Globalisation Flashcards
What is globalisation?
The increasing interconnectedness of the world economically, culturally and politically
What is economic globalisation?
- Money/capital becomes almost universal and instantaneous
- Goods and services produced in one part of the world are increasingly available in others-global market place, leads to global brands
What is a TNC?
Trans national corporation
What is an MNC?
Multi national corporation
What is FDI?
- Foreign direct investment
- Easier now as money flows almost instantaneously around the world
- Can create problems which start in one country but spread, such as credit crunch which in the USA
What can more TNCs or MNCs lead to?
More FDI
What is social/cultural globalisation?
The norms of our day to day lives become more similar to the norms and beliefs of others around the world
What is political globalisation?
- Countries come together to form large multi state trading groups
- Formation of international laws and rules
- Increasing number and power of associations which influence or govern the world as a whole
What is global shift?
- Movement of industry from HICs to new, cheaper locations - NEEs
- Causes deindustrialisaion
Dates for the inception of globalisation
•1492 - Columbus discovered America •15th cent. - emergence of slave trade •1607 - 1st British colony in USA •1709 - start of industrial revolution •1866 - 1st telegram cable across Atlantic •1876 - creation of telephone •1914 - WW1 •1929 - Great Depression See notes for more dates
When did rapid globalisation begin?
1960-2000
Developments in ICT examples💻
•1971 - Intel developed the 1st microprocessor chip •1975 - First PC Altair 8800 •1978 - Japan launches VHS •1985 - Microsoft Windows •1985 - first cellular mobile phone See notes for more examples
How does ICT help globalisation?💻
- Eco - video conferencing for trade, gives suppliers info, allows companies to be footloose
- Soc - video calling keeps people talking across world which supports migration, makes the work feel borderless
- Cult - lang and music are adopted, imitated and hybridised quickly
- Polit - raise awareness about political issues
Containerisation🚢
- Intermodal freight transport using standard containers
- Enabled global shift
- 90% of non-bulk cargo is transported by container
- More secure than other cargo
- Improvements in port handling efficiency - lower costs and increased trade flows
- Costs have fallen 100% since 1950s
Evolution of container ships🚢
- Began in 1950s
- 1980 - carry 5000 TEU
- 1992 - carry 6000 TEU
Aviation✈️
- Passenger planes replaced ships
- Aircraft got larger - could carry more people
- Aircraft used less fuel
- Deregulation - open skies agreement
- Low cost airlines
- 5% of goods traded by air - air freight
What is the open skies agreeement?✈️
- Governments no longer sponsored airlines and protected them from competition
- Resulted in increased competition and choice for consumers
What does a switched on country mean?
Countries with access to global information
Impact of telecommunications on business☎️
- Reduces need for face to face interactions
- Businesses can be footloose - can place a company in any location
- Rapid movement of money and information around the world
What is time-space compression?💻☎️
- ICT has changed our perception of time, distance and barriers to goods, people and money
- ’Shrinking world’
What is the KOF index?
Shows us how interconnected our world is, measuring the % of political, economic and social reliance that individual countries have with other nations
What is colonialism?
USED TO DESCRIBE THE PAST
•Extension of a nations sovereignty over territory beyond its borders - Indigenous populations are directly ruled or displaced
•Dominate resources and labour of colonised territories and may impose culture
What is imperialism?
USED TO DESCRIBE TODAY
•Doesn’t directly rule but influences economically and culturally
•E.g. USA through IMF and World Bank
What international organisations have contributed to globalisation?🏦
- IMF - loans, free market economy which allow TNCs to enter
- WTO - manages world economy to benefit HICs and TNCs
- Breton Woods Institutions - after WW2 to restabalise the world economy
- UN - maintain global peace, HICs have more say
- The World Bank - loans and grants
Consequences of political globalisation
- IGOs have more power
- IGOs are largely operated by HICs in the interests of HICs
- Imperialism/neo-colonialism - LICs are indirectly controlled by HICs
Why should Indonesia be a wealthy country? 🇮🇩
It is rich in copper, gold, oil, timber and the skills and labour of its people
Who do some say control Indonesia? 🇮🇩
Dictated by IMF and World Bank because the Indonesian elite is considered spineless
Describe the working and moving conditions of those working in slums in Indonesia 🇮🇩
- Estimated 70 mil in extreme poverty
- A waiter at two of the elite’s wedding reception would take 400 yrs to earn the cost of the wedding
- Dormitories built from breezeblocks and packing cases which flood
- They are laid 72p a day (min wage) - government say this is just over half a living wage
- Open sewers
- No clean running water
- Many children are undernourished and prey to disease
What is an economic processing zone? 🇮🇩
- A vast area of sweatshops with terrible working conditions
- Indonesian one’s are owned by Taiwanese and Korean contractors
- 24 hour shifts with a 2 hour break - workers are punished if they refuse
