global systems and global governance Flashcards
define globalisation
process by which nation economies, societies and cultures have become increasingly integrated, through trade, communications, transport and immigration
how can globalisation be measured
KOF index measures social, political and economic dimensions
- countries rated between 0-100
- most globalised are Switzerland, Belgium, Netherlands and UK (mainly europe)
dimensions of globalisation
- economic- increase in free trade, growth of TNCs, faster and cheaper transport, global marketing
- cultural- westernisation, cultural diffusion, migration, global communication
- social- migration, social networks, exchange of ideas
- political- trading groups, global institutions, NGOs, growth of Western democracies
- environmental- green campaigns, global commons
- health- medical advances, pandemics, pharmaceuticals
- technology- higher productivity, communication
what are the factors of production
land- natural resources
labour- human resources of a workforce to produce goods and services
capital- investment
enterprise- human capital
define flows of capital
any physical resource that can be regarded as a manmade aid for production
define core areas
economically important and affect investment/capital and people
define periphery areas
power and many experience exploitation and leakage
different ways flows of capital operates
- foreign direct investment- investment by TNCs like setting up subsidiary companies or through mergers
- repatriation of profits- TNCs invest in overseas production and profit made will be sent back to home country
- aid- provided through UN or made directly from richer countries (ODA)
- migration- poorer to rich countries, but nations may lose more of their skilled labour
define flows of labour
movement of people
flows of labour patterns globally
- africa has the most movement, either within its own continent or to europe
- largest inter regional flow between south and west asia (3 million between 2010-2015)
- most latin america go to north america
- most migration is over short distance
- higher skilled people can afford to go to more developed countries
- north america and europe tend not to leave
- movement in europe due to EU- 700,000 from poland to UK
- UAE had 5th largest international migrant stock in the world, composing 90% of their workforce
features of flows of products
- facilitated by reduction in costs of trade like tariffs and transaction costs
- containerisation has made it easier
- world trade organisation encouraged tariffs to stay low
- regional trading blocs- tariff free
- air travel makes it quicker
- low labour costs abroad meant goods have relocated- dyson moved to malaysia in 2002
features of flow of services
- high level (businesses like finance) vs low level ( for customers like travel and tourism)
- service industries are footloose- operate anywhere
- high level services are concentrated in more developed areas but now also in east asian economies like hong kong
- conglomerates- HSBC has smaller companies in banking, insurance, travel
- decentralisation of low level services to developing world like call centres- outsourcing
features of flow of information
- influence by movement of people
- transfer cultural ideas, language, industrial technology
- digitalisation and satellite technology- global phone networks, internet, media
- help expand knowledge like pharmaceuticals and business services
define and features of global marketing
advertising and selling goods/services across one single market
- brands should make the same product that can be used globally through economies of scale- save money
- markets can be adopted to regional markets (globalisation) e.g mcdonald’s
- coca cola- same bottle design, same taste
global patterns of production
- production has decentralised since 1954, where 95% of manufacturing was located in western europe and north america
- FDI by TNC’s meant production relocated overseas to lower wage economies- global shift
- TNC’s can also transfer technology which have allowed developing countries to improve the productivity of manufacturing
- growing economies in middle east are becoming more prominent in oil exploitation
- china, india and turkey are biggest exporters of textiles and clothes
global patterns of distribution
- manufactured goods are not versatile and far reaching due to advances in transport and communication
- transport time and costs have fallen
global patterns of consumption
- mainly in developed economies
- major trend in growing middle class countries like BRIC’s and MINT’s
factors contributing to globalisation
- communications and technology
- financial systems
- transport systems
- security systems
- management and information systems
- trade agreements
factors contributing to globalisation communications and technology
- development of internet
- 7 billion mobile phones users
- computerised logistics systems
- services like call centres can be outsourced
factors contributing to globalisation financial systems
- financially integrated due to financial deregulation
- regulatory bodies like international monetary fund
- high speed electronic transmission systems and global exchange connectivity means fewer concerns about exchange rates
- banks are global institutions
- communication technology has allowed for more informed decisions in terms of stocks and money
- global banking crisis in 2008-2009- due to free movement of capital
factors contributing to globalisation transport systems
- containerisation- shipped quicker and in larger quantities
- increased size of aircraft
- high speed rail networks- can link urban and rural China
- dry ports- located inland and near to their business, Pakistan has 6 inland dry ports where goods are deposited by producers before being sent to the port
- flights are now cheaper, due to privatisation, and there is more chance
factors contributing to globalisation security systems
- terrorism security measures
- checking food imports
- bio security- checking for harmful organism and transmission of diseases, COVID test passes
- cyber crime- breach of information
- 9/11 has increased border control
- can work together like NATO to deter threats
factors contributing to globalisation management and information systems
- global companies have invested in large production and global marketing- economies of scale
- global value chains- different production stages are in different countries
- enabled through information systems and allows for telecommunications and integrated IT management
