Globalisation Flashcards
What is Globalisation
Globalisation is where the world has become or is becoming interconnected through the processes of:
economics
culture
politics
trade
tourism
What is trade
Trade is the import and export of raw materials, food goods and services
How is trade linked to globalisation
Global trade is unequal
Developed countries benefit more from trade than developing and emerging countries
Many developing countries are paid low rates for materials and products
There are fewer barriers to trade than there were previously
Tariffs and quotas are much lower
Trade blocs have developed to make trade easier, including:
European Union (EU)
North American Free Trade Agreement (NAFTA)
What is aid
Aid is the transfer of resources from one country to another to help with development or after a disaster
How does trade boost globalisation
This allows developing countries to invest in education, health, infrastructure and trade
What is foreign investment
when individuals or firms from abroad invest in another country
What are TNCs
Transnational corporations (TNCs) are companies which operate in more than one country, usually with a HQ in a HIC, and manufacturing in LICs
How do TNCs affect globalisation
Investment in people, either for cheap labour or for their expertise
Specialist surgeons from the USA to Australia
Investment in developments that attract cheap labour—the construction of Dubai attracts many Indian migrants
The availability of lower-cost labour, and less environmental/labour regulations in developing and emerging countries has led many transnational corporations (TNCs) to invest in those areas
Build infrastructure, provide jobs, initiate trading routes between LICs and HICs
How does aid boost globalisation
This allows developing countries to invest in education, health, infrastructure and trade
Therefore building trade links with other countries and reducing economic gap, creating a more global economy
How has IT boosted globalisation
Advances in communication mean that companies can have factories and offices around the world
Media and advertising also increase the demand for products
IT development has also meant easier communication with other countries about trade, natural disasters, economic developments in other areas of the world etc. , this therefore means countries have become more interconnected and interdependent
How has transport boosted globalisation
Much easier to travel between countries, so countries can send aid, trading of goods, and people to other countries faster.
Caused the rise of the supply chain as it is cheaper to transport goods from LICs to HICs therefore providing the benefits of TNCs to LICs via this.
What effect does the WTO have on globalisation
The WTO aims to reduce barriers and promote free trade between countries
The organisation is a leader in globalisation, with both positive and negative effects
Powerful TNCs support the WTO for its positive impact on international economic growth
Others see it as increasing the wealth gap and hurting local workers and communities
Overall, the WTO has:
lowered trade barriers
increased trade among the member countries
lowered trade tariffs
What is the IMF and what effects does it have
The International Monetary Fund (IMF) was created to bring financial stability to the world after World War II
It allows currencies to be exchanged freely and easily between 190 global member countries
The IMF is funded by quota subscriptions, which means member countries pay into the IMF
The size of each country’s subscription depends on the size of a country’s economy
Quotas allow members to have enough foreign exchange to do business with the rest of the world
The IMF provides advice and financial assistance to struggling members
Countries under IMF programmes are usually developing, emerging or countries that have faced financial crises
What is the world bank and what effect does it have
It is an international organisation that provides finance, advice, and research to developing nations to aid their economic advancement
Funded by developed nations and interest from loans
It acts to reduce poverty by increasing economic growth
It deals mostly with internal investment (development assistance) projects
Building dams and infrastructure
Promoting health and education in developing and emerging countries
The World Bank issues low-interest loans, grants, and/or zero-interest credits to support the development of their economies
What are the pros of globalisation (and TNC investment)
World has got significantly more wealthy overall during the period of modern globalisation
TNCs bring wealth to local workers so they have more income to buy local products, services and resources. Money created by TNCs can be spent by locals on education, health and infrastructure
Globalisation increases awareness of significant events in faraway parts of the world e.g. Japan 2011 tsunami
Makes people more aware of global issues such as global warming/ deforestation, therefore making them more likely to try to advocate for change
What are the cons of globalisation (and TNC investment)
TNCs, focused on maximising profit can be EXPLOITATIVE, ignoring social and environmental impacts
Countries that have been negatively affected by globalisation in terms of GDP growth are mostly lower GDP, landlocked, and more in need of aid than others therefore globalisation operates mostly in the interest of richer countries, so not inclusive to all countries.
Economic leakage often happens with TNC investment and Foreign Investment of HICs, with much of this investment usually going back to HICs, not benefiting LICs interests.