- Some TNCs have employment codes but they are not enforced effectively
- Gov promotes 🇮🇩 as a location with cheap labour
- Worker gets 40p of the price of £100 trainers while the CEO’s salary and company profits are huge
Why was Indonesia once called the “Greatest prize in Asia”?🇮🇩
The term was used by President Nixon to describe 🇮🇩 vast mineral wealth, markets and cheap labour
How was Indonesia exploited?🇮🇩
- 🇮🇩economy was redesigned in🇺🇸 giving the west access to the “prize”
- The West backed Suharto because he got rid of the previous leader, Sukarno
Who was Sukarno and what did he do?🇮🇩
- Founder of modern🇮🇩, a nationalist who believed in economic dependence for his people
- Kept TNCs out and threw out the IMF and World Bank
What did Suharto do to Indonesia and why?🇮🇩
- Seized power in 1960s aided by the West
- Led a regime that committed mass murder of millions of people - CIA gave Suharto a list of 5000 opponents to be assassinated
Why was the conference held in Indonesia unfair?🇮🇩
- Conference in🇨🇭between business leaders and Suharto-approved 🇮🇩representatives
- Murders went unmentioned
- Global capitalists git the legal infrastructure for investment in🇮🇩changed
- 🇬🇧Government sold arms to Indonesia and used UK taxpayers money for export credits to help Suharto pay his arms bill
What was the World Bank and IMF set up for?🇺🇸🇮🇩
- Agents of the richest countries in the world, especially🇺🇸
- Set up to rebuild the economies of Europe after WW2
- Later started offering money to poor countries if they allowed western corporations free access to their raw materials and markets
Why are the loans by the IMF and WB considered to be the cause of the development gap?🇺🇸🇮🇩
- Only offered if the countries privatised their economies - used debt to get their policies implemented in poor countries
- E.g. Tanzania had a GNP of $2.2 bil shared between 25 mil people; an investment firm had annual profits of $2.2 bil shares between 161 partners
What does the Indonesia case study show?🇮🇩
How IGOs are a cause of globalisation
What does the Coca Cola case study show?🇮🇳
TNCs, global shift and how NEEs are often losers of globalisation
Why did Coca Cola move to India?🇮🇳
- 🇮🇳has a policy that water is virtually free
- 🇮🇳keen to gain investment so invited🥤to open a number of plants
- The wages of🇮🇳workforce were considerably lower than that of European counterparts
- Growing desire for the luxuries of the western world such as🥤
Problems with Coca Cola🇮🇳
- 1000s of people used to work on the land but now only 141 are employed at the plant
- Waste showed high levels of lead and cadmium
- Workers are paid very little
- Unions and strikes have often lead to workers being sacked
- 🥤products contained high levels of pesticides sold in🇮🇳
- 🥤latest facilities is to open in an area with severe contamination of arsenic
- Over 50 villages experience water shortages
- Water table has declined between 25-40ft in the last 4 years and🥤has been discharging waste into fields and a canal that leads to the river Ganges
What is a trade bloc?🌏
- A group of countries within a region that protect themselves from imports from non members
- Have reduced/ no taxes to member states
- E.g. the EU
Benefits of trade blocs🌏
- Increase market
- Block imports
- NAFTA -🇺🇸needed cheaper labour for its consumer market so used Mexico(benefits HIC)
Causes of globalisation
- Developments in ICT💻
- Developments in telecoms☎️
- Containerisation🚢
- Aviation developments✈️
- IGOs🏦
- Trade blocs🌏
- SEZs🏘
What is a special economic zone?🏘
- A region that has economic and other laws that are more free market-oriented than a country’s typical laws
- Mainly export related manufacturing areas where taxes are reduced as an incentive for companies to off-shore or out-source
Example of an SEZ🏘🇨🇳
Shenzhen, China
China’s change in policy🇨🇳🏦🏘
- Was run by a communist party
- Began to adopt neo-liberal economics/free market, inciting TNCs in
- Joined WTO
- Increased GDP per capita
- 300 mil left rural areas
- 50% GDP generated in SEZs
- 400 mil escaped poverty
China’s closed door policies - anti globalisation🇨🇳
- Banned Google and Facebook
- 34 foreign films screened each year
- Blocked Coca Cola’s acquisition of Huigan juice
Why are large parts of Africa bypassed by globalisation?
High risk and low returns
•Corruption - increases risk of losses, time consuming &frustrating for TNCs
•Little government support - harder for TNCs to gain incentives such as planning permission
•Debt - many countries have debt from loans
•Politically unstable - civil wars
•Negative image
•Unskilled labour - reduced spending on education
•Weak market - wages not high enough to kick start multiples effect
•Unstable currencies - rapidly changing exchange rate
•Crime - kidnappings of foreigners
•Poor infrastructure - no money to invest in modern infrastructure due to debts
Indicators of globalisation
- One indicator is the amount of FDI a country receives
* Mostly made by MNCs and HICs investing in other HICs
Reasons for FDI
- Raw material seeking
- Cheaper labour costs
- Market seeking
- Accounting benefits-🏘
- Political leverage
- Environmental exploitation
Dagenham or Cologne
- Both produces 200,000 cars a year
* Dagenham closed with a loss of 1,500 jobs because British workers are cheaper to sack than German workers
AT Kearney Index
- Ranks cities or countries by analysing each city’s business activity, cultural experience and political engagement
- Count number of TNC HQs, museums and foreign embassies