- just in time (JIT) systems are more efficient by ensuring the correct quantities are available on time to avoid goods being held in stock
- global corporations focus on outsourcing non strategic activities
- rapid growth of logistics and distribution
what is a trading bloc
group that encourages free trade between member countries without incurring tariffs
define free trade area
trade barriers between countries are eliminated but each member maintains its own tariffs against non member countries
define custom union
trade agreement with common external tariff to non member countries
define common market
trade agreement as well as free flow of goods, services and people
define economic/monetary union
operate as a common market with added integration of a common currency (EU)
advantages of trading blocs
- economic development
- intergovernmental support
- freedom of movement
- easier negotiation of trade with other trading groups
- open borders for sharing technology
- representation as group in world affairs
- created jobs- 3 million directly related to EU in 2011
disadvantages of trading blocs
- lack of access by poorer nations
- trade disputes arising over tariffs and changes
- border and customs authorities face corruption
- loss of sovereignty and pressure to adopt central legislation- ECHR
features of USMCA
- signed by USA, Canada, mexico
- remove all trade barriers, increase investment opportunities and improve economic co-operation
- renegotiated under trump
- USMCA now includes necessity for cars to have at least 75% of components from any member state
advantages of USMCA
- trade between members have quadrupled
- FDI has tripled
- consumer prices in US lowered
disadvantages of USMCA
- blue collar jobs lost in UK like automotive sector
- many mexican farmers went out of business as they couldn’t compete
- environmental impacts- exploit mexican environment
features of ACFTA
- free trade within africa
- life 30 million of africas extremely poor from poverty
features of EU
- 27 members
- free movement of people, goods, services and capital
- single currency euro adopted by 20 members
- uniform product labour and environment regulation
- political globalisation- parliament, ECJ, different institutions
- promote peace
- help negotiate treaties
economic interdependence
- trade- countries rely on other countries to supply their needs
- advances in technology- innovation
- employment
- international economic migration- 2019, 20% total population were international migrants
- TNCs and investment- outsourcing
- supply chains
- industrialisation
political interdependence
- IGOs- international monetary fund, WTO, world bank, UN
- security and stability
- world peace- “golden arches” theory where countries with mcdonald’s will not go to war due to similar cultures
social interdependence
- health- WHO, share of vaccines
- education- foreign exchange
- culture- social ties through migration, indian diaspora in UK
environmental interdependence
- global commons- shared resources, oceans, antarctica
- climate change- paris agreement
- unsustainable practices- air pollution, deforestation can affect on global scale
functions of world bank
- support structure of worlds financial order by regulating the flow of capital
- established after WW2 to steady the global economy and provide financial stability
- help developing countries develop and reduce poverty
- provide long terms investment loans for development projects through IBRD
- encourages and advises start up enterprises
what has the world bank done
- set two goals- end extreme poverty by decreasing those living on less than $1.90 a day and promote shared prosperity by fostering income growth of bottom 40%
- 45 countries pledges $25.1 billion in aid for the worlds poorest countries
criticism of the world bank
- criticised for free market reform being harmful
- run by a small number of economically powerful countries
- dual role of also being a political organisation
- funding top down projects- corruption
- loans are conditional and exposed to exploitation
functions of IMF
- regulator of financial flows and stabiliser for the system
- promotes exchange stability
- bail out loans to resolve problems
- offers financial assistance
criticism of IMF
- severely cut spending in developing countries
- borrowing country has to pay back rescue loan back at high interest loans
- lack of concern for democracy or human rights
- slow to react to crisis situations
- loans are conditional and exposed to exploitation
functions of WTO
- facilitating international trade
- provides stability
- encouraging removal of barriers and promotes trading blocs
- resolve trading disputes- EY and Latin America on bananas
- holds talks to reach multilateral agreements
what has the WTO done
- doha development round- reforming trade in agricultural produce
criticism of WTO
- pursue an agenda driven by business interstate
- rules undermine sovereignty
- leading world economies are members
- negotiations are slow
- disagreement between HDEs and developing economies- USA, China and India won’t compromise tariffs, emerging economies insist on large cuts in subsidies paid to US + EU
positives of unequal flows of people
- reduces unemployment and labour shortages- 44% of cleaning jobs in london taken by migrants
- reduces inequality as foreign workers earn more
- remittances sent back
- migrants pay taxes and spend money
- multiculturalism
negatives of unequal flows of people
- developing countries losing young and talented workers- brian drain
- over dependent on remittances- 2009 Estonia economy shrank by 13% due to loss of construction jobs in UK
- strain in health and education services
- ethnic and cultural conflict
- injustice- thousands of migrants died building facilities in Qatar for world cup
positives of unequal flows of money
- remittances
- loans from world bank to fund projects and improve services
- investment from TNCs raise incomes and reduce poverty
- aid can help LICs
negatives of unequal flows of money
- leakages from TNCs
- TNCs put pressure on governments to alleviate issues
positives of unequal flows of ideas
- privatisation can lower consumer prices
- free trade can attract investment
- multiculturalism allows integration into global economy
negatives of unequal flows of ideas
- deregulation can lead to social injustices and environmental degradation
- LDEs can be outcompeted by free trade
- undermine sovereignty
positives of unequal flows of technology
- information and data flows- access to internet
- labour saving tech