Globalisation Flashcards
Key elements of globalisation: LIBERALISATION
Creation of worldwide free markets incorporating former command economy countries such as China and the former Soviet Union involving the liberalisation of:
Information through the development of the internet (and social media) but also newspapers, TV etc.
UNIVERSALISATION
The convergence of regulatory frameworks involving:
The establishment of rules of free trade for ‘member’ nations i.e. those who accept these rules- the majority of trading nations throughout the world.
A worldwide legislative framework including:
-Human rights
-Employment rights
-Motor vehicle emissions
INTERNATIONALISATION
Establishment and consistency of international trade in:
-Goods
-Services
-Money
-Information
And global networks facilitating production, service and finance activities.
WESTERNISATION
The domination of Western values and codes of values, these itself being dominated by those of the USA.
Features include:
-Individualisation rather than collectivism.
Collectivism focuses on family/work groups whereas individualists focus on personal achievement.
DETERRITORIALISATION
Reduces emphasis of national boundaries and geographical barriers.
Without this 5th element of globalisation, Scholte suggests, true Globalisation could not occur.
brings back to the notion of CONVERGENCE, but…the reverse seems to be happening in some countries; USA (America First), UK (Brexit), Catalonia and Scotland (independence).
External drivers of globalisation:
1) PRIMACY OF ‘RATIONAL’ KNOWLEDGE
Swift moving technical and technological advancements of the 19th century.
Development of scientific, objectives methods and sees the importance of knowledge to solving problems and controlling our lives and environment.
2) GROWTH OF TRADE
Increased post war trade collaborations.
From 1950-2000 there was a 20-fold increase in the international trade of merchandise.
Individual economies have become interconnected through trade.
3) TECHNOLOGICAL INNOVATIONS
A world economy that is networked electronically is only possible through developments in transport, particularly air travel, communications and data processing.
Developments in computer technology, falling costs of information storage, transmission and processing very significant.
Developments in information and communications technology (ICT), involving computers, microelectronics and fibre optics and creation of the Internet.
These innovations have facilitated the easier movement and increased flows of people, goods, money, information and ideas.
4) POLITICAL CHANGE
The fall of the Berlin Wall symbolised a changing political map with the liberalisation of former state controlled economies and creation of emerging markets in such countries as Russia, Poland, Hungary and Czech Republic.
Some of these countries the political transformation to free market economies has facilitated their membership of the EU.
Changes towards liberalisation in large economies of China and India.
Changes led to increased trade and expansion of multinational firms and foreign investment in new areas.
Internal drivers of globalisation:
1) COSTS
Global scales means economies of scale in production can be achieved.
Sourcing of raw materials, components, labour and finance can be accessed anywhere in the world- price is key driver.
Cheap labour in countries such as China, Thailand, Vietnam etc.
Cost of R&D has risen disproportionately to other costs.
Competition has driven firms to bring out products at more frequent intervals and product life cycles are shortened.
2) GROWTH OF FOREIGN DIRECT INVESTMENT (FDI) AND MNC’S
FDI is the investment and management of overseas operations by companies, leading to the growth of multinational companies.
Between 1990-2000 outflows of FDI rose from US$200 billion to US$1200 billion (UN, 2004).
MNC’s both products and drivers of globalisation.
MNC’s are the product of global expansion.
As a driver: contributed to the diffusion of technology, ideas and convergence of processes and management practices.
A feature of MNC’s in past 20years is increase in number of joint ventures and strategic alliances- resulted in greater integration.
Economy and production within Globalisation
Global markets led to development of globally recognised brands and brand markers e.g. McDonalds (golden arches), Nike (tick), Disney (Mickey Mouse ears) etc.
Real-time linked global markets in finance: foreign exchange, shares, insurance.
Communications and information markets have their global markets, profit derived from: mobile phones, internet access.
A GLOBAL FACTORY
An ‘original equipment manufacturer (OEM)’ that controls design, development, branding and marketing.
Manufacture involving a number of different firms in various parts of the world.
It can involve wholly owned subsidiaries, joint ventures and contract outsourcing.
Parts are brought together for assembly in one country or in regional centres.
the system can apply to service organisations as in the use of international call centres.
FACTORS WHICH MADE GLOBAL FACTORY POSSIBLE
Technology change has enabled the mass production of standardised products to the same quality in any number of different locations. Production processes has been codified to make the manufacture of components possible in contractor firms not involved in the design and development of original product.
Technology change in information and communications has made possible low cost global communications aiding both information flows and effective control.
Easy access to pools of cheap labour.
Introduction of cheaper means of transport through container shipping and cheaper flights.
Perspectives on Globalisation:
TEH GLOBALIST PERSPECTIVE
Growth of products, services, markets.
Increased flows of goods, services, money, ideas.
Result- increased economic prosperity for all e.g.
-Reduced poverty
-Improved health
-Increased security
