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
What case study illustrates offshoring and global shift?
HSBC Bank
HSBC information🇨🇳🇬🇧
- 6th largest TNC - turnover of $140B
- Moved to🇬🇧
- Survived the 2009 banking crisis
- Transferred £750M and lent other banks £4B in a few hours
- Employs 330,000 in over 80 countries
HSBC and offshoring🇨🇳🇬🇧
- Offshoring processing work in LEDCs to reduce costs of providing services in MEDCs
- Offshoring has angered workers and trade unions in the US and UK - job losses and cut wages
- Around 80% of HSBC’s workforce has been moved offshore
North Korea - politically switched off🇰🇵
- Citizens don’t have access to internet or social media
- 3 TV channels
- Possessing a Bible or watching non-state movies is punishable by death
- Wearing jeans is illegal
- Only military and government officials are allowed cars
- No undersea data cables
The Sahel Region, Africa - physically switched off
- Deserts make it difficult to create infrastructure
- Land-locked countries have no ports and are reliant on other countries
- TNCs don’t invest as climate makes good trade difficult
•Other reasons countries are switched off
- They are LDCs(economic)-Chad:$951 per year
- Low literary rates(social)-Burkina Faso:50%
- Terrorist groups or political instability(political/cultural)-Sudan:over 2 million landmines
Anti-globalisation
- Some countries are protesting against globalisation
- E.g. 1st Starbucks opened in🇫🇷in 2004, compared to 1997 in🇬🇧despite that the🇫🇷are globally one of the biggest☕️drinkers
- 🇫🇷radio stations play 40%🇫🇷music
What is the Pacific Rim
Where most manufacturing is done because it is cheap, the workers have few rights and it’s the new market
Positive social impacts of global shift
- Regular income
- Accommodation and food provided
- Income often helps families back at home
- Diminishes cultural barriers
- Growing fluidity of money
- Improvements in the status of women
Negative social impacts of global shift🇨🇳
- Exploitative hours - 14-20hrs/day
- Punishments if quotas aren’t met
- Limited breaks
- Unsafe working conditions
- Regional inequality - 3% of FDI went to West, 85% to East
- Top 20% of population earns 50% total income, bottom 20% earns 4.7%
Union carbide🇮🇳
- TNC based in🇺🇸
* Moved to🇮🇳as products could be made more cheaply and laws and restrictions were less severe
Bhopal Disaster🇮🇳
- Dangerous chemical reaction happened in the Union Carbide factory
- Leak first detected when workers eyes began to burn - no detectors
- Supervisor informed but failed to take action
- 40 tonnes of Methyl Isocyanate leaked for 2 hours
- Moved 8km downwind
- 3,800 deaths
- A further 8,000 deaths
- 11,000 with disabilities
- Government claimed $3.3B, UC only payed $470M
Causes of air pollution in Linfen🇨🇳
- Coal industry - brown coal is burned: SO2, dust from mines, trucks shipping coal
- Construction - large number of homes and factories built: construction dust
- Factory pollutants
- Geographical location: Linfen is a bowl
Social impacts of air pollution in China🇨🇳
- High levels of cancer
- 70% of🇨🇳cities fail to meet air quality standards
- Emphysema is a major problem
- 24 hours in Linfen is equal to smoking 3 packs of cigarettes
Environmental impacts of air pollution in China🇨🇳
- 70% of groundwater is contaminated
- Plants near water die back
- 30% loss in harvest due to dust
Causes of water pollution in China🇨🇳
Waste products are release by TNCs into China’s rivers - 20-30% of China’s pollution comes from products destined for export
Social impacts of water pollution in China🇨🇳
- Liver cancer 3x more common in🇨🇳
- Numbness of hands and feet
- Blindness
- 320M don’t have access to clean water
Environmental impacts of water pollution in China🇨🇳
- Many poisons are released into the water
- Smaller and diseased fish
- 60% of water ways are contaminated
Impacts of oil extraction in Nigeria from shell🇳🇬🐚
- Contamination of land
- Contamination of rivers and fish
- Failed to build health centre
- Ogoni affected by resource curse - should gain 13% of oil revenue but no investment in education or healthcare
- Gas flares - 70M tonnes of CO2 emitted a year, equal to 10 million homes in the Uks emission said, caused cancer, skin rashes, bronchitis and asthma
Deindustrialisation in Detroit🇺🇸
- 2016, population dropped to below half of its peak
- Automation replaced jobs
- Global shift lost people their jobs
- In 7 Years, Detroit’s biggest employer dropped from 130,000 to 50,000 workers
- At peak of deindustrialisation, 30% unemployed
- Schools shut down
- Lost homes and jobs
- Lots of land for urban farms
Why did Detroit’s industry collapse?🇺🇸
- Market location -NEEs better location
- Wrong car type - SUVs were not what the world wanted
- Cost of workers’ healthcare - cheaper elsewhere
- Cheaper labour elsewhere
- Import/exports costs
Order of effects of deindustrialisation
- Old factories close
- Jobs lost
- People leave the inner city
- Shops and schools close
- More jobs lost
- More people leave
- Area becomes rundown
- Land becomes derelict
- Crime and vandalism
- People who stay are mainly elderly or low income groups
- Quality of life gets worse
Urbanisation
- Caused by rural-urban migration
- Increase in the proportion of people living in urban areas within a specified location
- Can create mega cities
What’s a mega city?
