Globalisation Flashcards
How has economic activity shifted globally?
- centre of economic activity is constantly moving and the rate of shift is increasing
- industrial revolution pulled centre of economic activity towards the West to the USA, rise in car manufacturing industry
- global shift as centre of economic activity is pulled back towards China after 1960’s due to cheaper labour costs in Asia
What is glocalisation?
global goods are adapted towards the local market eg. clothes sizing varies between continents, cars are manufactured with steering wheels on different sides
What is the world systems theory?
- a 3 level hierarchy system consisting of the core (HICs), semi periphery (BRICs) and periphery (LICs)
- core countries are the centre of economic activity and dominate and exploit periphery countries for labour and raw materials
- peripheral countries are dependent on core countries for capital
- semi-periphery share characteristics with both core and periphery countries
How can governance lead to unequal flows within global systems?
- tariffs and controlled imports - eg. goods are less accessible to African nations in the periphery due to the artificially inflated prices, core are able to develop whilst periphery fall behind
- neoliberalism - control of economic factors from public to private sectors (privatisation) - services become inaccessible to poorer nations, private companies owned by TNC’s in the core can control the economy so local economies cannot establish themselves
- governmental policies - international policies are made by western countries primarily, so western core has the greatest control - they do not take into account the needs of poorer countries and make decisions based on their own needs - global injustice
Why is the world described as shrinking?
- appears to be shrinking due to the time-space convergence
- travel times have got quicker due to increased aircraft sizes, high speed railways, lower cost travel
- planes are more frequent and going to more remote places which connects the world, easier to book online
What are examples of governmental trading policies?
- free trade zones - special economic zones where goods can be handled/stored/manufactured and reexported usually without being subject to customs duty - gives periphery access to global market
- trade blocs - intergovernmental agreements where barriers to trade are reduced or eliminated among participating members eg. EU - market is closed so harder for periphery to develop or access goods, globalisation is promoted within the bloc but decreased outside
- WTO - world trade organisation
- OECD (organisation for economic cooperation and development) - consists mainly of the richest countries who control trade deals between themselves
What is globalisation?
the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capita, increased connectiveness of flows and more widespread diffusion of technology
What is the global village?
phenomenon of the entire world becoming more interconnected as a result of the propagation of media technologies throughout the world
How is globalisation measured and what are the disadvantages of this?
- KOF index of globalisation - looks at economic, social and political factors
- very European focused eg. number of ikeas so not globally suitable
- includes trade in newspapers/letters which is all online now - outdated
- informal economy where people are not taxed is very hard to track
Why is the world described as flat?
- can instantly communicate anywhere in the world and instant access to people due to improvements in technology
What are the factors leading to globalisation?
- TNCs - spread of culture and money from manufacturer to head office
- containerisation - larger ships fit more goods which can be quickly and easily transported
- migration - as people move they bring new skills and ideas, work abroad and send money home (remittance)
- trade agreements
- communication technology - global links and instant communication
- collapse of communism - less closed economies so trade and flows of people are more accessible
- links with former economies - strong trade links, effects migration
What are the global flows of finance?
- FDI (foreign direct investment)
- repatriation of TNCs profits - sent back to manufacturers
- flows from the IMF and world bank
- foreign aid eg. US aid in 2023 was $43 billion
- remittance and migration
What role does the WCO play?
- world custom organisation
- make movement of money and goods secure, control customs and trade securely
What does the Lorenz curve show?
the proportion of national income earned by a given percentage of the population eg. what % national income is earned by the top 10%
- a curve further from perfect distribution shows greater inequality
What is the gini coefficient?
the area between the Lorenz curve and the line of complete equality
- a coefficient of 0 represents perfect equality but 1 reflects maximal inequality
How does inequality change as a country develops?
- countries with the greatest inequality are dominated by semi-periphery (developing nations)
- in India there is growing inequality as the country develops - in 2012 the top 1% of the population earned 1/2 of all wealth, in 2016 this rose to 2/3
- core shows greatest level of inequality
What is the role of the IMF (international monetary fund) ?
