Globalisation 3.1-3.3 Flashcards
Globalisation
The widening and depending of global connections, interdependence and flows of commodities, capital, information, migrants and tourists.
5 dimensions of globalisation
Cultural - McDonaldisation Economic - growth of TNCs Political - the G8, big democracies Environment - climate change Social - global improvements
Lengthening of global connections
The connections are lengthening because new links are growing between places that are far apart
Deepening of global connections
The world is becoming more deeply interconnected - connecting with every person
It is no longer just the rich that are able to live globally
5 examples of global connections
Commodities Capital Information Migrants Tourists
Shrinking world
This idea has come about due to developments in technology, communication and travel. It allows places around the world to seem more accessible than ever before
3 improvements in transport
Steam power in the 1800s helped move goods and armies
Containerisation - ships transport over 90% of our goods
Aircraft - by value, 15% of our goods are flown and jet engines are becoming more efficient
4 technological advances in the last 100 years
Telephones
Internet
Air travel
GIS and GPS
Telephone development advantages
Instantaneous communication
This has allowed TNCs to set up in more than one country
It has allowed developing nations to leap frog in advancement
Telephone development example
BT Call centres can be located worldwide
This allows the company to find cheaper labour overseas
Internet development advantages
It has allowed the quick transfer of information
It has allowed employees to work remotely and to transfer information quickly via email
Internet development example
Disney are able to produce films all around the world simultaneously
Music companies etc. Can email recordings internationally
Air travel development advantages
Aerospace technology has made planes much faster and more quickly built
Bigger planes = more passengers = more tourists
Air travel development example
EasyJet have pioneered low cost mass air travel
Their Airbus A380 can carry 550 people
GIS/GPS development advantage
24 hour global positioning systems collect data at all times
This allows broadcasting of location also
GIS/GPS development example
GPS has generated $1.4 trillion in economic benefits for the United States since the 1980s
This is because its precise technology supports finance, communications and electricity systems
Many people rely on it day to day
BRICs
Brazil
Russia
India
China
Consumer societies
A society in which the buying and selling of goods and servies is the most important social and economic activity
Cultural erosion
The process of a culture losing many of its core elements
This is often due to the arrival of a new culture replacing it
Cultural imperialism
The practice of promoting one culture/language of one nation over another
It’s usually a large, powerful nation enforcing it on a smaller, less affluent one
Deindustrialisation
The decline of regionally important manufacturing industries
Diaspora
The dispersion or spread of a group of oriole from their original homeland
Ecological footprint
The measurement of the area of land and water required to provide a person/society with the energy food and resources they need to live
Elite international migration
Highly skilled or socially influential individuals that move to a new location
They are often welcomed by governments as they are highly skilled and wealthy
Eg Russian oligarchs in London
Enclave
A group of people surrounded by other groups of entirely different people
Ethical purchasing
A financial exchange where the consumer has considered the social, environmental costs of production for food, goods or services purchased
Food miles
The distance a food travels from a farm to the consumer.
FDI
Foreign Direct Investment
A financial injection made by a TNC into a nation’s economy, either to build new facilities (factories or shops) or to acquire/merge with an existing firm
G7
A group of 7 that are an inter-governmental political forum
Canada, France, Germany, Italy, Japan, the UK and the US
Global hub
A settlement or region that has become a focal point for activities with a global influence such as trade, business, education or research.
