated air traffic networks
- Use of standardised containers (Containerisation)
- Improved handling and distribution efficiency
- Increased low cost airlines and air freight companies
- computerised logistics systems
What is containerisation?
A standardised system of the transfer of goods around the world, all containers are the same size and all connect with the sane locks, allowing a good to be travelled around the world efficiently
How has security contributed to globalisation?
Higher security = reduced globalisation but more safety
lower security = greater safety risk, but more globalisation
What globalised things have been done to prevent security threats?
- initiatives like the world customs organisation and the EU’s secure operator
- response to terrorism has tightened security benefitting businesses but this has sometimes led to the disruption of trade and shipping delays
Describe the distribution of employment sectors?
Globalisation has meant most primary and secondary Labour jobs have been concentrated in SEA Asia and NEEs while HIC’s have shifted to the tertiary and quaternary sectors
What are the 5 case studies to show whether a country is benefitting or suffering from the effects of globalisation?
- Ugnada and Global systems
- China and the Internet
- Nigeria and the negative impacts of primary product dependency
- Exploitation of resources Zambia
-Tata steel in the UK
What are the three main institutions linking to globalisation?
IMF
WTO
World Bank
Describe the Basics of the world bank?
- Founded 1944 in new hampshire with the aim of rebuilding the EU and Japan after WW2
- consists of 189 countries who aim to reduce poverty and and increase sahred prosperity
How does the World Bank enbale inequality to develop
- Lend money to governments to improve standards fo living but at high interest rates
- The few nations who are excluded from the world bank are not included
- Must be an IMF member to join which requires a sum of money (however this is based on a % of a nations wealth so fair)
- If governments loans are provided to are corrupt, they may be used to increase inequality
- Tax reforms under structural government changes have often meant tax cuts for the wealthy that increase inequality
What are the advantages of the world bank?
- Grants can help a nation develop and grow
- Provides investment to improve QoL
- Works cloesly with partners to achieve safewater and sanitation globally
- Helps employ policies intended to maximise trade within a nation
What are the disadvantages of the World Banks?
- Tax reforms under structural government changes have often meant tax cuts for the wealthy that increase inequality
- Cuts in public sector spending often leads to increased unemployment
- Various NGOs have taken over govermental functions in many social
- Deregulation has made it easier for NGOs to profit abroad
- Richer countries are granted more power over poorer ones through the world bank
Describe an example of the world bank at work?
- During COVID pandemic set up an algorithm to detect high risk places for COVID infection, donated $40 million to kinhasa and $54 million to Cairo
- Providede $1 billion in lending to India for their solar power projects (incl solar roofs) to deliver electriity to millions and reduce GHG reliance
Describe the basics of the IMF?
- Established in 1944 in Washington DC
- Has $1 trillion in lending money to member states, allowing them to offer loans to member states in times of crises - with fundscoming from an entrance fee
- Aims to foster global financial global stabillity and sustainable growth
- has 190 member states
How does the IMF allow inequality to develop?
- Often makes nations privitise to encourage growth
- Borrowed money can reach corrupt governments where money is spent inefficiently and increases inequality
- Imposed tarriffs on some countries to help other exporting countries can negatively impact free trade
What are the advantages of the IMF?
- Gives members economic policies
- Helps countries who follow new economic policies and offer technical assistance in the banking and finance sector, echange rates and fiscal policies
- Gives financial support to those suffering from BoP problems, often the lender of last resort, imposing madatory economic policies
What are the disadvantages of the IMF?
- Domination of IMF by rich countries means HIC’s are favoured
- Interest rates on loans are high, reaching up to 14.55%
- The failure to remove foreign exchange restrictions
What is an example of the IMF at work?
In 1976 James callaghan (Dennis healey = CofE) had to borrow $3.9 billion from the International Monetary Fund (IMF) in an attempt to maintain the value of the pound.
What are the basics of the WTO (World Trade Organisation)?
- Deals with the rules of trade between 164nations (98% of all global trade)
- It was created in 1995 in Geneva
- Aims to remove tariffs and encourage global free trade
How does the WT Oenable inequality to developed?
