Globalisation 3.3

Question 1

How is the KOF index calculated and what does it show

Answer 1

• each set of indicators in groups are weighted because some have more significance
• 3 sets of indicators are combined to one value and are then ranked
• shows 14 out of top 15 are european
• measures international interactions

Question 2

What are the advantages and disadvantages of the KOF index

Answer 2

ADV
- allows for comparisons between countries and overtime
- weighting system accounts for missing data
DISADV
- bias to EU countries as are smaller compared to USA / China
- China / USA have large domestic markets which are not accounted for

Question 3

How is the A T Kearney index calculated and what does it show

Answer 3

• uses point system of 0-1
• FDI, internet, telephone traffic weighted as double
• scores summarised
• uses more holistic indicators than KOF
• USA / Canada / Germany / UK / China top 5 (2015)

Question 4

What are the advantages and disadvantages of the A T Kearney index

Answer 4

ADV
- covers 96% of worlds GDP and 84% of population
- allows comparison between countries and overtime
DISADV
- only 64 countries included
- smaller countries higher up as more FDI
- complex system

Question 5

What is offshoring and outsourcing

Answer 5

offshoring: TNCs move parts of thier own production process to other countries to reduce costs
outsourcing: TNCs contract other companies to produce goods and services they need (growth in supply chains)

Question 6

What are some factors leading to the expansions of TNCs

Answer 6

• profit > minimising labour costs > increasing revenue by expanding markets
• Mobility > faster cheaper transport / rapid communication systems

Question 7

What are some advantages of TNCs

Answer 7

• money TNCs invest into the economy can increase government spending
• allows consumers in developing countries to have access to G&S the wouldnt of had before

Question 8

What are some disadvantages of TNCs

Answer 8

• exploit cheap labour resulting in people being paid poorly
• tax evasion as they are international mean government get less money whilst TNC uses their resources
• employment instability as they can leave at any point

Question 9

What does it mean if a country is switched on or off

Answer 9

-switched on places are areas that are strongly connected to other places through consumption of goods and services (have significant global flows)
-switched off is the opposite

Question 10

What is a hub city

Answer 10

a settlement or wider region that provides a focal point for activities that have global influence (London, New York)

Question 11

Why are large parts of Africa switched off (CPUL)

Answer 11

• Corruption - abuse of authority increases risks of losses making it hard for TNCs to operate
• Poor Infrastructure - international debts mean government has no money to invest in modern world infrastructure
• Unskilled Labour - reduced education spending results in …
• Little government support - lack of business volume makes it harder for TNCs to gain inscentives (planning permissions / tax inscentives)

Question 12

Why is Zambia switched off and how is it improving

Answer 12

• Landlocked so relies on good political relations with neighbours
• Value of copper began to fall
  Improving
• privatisation of debt
• $20 b of FDI invested into copper industry