Global Systems and Governance

Question 1

Define Globalisation

Answer 1

The growing interdependence of countries through cross-boarder transactions. The process of being more globally connected through trade, transportation, communication and immigration

Question 2

What are the dimensions of globalisation?

Answer 2

Flows of:
- Capital
- Labour
- Products
- Services
- Information

Question 3

Talk about flows of Capital

Answer 3

Usually refers to the movement of money for investment, trade or production

Examples include TNC’s invest into developing countries, Repatriation of profits- movement of profits made by TNC’s brought back, Aid- gives out loans, Remittances- Migrants giving money back to their home.

They occur between 4main groups:
1. Core regions- wealthier developed countries
2. Periphery Regions- less wealthier, developing countries
3. International Monetary Fund (IMF)- reduce poverty around the world and secure financial stability
4. The World Bank- give out loans for development

Capital flows also occur within core regions like through the major stock markets in megacities and the EU cross boarder trade in finance.

Question 4

Talk about flows of Labour

Answer 4

Labour Flows- Movement of people who move to work in another countries- essentially migration.

Economic Migrants- Voluntary migrants for reasons of work and improved quality of life.
Refugees- People forced to leave their home and travel to another country and granted residency.
Asylum Seekers- Waiting to be granted residency
- The majority of international migration is to a high income country.
- 14.1% of HIC populations are migrants however only 1.6% of LIC’s
- Today, 3-4% of the worlds population are migrants

Largest flows within continents:
Asia- 63 million, mainly between south to west Asia for better job prospects as Western Asia is generally wealthier.

Question 5

Talk about flows of Products

Answer 5

Movement of produced goods from area of production to area of consumption. Increased globalisation caused floes to become international meaning produced in one country and shipped to another.

In the past, produced goods were manufactured in HIC’s due to the access to resources like factories and materials. They were usually sold in the countries they were produced in.

In recent times there has been a switch from internal to international. International trade created major flows, especially between LIC’s and HIC’s. Due to technological advancements like better transportation and communication, products are now produced in LIC’s. This is beneficial to manufacturers as there are lower Labour costs meaning companies have relocated. They can then be sold for higher prices in order to make a higher profit.

Question 6

Talk about flows of services

Answer 6

Service industries can flow due to the ability to transfer information. Services can now be transferred on phone calls or via the internet meaning there is no longer a need for the industry to be tied down to a location. 2 types of services:
- High Level Services- activities that require a higher skill level, important and complicated. An example includes financial services.
- Low Level Services- Services that require less training mainly customer based like call centres

High level services are usually concentrated in HIC’s where low level services are offshoring (moving overseas) in order to take advantage of lower labour coasts. This has developed global connections and accelerated globalisation.

Question 7

Talk about flows of Information

Answer 7

The development of internet use, social media platforms and entertainment services have allowed information to be transferred globally easily.

The information flows for different purposes and accross many platforms:

• fast broadband and connections allows news and financial to be transferred quickly and globally
• Social Media has allowed communication and experiences making the world more interconnected.
• Large databases and archives for research

Question 8

Talk about Global Marketing

Answer 8

Globalisation has allowed businesses to market their products internationally. This has in turn grown many businesses due to increased recognition and profit.

Awarness of the Brand- creating a trademark (legally registered representation) it can be easily recognised by consumers.Familiar brands are more likely to sell as they are chosen over less known brands, by keeping the logo worldwide, other countries are more likely to trust it.
In many countries, keeping the same marketing strategy is more efective due to the low cost.

Glocalisation- changing the marketing of a brand or product in order to fit in with local cultures or needs
ie. KitKat- Appeared in Japan in 1973 and became very popular so they introduced hundreds of unusual flavour varieties alike Baked Potato and Cherry Blossom. This appeals to the Japanese collectibles culture as well as the unusual products popular in Japan.

Question 9

Talk about patterns of production and consumption

Answer 9

Developed markets dominate the global exports in manufactured goods, especially the EU and US ie. Agriculture, Fuels, Steel and Iron, chemicals.
However some are dominated by LIC’s and NEE’s ie. clothing and textiles.