- Only 164 meber conutries meaning many are left out of the free trade schemes
- Free trade tends to benefit developed countries more than developing countries, as they often rely on income from tariffs rather than income from taxation
What are the advantages of the WTO?
- No grouping of nations or tactical voting due to the most favoured nation principle
- LIC’s don’t get locked out due to the MFN principle allowing for specialisation
- Allows free trade that gives consumers more choice
- All countries rely on a consensus, this narrows inequality as all countries have a say
What are the disadvantages of the WTO?
- Ignores many social and cultural factors
- Failure to reduce agricultural tariffs
- Many HIC’s adopt protectionist policies to protect domestic industries
- Consensus voting only a few votes are needed to veto a proposal
- Passing a vote can be very slow and take many years
- MFN means developing countries cannot give preference to local industries but must instead use foreign multinationals
What is an example of the WTO organisation at work?
The 12th Ministerial meeting in Geneva in 2022 was co hosted by Kazakhstan, and decided a ban on giving subsidies to harmful fisheries as a response to a food crisis.
What are the six advantages of international trade?
- Comparative advantage
- Economies of Scale
- Purchasing power
- Fewer domestic monopolies
- Transfer of technologies
- Increased employment
What are the six disadvaantages of international trade?
- Over Specialisation
- Product dumping
- Stunted groiwth or decline of local and emerging industres
- Protectionism and tariffs
- De-skilling
- Exploitive and labour intensive industries
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How is Comparative advantage an advantage of international trade?
Country specialising in producing only certin goods produce them more efficiently and at the lowest opportunity cost
How is economies of scale advantage of international trade?
Producing a narrower range of goods and services mean a country can produce higher value at a lower cost per unit
How is purchasing power an advantage of international trade?
Increases competition lowers prices and allows consumers to buy more for their money.
How is fewer an advantage of international trade?
When a single firm controls more than 25% of the market, there is lesser competition. IOnternational trade and imports should lesser the number of domestic monopolies
How is the transfer of technology an advantage of international trade?
New technologies are traded, leading to design improvements and cost savings, as well as supporting innovation and enterprise
How is Increased employment an advantage of international trade?
Increased production and exports creates more employment -> creating a multiplier effect of more jobs created across the whole economy
How is overspecialisation a disadvantage of interantional trade?
If demand falls or production becomes cheaper elsewhere for an overspecialised product, then production will shift. Overspecialised economies are less flexible and less diverse (e.g. Nigeria and oil)
How is Product dumping a disadvantage of interantional trade?
Exporting at a price lower than the market price and the price charged domestically
How is Stunted growth or decline of local and emerging industries a disadvantage of interantional trade?
New domestic industries may find it difficult to grow and established when paced against existing foreign competitors where prices are lower
How is protectionism and tariffs a disadvantage of interantional trade?
May protect important domestic industries by imposing additional taxes and tariffs on imported goods
How is de-skilling a disadvantage of interantional trade?
Traditional skills and crafts may be lost when production technologies replaces man power screwdriver (multinational) jobs may dominate
How is exploitive and labour intensive industries a disadvantage of interantional trade?
By squeezing costs, the working conditions can be comprimised and worsened
What are the positive effects of the international labour market and the movement of labour?
- Reduced unemployment where there is a lack of work
- Reduces geographical inequality between workers
- Adresses important skill and Labour shortages
- Some workers return to their country of origin with new skills and ideas
What are the negative effects of the international labour market and the movement of labour?
- Countries may find it difficult to retain their best talent, leading to a brain drain, attracted abroad by prospect of better wages and opportunities
- Loss of skilled workers will create a training gap
- Outsourcing of production from high wage to low wage economies causes unemployment in more developed countries
- With greater movement of labour there is a greater risk of diesease and pandemics
What is outsourcing?
The movement of production overseas due to:
* Lower wages
* Human rights
* Labour laws
in order to lower the cost of production
What is the source and host country (regarding outsourcing) ?
Source = Where the headquarters of a company is
Host = Where the outsourcing is done
What are the effects of outsourcing on the host country?
In the source can increase in employment, creating a multiplier effect into the economy