Unlike a megacity, a global hub is recognised for its influence rather than population size
Global production network
A chain of connected suppliers of parts and materials that contribute to the manufacturing/assembly of goods
Serves the needs of TNCs
Global shift
The relocating of the global economic centre of gravity FROM Europe and North America TO Asia over the last 30 years
Glocalisation
Changing the design of products to meet the local tastes/needs/laws
Strategy by TNCs to conquer new markets
GDP
Gross Domestic Product
A measure of the financial value of goods and services in an area - including foreign firms located there
Divided by population size for per capita to make good comparisons
IMF
International Monetary Fund
Interdependency and example
Places that are over reliant on financial and/or political connections with another
Eg. An economic recession in a host country for migrant workers makes the economy of the source country shrink due to falling remittances
Local sourcing
Buying consumer goods from the local area rather than importing goods from overseas
Low wage international migration
Buying consumer goods from the local area rather than importing products from overseas
Megacity and top 3
A city with 10 million or more inhabitants
Tokyo, Delhi, Shanghai
NAFTA
North American Free Trade Agreement
Implemented in 1994 between US, Mexico, Canada
It reduced or eliminated tariffs on imports or exports between them
OECD
Organisation for Economic Cooperation and Development
Intergovernmental economic organisation with 38 member countries
Founded in 1961 to stimulate world trade
Offshoring
TNCs move parts of their own production process (factories or offices) to other countries to reduce labour or other costs
Outsourcing
TNCs contract another company to produce the goods and serves they need rather than do it themselves. Causes complex supply chains
Remittances
Money sent back home from migrants via formal or informal channels
Rural-urban migration
The movement of migrants from rural areas to urban areas
Shrinking world
Due to technology, distant places start to feel closer and take less time to reach
Soft power and example
The global influence a country gets from its culture, political values and diplomacy
Eg. Hollywood and Microsoft in America
SEZs
Special Economic Zones
An industrial area, often near a coastline, Where favourable conditions are created to attract foreign TNCs
These include low tax rates/exemptions from tariffs and export duties
Switched off
Countries that are connected from social, economic, cultural or political networks
Tariffs
The taxes that are paid when importing or exporting goods and services between countries
Trade blocs
Voluntary international organisations that exist for trading purposes
They bring greater economic strength and security to the nation that join
Transition town
A settlement where individuals and businesses have adopted ‘bottom up’ initiatives with the aim of making their community more sustainable and less reliant on global trade
Transnational corporations
Businesses whose operations are spread across the world, operating in many nations as both makers and sellers of goods services
‘Global brands’ that bring cultural change to consumer Countries
Trickle down
The theory that there are positive impacts on peripheral regions and poorer people caused by the creation of wealth in core regions and amongst rich people
World Bank
An international financial institution that provides loans and grants to the governments of low and middle income countries for capital projects
WTO
World Trade Organisation
An intergovernmental organisation that regulates and facilitates international trade
Banana wars explained
A six year trade quarrel between the US and EU
The US complained that the way the Caribbean had a quota of bananas to sell to the EU broke free trade rules
US based multinationals (eg Chiquita donated $500,000 to the Democrats) were annoyed because they want no protectionism because they sell Latin American bananas
The US has now put import duty on lots of European products in retaliation
Banana wars impact
Scottish cashmere may have to cut 700 Jobs if it loses its £1.25m US exports
Half the population of the Caribbean rely on the banana industry so if the access to EU markets is suddenly taken away their economy could collapse
NICs and example
A country that has just passed the point of being a developing country but still not highly developed
Brazil, Mexico, Turkey
International political and economic organisations
WTO, IMF, WB
National governments and Trade Blocs
EU and ASEAN
Protectionism
High use of tariffs that means foreign trade is put off and your own country’s economy improves (due to tax and increased industry)
Breton woods agreement
After WW2 the western allies wanted successful international trade for rebuilding economies
Came into force in 1946
A system of rules, institutions and procedures
Aimed to stabilise and regulate international financial transactions
Quota
A limit placed on the number of goods that are imported from other countries
Embargo
A ban placed on certain goods imported from other countries
Subsidies
A sum of money granted by the government to help an industry or business keep the price of goods low
It helps protect domestic industries and create more profitable local businesses
Why would a government use tariffs
To protect domestic jobs
To help a young industry to develop
To protect customers
2 organisations formed from the Breton woods agreement
International Monetary Fund
To monitor exchange rates and lend currency
and the World Bank Group
To provide financial assistance
Facilitates globalisation by international trade