In general, HIC’s consume manufactured products more than LIC’s. This is because there is a less demand for good in LIC’s. In developing contries, there is a demand for fuel and minerals due to rapid industrialisation in these economies

Question 10

What are the factors in globalisation?

Answer 10

-New financial technologies and systems
- transport

Question 11

Talk about new financial technologies

Answer 11

The financial system is the relationship between those who borrow money and those who invest. An example is a bank, those with momey invest in order to make interest by saving it there, those who need money take loans and pay this back with interest. Globalisation has made this process global making the world more connected:
- Banks are now global
- Multinational corporations invest their profits and make interest putting money in the system
- People buy and share stocks from global corperations
- Entire countries invest and take loans from institutions alike the world bank

Question 12

Talk about transport

Answer 12

Innovations in transpoer have made it easier to transport goods faster and in larger quantities. High speed raik and faster and bigger planes and boats allowed globalisation.

Larger and faster aircraft have increased capacity and reduced travelling times meaning products can be sold over a larger distane in a shorter space of time.

Question 13

What are global systems?

Answer 13

Alongside the process of globalisation, a range of global systems have evolved to reflect the increased economic, political, social and environmental interdependence in this world. They are led by powerful nations to reflect increased independance in a contempary world.

Most of these systems are supported by international political organisations. These systems and supporting organisations have undoubtedly helped to improve stability and development.

Question 14

What are financial systems and examples?

Answer 14

Play a role in governing the worlds financial organisation by supporting the structure of the world’s economic and financial order all while regulating other countries economies. They also act as intermedianeries in flow of capital.
IMF and The World Bank

Question 15

What is the world trade organisation?

Answer 15

Deals with the global rules of trade between nations. Its main aims are to:

• Supervise and liberalise by reduceing brriers
• Act as an arbitrator sorting out trade problems
• negotiates agreements that become legal rules.
  The maintenance of (some say unfair) high import duties and quotas in rich
  countries, which reduces imports from developing countries
  ● The protection of HIC agriculture, but the pressure for LICs to open their markets
  up to international produce
  ● Developing countries are not represented as much in the WTO

Question 16

What is interdependance?

Answer 16

Interdependance is the theory that nations depend on each other economically, polliticslly, socially and environmentally.

Question 17

What are the issues assosiated with interdependance

Answer 17

UNEQUAL FLOWS

Question 18

Talk about unequal flows of people

Answer 18

In general, migration occurs from LIC’s to HIC’s due to there being more opportunities in HIC’s for things like employment. This causes an unequal flow of people.

• The benefits of unequal flows of people within the country they are migrating to are mainly concerned with the workforce. Migrant workers become an important part of the host country as they take jobs that have to be done. 44% of cleaning workforce in London
• The countries that people are flowing from may also benefit from unequal flows as workers send remittances back to the home country.
• However, large flows of people can have negative effects as they could rely on them.
• They can also cause overpopulation and preassure on services
• Countries may also become dependant on remittances so a change in circumstance may be detrimental to the economy and emigration can cause high unemployment rates and underpopulation.

Question 19

Talk about unequal flows of money

Answer 19

Into LIC’s via FDI, Investment, Aid, Remittances whereas into HIC’s are usually profits and sales.

• FDI improves the quality of life as provides income, and aid can help rebuild after dosasters ie after the Fiji cyclone, 11 million USD.
• Richer countries can take advantage of lower labour costs maximising profits.
• • However it can create dependancies for workers as they are dependent in the higher wagesso subject to large sweatshops with dangerous workings and conditions
• Companies may be criticised for profiting too much in comparison to LICS who only get a little bit.

Question 20

Talk about unequal flows of ideas

Answer 20

High income countries usually dictate ideas of how countries should be run, and how trade should
be carried out. This is mostly down to these countries having more money, thus more power over
less developed countries

• Free-trade (created by HIC deregulation) has increased globally due to deregulation,
  allowing global markets to thrive and decreasing the risk of conflicts.
• Countries with successful strategies can educate low income countries on how to create
  economic growth or remove social injustice, meaning low income countries can
  implement these strategies.
• Low income countries may feel forced to keep up with ideas of the wealthier countries,
  even if the ideas are not the most beneficial to these countries. E.g. it is a massive
  disadvantage to a country’s economy if they do not join trade agreements etc.