- monitors economic and financial policies of the 191 member countries
- provides advice to stabilise economies, prevent financial crises and raise living standards
- have $1 trillion that can be lent to member countries - basically short term aid
What are the financial institutions in global systems?
- IMF
- world bank
- WTO
How successful is the IMF?
- reduces economic inequality between the core and periphery - trying to balance out the imbalanced global economy
- stabilises economies so TNC’s will invest in LIC’s
What is the role of the world bank?
- brings economic stability to the world
- main goal is to help countries in trouble eg. collapsing economies to eradicate poverty and fund specific projects, creates sustainable countries
- promotes private healthcare - world becomes richer but at the expense of the poor as healthcare is inaccessible - widens gap
- richest countries (core) have greatest influence and input - they help everyone but disproportionally, more focus on the rich
What is the role of the WTO (world trade organisation)?
- regulates international trade
- create a level playing field by setting rules for trade so member countries can trade amongst each other freely
- protect trade and patents ensure that nobody can replicate goods
- play a mediating role during disputes and can impose sanctions on countries who break the rules
- countries vote for rules
How successful is the WTO?
- rules are imposed on all members, countries who disagree still have to adhere so undemocratic
- patents make prices of necessities eg. medicines inaccessible to LICs
- can bypass regulations in emergency eg. covid which is unfair to countries who invested in developing the drugs
- proportionally improves wealth of core and periphery - patents protect HICs and make trade accessible for LICs
- has no help for LICs who don’t have access to the world market
Why are China investing in African countries?
- they are investing in every country to obtain natural resources that can be processed in China and sold on
- offer money at cheaper rates than the world bank so African nations borrow money at a cheaper cost
What are the advantages and disadvantages of Chinese investment in Africa and how is this an unequal power relation?
advantages:
- increase in Chinese demand for raw materials improves trade and export incomes in LICs
- this enables African countries to invest in social and economic policies, and more developed infrastructure
disadvantages:
- Zambia’s total debt amounts to $8.7 billion - very uneven power relationship as China has all control
- loss of local businesses as they can’t compete against large Chinese companies
- Chinese investors hire 70% Chinese workers as opposed to 30% locally
- Africas reliance will only worsen
- social rights of workers are constantly violated eg. underpaid, poor conditions
What are the 3 types of barriers to trade?
- political
- physical
- economic
What are the political barriers to trade?
- lack of investment due to government decisions eg. North Korea is isolated and trades with limited countries
- not being a member of trade blocs - higher tariffs for African nations makes trade inaccessible
- political disputes eg. Russia and Ukraine
What are the physical barriers to trade?
- lack of energy and natural resources
- remoteness and an inhospitable climate makes trade very difficult
- eg. Chad is landlocked and lacks natural resources so trade routes like roads need to be built and goods are inaccessible - lots of barriers
What are the economic barriers to trade?
- lack of private and public investment eg. due to corruption
- lack of technology and developed infrastructure
- energy and transport costs
What is the dependency theory?
core and periphery are dependent on each other
- aid
- economic and political support
- raw materials
- manufactured goods
eg. Angola produce gold and copper which are exported to China who produce technology
How does the dependency theory benefit the core and not the periphery?
- value is added to raw materials so high incomes are generated from the exports in core countries which can be invested in money and infrastructure
- LICs export low value goods leading to low income and low investment - stuck in a cycle of poverty
What are the stages in Rostow’s model of economic development?
- traditional society
- transition stage - pre-conditions for take off, there is a gap between stage 1 and 2 as countries in stage 1 are completely switched off from globalisation as a result of barriers
- take off - BRICs and MINTs
- drive to maturity - less reliance on imports and investment
- high mass consumption - HICs
Who benefits from international trade?
