Globalisation Flashcards
Interdependence
The relationship between two or more countries, usually in terms of trade.
Countries are mutually reliant and dependant on each other.
Globalisation
The increasing links between countries and the greater interdependence that results from this
Factors that have made globalisation possible
- Relaxation of laws-allowing foreign investment in countries
- Increased amount and speed of international transport
3 development of telephones, fax, email and the internet.
The influences of developments in ICT
- falling cost of transport has made it economic to move manufacturing to cheaper areas
- falling cost of telecommunications, in particular satellite technology, has made it easier and quicker to send info globally
- submarine cables have been important for the high speed transmission of data
Call centres in India why
- Indian call centres 40% cheaper to run than British ones
- Over 4000 IT companies based in Bangalore
- Indians speak good English
- 2 mil ppl a year graduate from Indian Unis and technical colleges
Why people want to work in call centres
Earns more than teachers. £90/week
High rates of unemployment
1/4 of indias population lives in absolute poverty
TNCS
Transnational corporations : a corporation that operates in more than one country
Advantages of TNCS
Provides jobs in factories making the supplies/in services where products are sold. Additional income that people have created multiplier effect. Development of skills. Infrastructure improved as better access and communication are needed between and within countries.
Disadvantages of TNCS
Leakage. low wages and key jobs go to outsiders. Branch plants are susceptible to closure if there are worldwide economical problems. Government has no say in deciding on the future of TNCS. Working conditions can be poor. Safety can be compromised- workers health can be jeopardised
Multiplier effect
Where initial investment and jobs lead to a knock on effect, creating further jobs and providing money to generate services
Leakage
Where profits made by the company are taken out of the country to the country of origin so do not benefit the host country.
Nike TNC case study : why in Asia
Located factories in Asia because : labour is cheap, raw materials are grown near or in those countries, countries are close together reducing transport costs, countries are in trade bloc- no import and export costs
Nike TNC advantages
Advantage: subcontracts to over 800 factories in 50 countries, employing over 600,000 workers. Multiplier effect allows new business to exist which can benefit economy. Creates a skilled and experienced workforce which can encourage further investment in the country by other companies.
Nike disadvantages
Long working hours, child labour, taking advantage of poor health and safety regulations. Manufacturing in urban areas of Indonesia contributed to rural urban migration-overpopulation in cities and growth in shanty towns. They often relocate to poorer regions which has domino effect on small local companies reliant on Nike employees to buy their goods / raw Materials
Nike in Japan and China
China - Guangzhou factory - Nike has been allowed tax benefits + to pay low wages. Nike has been able to source, produce and sell many products within China as they have a wealth of resources. Population becoming wealthier and keen of buy western goods.
Japan- key to increasing profit for a TNC is to make product cheaply as possible. Transportation costs low.
De industrialisation
A process of decline in certain types of manufacturing industry, which continues over a long period of time->Fewer people employed in this sector and falling production.
Reasons for locating factories in NICs - government legislation
Cheap labour in NICs. They have very low minimum wages- lowest is £1.25 per hour set by government which reduces the cost of manufacturing goods as the workers are paid less. USA minimum wage is £5.61 per hour. They also have longer working hours compared to the EU, so they get more done in one day.
Reasons for locating factories in NICs - health and safety regulations
In some poorercountries, regulations don’t exist/ not enforced, which lowers cost of manufacturing goods as less money is spent on increasing safety of factories.