Question 21

Talk about unequal flows of tech

Answer 21

There are flows of technology both ways between HICs and LICs/NEEs. However, these flows are
unequal as different types of technology flow between countries.
In the past, the majority of flows of technology were within HICs , as there was virtually no
demand for technology in lower income countries.
Now, HICs and companies wish to invest in lower income countries due to the benefits they bring, so technology that can make capital gains (e.g. manufacturing equipment, components
for assembly etc.) flows to LICs. This type of technology does not flow from LICs to HICs because
there are less companies based in LICs that wish to invest in HICs (as there are less benefits,
including higher wages).

LICS also can produce the technology.

• other economies can develop through investments
• Companies benefit from products being produced overseas, meaning they can maximise
  profits
• HICs with developed markets have a technological advantage over lower income
  countries because they can afford to buy the technology. People in LICs cannot afford to
  purchase technology that will advance their economy and improve quality of life,
  meaning HICs can rapidly develop while LICs are left behind.

Question 22

Talk about unequal power relations

Answer 22

In general, richer, more developed countries are the more powerful countries as they have more money and technology as well as deeper trading relations.

In contrast, low income countries that lack money and technology have less influence over
geopolitical events. This is problematic for these countries, as they rely on the decisions made by
richer countries,

Some rich countries may be less likely to agree to global environmental protection if this
may reduce CO2 emissions, even though they are likely to feel the effects of climate
change less. Poorer, less powerful countries that are frequently affected by climate change
induced natural disasters cannot do much to influence the ideas of these richer
countries.

Trade- richer countries control trade agreements as other countries can benefit from their wealth. This means they can preassure low income countries into making more beneficial ideas

Question 23

What is trade and how has it changed since globalisation?

Answer 23

Trade is the exchange of capital, goods and services accross international boarders or territories,

Due to globalisation, international trade is occuring more than ever before with the amount of exports globally been steadilt increasing with the only time it has been decreased during the Global Financial Crisis.

Question 24

What are the patterns of global trade?

Answer 24

Global trade and investment has changed over the past 40 years. Trading and investments used to be heavily concentrated with the high developed countries whereas now it is mainly concerned with HIC’s investing in LIC’s.

Patterns have also changed as emerging economies are beginning to invest in LIC’s causong the emergine economies to rapidly develop

Although high income countries remain the largest exporters, many emerging economies are also huge exporters alike China the worlds largest with $2,263bn first to the USA $1,547. Developing economies share of world trae is currently 41%.

LIC’s are also trading more however it is very slow with the least developed countries make up less than 1% of global merchandise. This is further exaggerated by the type and limited range od exports from LIC’s dominated by primary products like crops and raw materials.

In general, economies with more money invest into those with less omey for development. This generates economic growth and allows HIC’s to take advantage of the lower labour costs

Question 25

Talk about single product economies and examples.

Answer 25

Single product economies are countries which rely on one prodyct for its export earnings. Such countries are vunerable to market price fluctuations and may have limited options for generating other sources of income should a natural distaster strike or if tastes and fashions change
Dutch Disease- when good news begins with a large influx of foreign cash to exploit resources.

Nauru at one point was the richest island in the world per capita even though it is the smallest island nation. They had a surplus amount of phosphate allowing them to have free education, transport healthcare and be tax free. However, they soon ran out causing 80%of their land to be demolished, 90% ending without a stable job and obesity rates to be so high and it becoming one of the unhealtiest countries.

Question 26

Talk about trading blocks

Answer 26

Trading Blocs are groups of countries in a trading agreement allowing them to have certain advantages over other countries such as tarrifs and quotas.
EU- The EU is a group of 28 countries in Europe
NAFTA- The North American free trade agreement with 3 countries and the aim to remove barriers to agricultural and manufactured products as well as services.

