Global systems and global governance Flashcards
Globalisation
The process by which national economies, societies and cultures have become increasingly integrated through the global network of trade, communication, transportation and immigration.
Dimensions of Globalisation
- Capital Flows
- Labour Flows
- Product Flows
- Service Flows
- Information Flows
- Global Marketing
Capital Flows
The movement of money for the purpose of investment, trade or production of good and services.
Frank and Wallerstein’s Core-Periphery Model
Model of the world system that suggested global power is concentrated in a handful of developed regions, leaving less developed countries vulnerable to exploitation, lack of investment, emigration and leakages.
Leakages
The loss of income from an economic system, usually from profits of TNCs being sent back to the country of origin in profit repatriation.
Foreign Direct Investment (FDI)
The investment of TNCs or governments based in one country, into the physical capital or assets of foreign enterprises.
Remittances
Transfers of money made by foreign workers to family in their country of origin.
They have become the 2nd most important income source in LICs, ahead of international aid and behind FDI. They are more reliable as they’re less impacted by times of global financial crisis
Diaspora
A large group of people of similar heritage or homeland who have settled elsewhere.
What are product flows controlled by?
- Transaction costs
- Tariffs
- Transport and time
- The WTO encourages global reduction in tariffs
Tariffs
Taxes placed on imported goods with the intention of making them more expensive than home-based goods. They are a strategy of protectionism.
Protectionism
Government policies that impose restrictions in foreign goods and services to safeguard home based goods.
High Level Services
Business services such as finance, investment and advertising.
Low Level Services
Consumer services like banking, travels and tourism, call centres or communicative services.
Conglomerates
A collection of different companies which report to a parent company despite being different types of businesses. Most TNCs are conglomerates, eg - Unilever is a UK company owning food, cleaning and care products.
Information Flows
The transfer of languages, cultures, technology and ideas due to migration and communication, aided by digitisation and satellite technology.
Information Flows
The transfer of languages, cultures, technology and ideas due to migration and communication, aided by digitisation and satellite technology.
Global Marketing
The process of promoting, advertising and selling through creating a recognisable brand. It enables trade across a single global market that generates economies of scale.
Economies of Scale
The cost advantages associated with a larger size, output or scale of an operation by spreading costs or rationalising (making more efficient) operations. Reduces average cost per production of unit.
Decentralisation
Movement of departments from a single location to multiple others.
Global Shift
The filtering of industries that has resulted in many production operations being overseas in lower cost locations with lesser regulations and government incentives.
Factors in Globalisation
- Government support/Democracy
- Financial/Deregulation of markets
- Transport
- Security
- Capitalism vs Communism
- Containerisation
- Migration
- Trade
- TNCs
Security in trade
Includes supply chain security, crime & anti-terrorism, food & bio-security, and fiscal security. (tax avoidance).
Initiatives to alleviate issues include the World Customs Organisation (WCO) and the EU ‘Secure Operator’ label.
Trade Bloc
Groups of normally spatially close countries that protect themselves from imports form non-members as a way of economic integration, increasingly shaping the pattern of world trade.
Free Trade Areas
A trade bloc where 2 or more countries agree to eliminate importing borders (tariffs, taxes and quotas).
Preferential Trade Areas
Often the foundations of a trading bloc, involving the elimination of tariffs on certain products.
Single/Common Market
Countries can be members of the single market without being members of the trade bloc, eg Norway, Iceland and Liechtenstein are in the EU single market but not part of the EU.
They eliminate tariffs, quotas and taxes on trade as well as including free movement of goods, services, capital and people.
Single markets also try to eliminate ‘non-tariff barriers’ such as creating product regulations and standards that are shared in every member country.
Customs Unions
Accept the same rules as a single market, eliminating tariffs, quotas and taxes on trade, allowing free movement of goods, services, capital and people, and accepting shared product standards across all members.
They also impose a common tariff on goods from non-members.
Economic/Monetary Units
A group of countries that use the same currency, such as the Eurozone, removing risks of exchange rate fluctuations.
Benefits of Trade Blocs
- Improve global peace & security by forming alliances
- Increase global trade & cooperation
- Development of economies
- Increase competition on a global scale
- Allow freedom of movement to fill labour
Drawback of Trade Blocs
- Loss of sovereignty as decisions are centralised
- Loss of financial control to the central authority
- Pressure to adopt central legislation
- Damage to certain economies due to resource sharing (eg- fishing grounds in the EU)
The EU
A customs union made up of 28 members. In June 2016 the UK voted to leave in he Brexit referendum. The EU is currently the UK’s largest trading partner:
- 44% of all UK goods and service exports are to the UK
- 53% of all UK imports come from the EU
- 45% of all UK FDI stock is from the EU
Reasons UK Brexit from the EU
- The Common Agricultural Policy ensures minimum production levels in farming but UK farming is much more efficient so the fixed prices meant UK farmers lost out.
- The UK has a net contribution of £9.8 billion
- Free movement placing a strain on public services and increasing public security risks
- The UK were unable to negotiate separate external trade deals and tariffs
Brexit Voting Patterns
There was a 72% turnout of which 51.9% voted leave and 48.1 voted remain.
Scotland and Northern Ireland were strongly remain, as were 18-25 year olds.
All other constituencies were overall leave, and 60+ year olds were strongly leave.
Asian Tigers
The first 4 NICs, in South East Asia - Taiwan, Singapore, Hong Kong and South Korea.