A city with a population of 10M or more
What does Lee’s Migration Model show?
- Origin has negative, positive and neutral features
- Intervening obstacles which may prevent people moving
- Destination has negative, positive and neutral features
Environmental challenges of mega city growth
- Water and air pollution create challenges for city planners
- Severity if problems depends on economic and physical context, e.g. Athens and Rome suffer from smog due to anticyclonic weather; India and Pakistan’s monsoon belt creates rainfall and flooding due to sewage failures
Social challenges of mega city growth
- Provision of adequate urban housing, healthcare and education is a major challenge for planners in developing countries
- Mass migration
- Challenge is regulate housing market to make housing affordable for low income groups
- Hard to achieve anywhere unless urban employment needs are met
What is a global hub?
A highly globally connected city sometimes known as a smart city or world city
Hub city influence
- Influential - large populations, highly skilled workforce and a range of TNCs
- Socio-economic influence globally, e.g. Washington is Home to IMF, WB and Pentagon; Dubai is rich in finance and resources and base for many TNCs
Elite migration
Sometimes known as millionaire migration or oligarch migration
International elites
- Combination of wealth, social status, political influence and cultural influence
- 1/3 of all foreign purchases of property in London went to Russians in 2014
- Most expensive property at £136M was sold to an oligarch
Globalisation benefits to host nation
- Fills particular skill shortages
- Working migrants spend wages on rent, benefitting landlords and pay tax
- Migrants willingly do labouring work locals may be reluctant to do
- Some migrants are entrepreneurs who establish business employing others
- New market can develop for ethnic food
Globalisation costs to host nation
- Social tensions arise
- Local shortages of primary school places due to natural increase among a youthful migrant community
- Political parties change their policies to address public concerns such as migration
Globalisation benefits to the source nation
- Migrants or their children may return, bringing new skills
- Migrant remittances can contribute to national earnings significantly
- Some government spending costs are transferred to host region
- Less public spending on housing & health
Globalisation costs to the source nation
- Closure of urban services & entertainment with a young adult market, bringing decline & dereliction
- Closure of some university courses due to lack of students
- Increase in the proportion of aged dependants & the long term economic challenge it creates
- Reduced economic growth as consumption falls
- Economic loss of a generation of Human Resources, schooled at government expense, including doctors, teachers and computer programmers
Low-waged migration
- Large numbers of low waged and often low skilled migrants are attracted to global hubs
- Over 2M Indian Migrants live in the UAE, making up 30% of its population
- Migrants make up 90% of UAEs total population
Culture
- Ideas, customs and social behaviour of a particular people or society
- Each culture has traits
Cultural diffusion
- Spread of culture
- Considered as soft power - when a country has changed their culture in other places with no brute force but due to influence
Americanisation/Westernisation
USA & western nations have used soft power to change cultures
Cultural imperialism
Imposing one culture into another
Reasons for cultural change in Nigeria🇳🇬
- Economic change - Nigeria
- 🇳🇬deregulated foreign investment - more TNCs enter and more international trade
- Free trade
Effects on Nigeria from cultural change🇳🇬
- Indigenous languages under threat
- Nigerian music has been neutralised by western music
- Many Nigerian youth prefer western hair styles shoes and dressing
- Changing gender roles - women are expected to find work
- Culture of borrowing money has emerged
- Production of rice has reduced and farmer livelihoods and ways of live destroyed
- Many are leaving for cities
McDonalds information🍟
- Grown to 32,000 outlets worldwide
- Found in 119 countries
- Serves 58M customers a day
- Term McJob came about - low-paying job that requires little skill and provides little opportunity for advancement
- Glocalisation - dominating culture weaves into the local one
Social impacts of McDonald’s🍟
- Diabetes
- Heart problems
- Obesity
Environmental impacts of McDonald’s🍟
