globalisation 2 Flashcards
Name the 5 flows of movement
capital: money flows routed daily thro world’s stock market
commodities: valuable raw materials (fossil fuels, food, minerals) have always been traded between nations
info: internet has brought real-time communication between distant places
people: migrants and tourists ->
What is a gross domestic product
measure of the financial value of goods and services produced within a terrirtory
What are emerging economies
-countries that began to experience high rates of economic gorwth due to industrialisation
What are remittances
money that migrants send home to their families via informal/ formal channels
What is interdependency
if 2 places become over-reliant on financial and/ or political connections
Describe the interrelationship between trade and transport growth
transport -> improved communication & transport tech helped trade to grow into geographical scale
-> technological progress brings unexpected changes to operation of companies
trade -> transport tech help[s build new global market which will ^ profits
->
Name 4 developments in transport
-steam power:
-railways:
-jet aircraft:
-container shipping
What is spatial division of labour
common practice among TNC’s -> moving low-skilled work abroad where labour costs low
What is shrinking world
due to tech, places feel closer and take less time to reach
What are trade blocs
voluntary international organisations that exist for trading purposes, bringing greater economic strength and security to the nations that join
What are tariffs
taxes that are paid importing/ exporting goods and servies between countries
What are the benefits of the growth of free trade blocs
growth of trade blocs -> free trade with neighbouring countries -> allows state boundaries to be crossed freely by flows of money, goods -> internal tariffs (taxes on importing/ exporting goods) are removed
-removing barriers -> markets for firms grow
-e.g. tesco gained 75 mill customers when 10 new nations joined EU
-firms that own production of product/ service should prosper
-e.g. french winer-makers have better climate, so nicer wine -> consumed all over
-smaller national firms within a trade bloc merge to form TNC -> cost effective
What is a special economic zone
industrial area near coastline where favourable conditions are created to attract foreign TNC’s
-e.g. low tax rates,
Why do trade blocs include nations at varying economic development levels
-mexico, usa part of NAFTA
-as mexico- emerging economy, cheap labour force
-usa- managment, research expertise
-american tnc’s lower cost this way
Name the 4 issues with trade blocs
-Trade distortion-
-short-term unemployment-
-cultural erosion
-spvereignity loss
Trade distortion
Imposition of common external tariff makes goods from non-members expensive. Trade distorted as the switch from cheaper non-member producer to more expensive member producer. Prices rise and SOL falls.
Short term unemployment
Specialisation shifts resources to industries which have a comparative advantage.
Firms being specialised away from will shut down. Workers’ employment lost (though there are new jobs in the expanding specialised industry and in new demand areas from increases purchasing power)
new jobs likely to benefit new workers and older ones less likely to retrain
Cultural erosion
cheap uniform products across the bloc replace more expensive local variants.
Sovereignty loss
nation gives up determination of some areas of economic (and in single market, immigration) policy
When does the WTO accept subsidies
- WTO may accept a subsidy for FDI, e.g. in SEZs as this promotes trade
- through gov subsidies they can increase globalisation as through the financial injection, firms can work on a more global scale. it increases consumption so the firm can expand, leading to economic and cultural globalisation
Give an example of a special economic zone
-Indonesia
-in late 1960s Presdient Suharto created the Jakarta Export Zone -> had attractive legal & economic conditions designed in consultation with US and European TNCs.
-World bank funded infrastructure improvements for ports, power supplies, roads
-Gap and Levis FDI followed
Why do firms become TNC’s
-to maximise profits -> being TNC reduces costs & generates higher revenues from new markets
What is offshoring
moving part of a company’s own production process to another country
, e.g. building a new factory in China, where wage rates are lower.
-reduces costs -> wages, tax, raw materials, transport cheaper
Name 3 drawbacks of TNC’s
TNCs have been accused of exploiting workers in the developing/emerging world by paying them low wages.
Outsourcing jobs can lead to job losses in the home country.
Local cultures and traditions can be eroded by TNC brands and western ideas
How is North-Korea switched off
-citizens don’t have access to internet or social media
-no undersea data cables connecting NK with rest of world
-
How is the Sahel REgion switched off
poor infrastructure & low literacy levels -> make it unattractive for offshoring FDI
low income levels mean it lacks market size to attract retail outlet FD
What is the global shift
the international relocation of different types of industrial activity
-e.g. The shift of manufacturing jobs from Europe, Japan and North America to China
How did the global shift occur
improvements in transport & communications & lowering trade barriers and economic liberalisation, opening up to FDI
-large no. of workers willing to work for low pay -> labour-intensive manufacturing -> Asia
Name 4 benefits of the global shift
-waged work -> factory work provides reliable, regular work
-low wages still pay more than rural
-poverty reductionl- income rises due to waged work
-education & training -> tncs invest in training & skills to improve workforce - skills transferrable
-higher incomes -> childrens schooling
-investment in infrastructure