SAPs
Structural Adjustment Programs
A way to help make debt repayments on old debts
They can result in deep cuts to health and social services and the removal of important subsidies
And the privatisation of govt asserts to increase private sector and increase wealth
Evaluation of IMF
Use of SAPs hurts the poor the most
Selling govt assets may force LICs to sell to foreign TNCs
Privatising businesses is done at the expense of workers’ rights
It makes it necessary to open up to foreign firms
How does the IMF operate
Member nations pay a quota to be part
Those making higher contributions have greater voting rights
It loans money on a deal that countries sign up to a SAP
How does the World Bank operate
It uses bank deposits placed by the world’s wealthiest countries to provide loans for developing countries
Includes low interest loans, grants, tech assistance to LICs
Evaluation of WB
It connects countries which helps them find assistance - dependence and interdependence
It can force developing nations to open their markets to foreign investors - increasing risk of financial crises
how does the WTO operate
It aims for trade liberalisation
Seeks for all countries to be free of tariffs and quotas
Settles free trade agreements and disputes
Believes in FREE TRADE
WTO and Pakistan
Pakistan joined WTO in 1995
It was forced to open up its (previously excluded) fishing zone around its coast
Then, deep sea trawlers owned by TNCs were allowed to fish in these waters - huge trawlers from India take most of the catch
‘Taking the fish’ by action aid found that their fish stocks were dangerously low and their fishing communities were left in poverty
WTO Evaluation
Led to poverty in Pakistan It hasn’t stopped the USA and UK from subsidising their own food products so hypocritical It’s too powerful Run by the rich for the rich Lacks democratic accountability
Ghana and WTO
Ghana joined the WTO in 1995
Its govt had subsidised Ghanaian farmers until then
But the WTO made a joining condition that Ghanaian farmers should not be subsidied (even though the EU and USA freely subsidise their own farmers)
So now Ghanaian farmers can’t compete with imported subsidised foods so have given up
The IMF and Greece
The IMF helped the Greek debt crisis in the years after the 2008 financial crash
This meant Greece was forced to cut back on its govt expenditure and into austerity
Lots of protest in Greece
How does free trade increase globalisation
No barriers to trade = TNCs invest in different nations
Increases outsourcing, forms global supply chain
Global spread of ideas, culture etc.
Investment economically develops a Country which increases their demand for foreign products and leads to a reliance on global trade
More TNCs invest = interconnected
Offshoring example
US owned Fender opening a plant in Mexico
Foreign mergers
Two firms in different countries join forces to become one entity
Foreign mergers example
Royal Dutch Shell has a HQ in UK and Netherlands
Foreign acquisitions
A TNC launches a take over of a company in another country
Foreign acquisition example
UK’s Cadbury taken over by US Kraft
Transfer pricing
Some TNCs channel profits through a subsidiary company in a low tac country
Transfer pricing example
Starbucks and Amazon in Ireland, a low tax country
3 ways national governments influence globalisation
Free market liberalism
Privatisation
Encouraging business start ups
Free market liberalism idea
Government interventions in markets hinders economic growth so we should have as few rules about trading as possible
As overall wealth increases, trickle down will take place from the richest to the poorest
Deregulation
The process of removing or reducing state regulations
Removal of governmental regulation of the economy
Neo liberalism in the UK
Deregulation of the City of London in 1986 made London become the world’s leading hub for financial services
However we have not had genuine trickle down of wealth because now the richest 10% earn 9.5x more than the poorest 10%. In 1980, this was 7x
Privatisation
Foreign investors gain a stake in privatised national services and infrastructure
UK Privatisation
Until the 1980s important assets like rail and energy supplies were owned by the state
To reduce govt spending, increase competition (so reduce costs, increase quality) and as part of austerity the UK govt sold
British telecom
Energy
Railways
There are concerns about services getting worse, rising costs and no accountability
Encouraging business start ups methods
Love corporation tax Free or subsidised land Visas for staff Subsidies for spending, training etc Change in local laws Increasing profitability of a company (subsidies)
UK Encouraging business start ups
Subsidised land for Nissan in Sunderland
Change in Sunday trading laws attracted Disney and Burger Kind
Common Agricultural Policy increased the profitability of farming in the UK
National governments and trade blocs
National governments have promoted the growth of trade blocs to trade freely with neighbours without additional tariffs
3 Disadvantages of trade blocs
Loss of sovereignty eg. The EU also dealing with matters that are not about trade
Interdependence - if there is disruption of trade within a bloc this will have consequences for all
Compromise and concession - they must allow foreign firms to gain domestic market share at the expense of local companies
3 Advantages of trade blocs
Bigger markets but no extra taxes
National firms can merge to form transnational companies and increase profit
Protection from foreign competitors and political stability - limits the import of cheap goods to protect domestic manufacturers = political stability?