- consumers in HICs who have access to a variety of goods that are cheaper
- retailers who keep a high % of profit
- HICs have competitive wages and incomes through exportation of high value goods
- LICs have access to global markets and allows them to export low value goods that are naturally produced - have a source of income which they otherwise wouldn’t have
What is the brain drain?
people migrate from poorer rural areas to urban areas, or from LICs to HICs in search of better job opportunities and higher pay - leaves behind lowly skilled and uneducated people which widens the gap of inequality
Who doesn’t benefit from international trade?
- producers in LICs working in poor conditions for low wages, goods are such low value that there is no real economic benefit as most of this leaks back to HICs anyway
- dereliction in HICs due to the global shift from West to East
- local companies cannot compete with larger TNCs so local economy suffers
- environmental damage to the world - air mileage, climate change, eustatic sea level rise
- increasing income inequalities between core and periphery
What factors give countries differential access to markets?
- trade blocs - eg EU trade bloc, known as ‘fortress Europe’ as non members have tariffs which artificially inflates prices so limits access to goods however free movement of goods within the bloc promotes internal trade
- customs union - has closer economic integration than trade blocs because as well as free trade, all members have a common external tariff on imports from abroad
- economic union - allows freedom of trade, people, capital and common policies on different sectors like industry and agriculture
What is global governance?
refers to ways in which global affairs affecting the whole world are managed. It is a movement of political integration aimed at negotiating responses to problems that affect more than 1 state or region eg. environmental issues - PCCA, antarctic treaty
What is the Montreal accord?
one of the only global policies that has worked - banned CFC’s which caused the hole in the O-zone to repair rapidly, shows that countries can work together to fix problems
What are some example of global governance institutions?
- civil conflict - international criminal court
- trade inequalities - WTO
- human rights - UN, amnesty international
- poverty reduction and financial stability - world bank, IMF
What are norms?
- accepted standards of behaviour and there are usually negative consequences for someone not following these eg. freedom of speech
What are laws?
- rules established through international agreements, legally binding for those signed up which helps to reduce conflict, add stability and stop countries from taking advantage of each other eg. international law on human rights
What are institutions?
- political and legal organisations who pass and enforce laws eg. WHO, WTO
What is the UN?
an intergovernmental organisation that aims to:
- maintain international peace and security
- develop friendly relations among nations
- achieve international cooperation - act as a centre for harmonising actions of nations
What is the human rights act?
- promotes sustainable development
- delivers humanitarian aid
- different countries interpret laws differently eg. right to marry - different laws on age of consent and same-sex relationships
What is the most important goal of the UN and how does it lead to the multiplier effect?
partnerships for goals - without collaboration between different institutions no goals can be achieved
- leads to no poverty
- zero hunger
- better health and wellbeing
- better education
What are the missions of the world bank?
- to end poverty - reduce share of the global population living in poverty by 3% by 2030
- promote shared prosperity - increase the incomes of the poorest 40% of people in every country
What are the criticisms of the world bank?
- political power imbalances - voting shares are based on the size and openness of a countries economy, therefore the core have more power and make decisions revolved around themselves
- loss of autonomy (self-governance) - undermines power of borrower nations so limits their ability to make policy decisions and erodes their own national development strategies
- ignores social and environmental impacts of the projects funded
What are the 3 main aims of the WTO?
- create global trade rules and agreements
- negotiate trade
- build trade capacity in developing nations
What are NGOs and what are the 2 types?
- operational NGOs - provide frontline support eg. oxfam
- advocacy NGOs - focus on campaigns eg. friends of the earth
- democratic decision making
- protect human rights
- provide essential services to most in need
What are the global commons?
- parts of the planet that fall outside of political reach of any one nation state, and to which all nations have access
- the international law identifies 4: high seas, atmosphere, Antarctica and outer space
- there are increasing pressures on global commons due to advances in technology and science, scarcity of resources and superpower activity
What is the tragedy of the commons?
- explains an individuals’ tendency to make decisions based on personal needs, regardless of the negative impact it may have on others