Trading blocs are good as they allow free trade and things like that however, some say trading blocs limit trade to other countries restriciting the development of the global economy.

Question 27

Talk about trading organisations

Answer 27

Help encourage trade of different types and from different countries .

World Trade Organisation- formed in 1993, aims to cut trade barriers that stop free trade so that goods can flow more easily

world Banks- promotes global investment and provides loans for countries under certain conditions

International Monetary Fund- standardises global financial relations and aims to promote global monetary and exchange stability.

Question 28

What is a transnational corperation?

Answer 28

A TNC is a compay which has multiple operations across multiple countries.

As the world’s economy has become globalised, TNC’s have grown in size and numbers and now produce global prodcuts- mainly with a strong, recognisable brand that are distributed, marketed and sold through many countries. They exist in different industries or sectors.

Question 29

Talk about TNC’s as a spatial organisation

Answer 29

The headquatres of TNC’s are usually in high income countries. HQ is responsible for the big decisions such as investments and meeting with global organisations.

Research and development are facilities in which customer research, software developing and more are carried out. Normally facilities are the same countries that TNC’s operate from, but there may also be multipe facilities in different countries so that research can be baried and specific

Manufacturing and production facilities are mainly concentrated in LIC’s due to increased profits. Lower costs for labour, lower material costs and lower taxes.

Question 30

Talk about production

Answer 30

TNC’s use global managment systems in order to maximise profit:

Economies of Scale- TNC’s usually have a large revenue so they can afford to upscale to maximise profits

Global Supply Chains- TNC’s use global supply chains ie production in LIC’s due to cheaper costs.

Question 31

Talk about the impacts of TNC’s

Answer 31

Host Country- increase employment so thereby raise living standards, Improve levels of skill and expertise, FDI bought in improving the balace of payments, encourages a transfer of tehcnology into the country like the growth of telecommunications- however, many jobs are low skill, managerial positions tend to be bought in rather than local, majority of profits are sent home, investment may only be short-term

Country of Origin- Development of higher order jobs such as research or managment, overseas investment adds income for whole nation, wider share ownership- individuals and companies more willing to become involved in FDI’s- however, the workfore may need to relocate or make increased visits to operations overseas.

Question 32

What is Fairtrade?

Answer 32

Globalisation has unfortunatly left many underdeveloped markets vunerbale to exploitation. Many small-scale farms struggle to comete with competitive prices of TNC’s lead to low paying people and large amounts of labour.

Fairtrade was set up in 1992 to ensure producers recieve better trading conditions.

Question 33

What is global governance and what do they do?

Answer 33

Global governance refers the the way in which global affairs affecting the whole world are managed. They focus on a number of different issues:

• reducing environmental problems
• trade and investment inequalities
• reducing poverty
• human rights violations
• civil conflicts
• financial instability.

Question 34

Talk about the UN

Answer 34

The United Nations Development Programme (UNDP) These are a set of aims to eradicate poverty and the reduction of inequalities and exclusion.
They operate over 170 countries and led to the Millenium Development Goals which are eight anti-poverty targets set to achieve in 2015.

• Promotes Growth and Sustainability- aim for global economic equality allowing less developed countries to grow.
• Stabalise economies by providing loans and aid.
• Societal Growth- promoted by global institutions maintaining social equality
• Some institutions have been accused of creating more inequalities for being unrepresentitive of every country
• Only give loans conditionally leading to exploitation
• International laws are voluntary, meaning many institutions don’t hold full power.

Question 35

What is a global common and the examples?

Answer 35

A global common is an area that doesn’t belong to a single country. Rather than belonging to nobody, they belong to everyone meaning every country has a right to benefit from the global commons.
- International Waters
- The Atmosphere
- Antarctica
- Outer Space
- Internet

Question 36

Why are global commons important?

Answer 36

Global commons are very important to humanity as they provide untouched environments for research and wildlife where animals can thrive. Scientific research is also enhanced by these environments as scientists can gather information without human interactions influencing their findings.