- Livestock’s food uses fertiliser, fuel, pesticides, water and land - 167M pounds of pesticides, 17B pounds of fertiliser each year across 149M acres of crop land
- Deforestation
- Overgrazing by China’s 127M🐮 279M🐷are expanding desertification by 2330 km2/year
Positive impacts of cultural diffusion
- More open and accepting nature of western nations
* Paralympic movement and decade of disabled persons
Environmental change - Indonesia🇮🇩
- Pressure to build factories has devaluation natural land
- Globalisation is thought to be the main driver behind deforestation
- Suharto’s open door policy converted much of the forest and farm land to factories and industry
- More forest cut down for pulp and paper
- 🇮🇩owns about 10% of global rainforests, losing 900,000 hectares of forest each year
Brexit - migrants & erosion of culture
- London is considered a migration hub
* Most come from countries with a different language, culture or religion
White horse village
- People forced out of their homes
- Farmland replaces
- Houses aren’t built for the villages
- People had to move elsewhere for jobs to support their language
White horse village after a few years
- New shops open everyday
- 1000s of new residents - property prices have doubled
- Only government are allowed to build
- Bridges and tunnels are being built in the mountains
- Villagers allocates subsidised apartments
- Villagers are becoming rebellious
- Villager’s apartments aren’t safe - earthquakes
- Soon it will be 4 hours from Chong Ching
- New schools were built
Would the line be more concave or less concave for a country with more equal distribution of its wealth?
Less concave
For an equal country, would the Lorenz curve be closer or further from the line of equality?
Closer
What is the formula for the Gino Coefficient?
A/(A+B)
The development gap
- The differences between the most and least advanced countries/regions
- Defines how far apart they are in terms of development, economy and education
Gino coefficient
- Gini index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution
- A gini index of 0 represents perfect equality
- A gini index of 100 implies perfect inequality
What indices can be used to measure a development gap?
- HDI index and rank
- Life expectancy at birth
- Expected year of schooling
- GNI/capita
- Carbon emissions/capita
Why is it argued that globalisation widens the development gap?
Because globalisation makes the rich richer and the poor poorer
Why is it argued that globalisation is closing the development gap?
Because it increases many countries’ capita
What does the HDI trend show
That countries are increasing in HDI which shows the effect of globalisation - as a country gets richer, HDI, life expectancy, expected years of schooling, GNI/capita and carbon emissions also increase
Cultural mixing - open borders
- 2.2M🇬🇧living in Europe, but only 813,000 Poles living in🇬🇧
- Post accession migration happened when 8 Eastern European counties joined the EU
- Impacts: many migrants concentrate themselves, thriving migrant diaspora, extremism and racial/cultural tension
- Places like New York embrace different cultures
What is post accession migration?
The sudden movement of migrants into other EU countries when their home country joins the EU
What is migrant diaspora?
Dispersion of a group of people from their homeland
Cultural mixing - social tension
Many people are hostile towards migrants
Cultural mixing - rise of extremism
- Rapid increase of migration since the rise of globalisation has also led to a rise in extremist groups
- E.g. Britain First and The Knights Templar - these groups are very aggressive and provocative
Support for extremist groups
- Considered that specific social groups such as economically insecure lower-middle class persons and those who are unskilled manual workers
- Tend to show more hostility towards immigration, multiculturalism, and diversity - often focuses on Muslims
Internet censorship - China🇨🇳
- Government filters searches and blocks sites
- Done to prevent an uprising or riots
- In 2014, China had the highest number of imprisoned journalists in the world
Retaining cultural identity
There are groups of people within globalised countries who wish to retain their traditional culture and shun globalisation and westernised countries
First Nations, Canada🇨🇦
- There are several tribes in Canada who seek to avoid westernised life
- Over 600 recognises First Nations
- Throughout history, Canadian government has tried to assimilate these groups
- 2.7% of the population is natives
Buying local
- Sourced locally
* Money remains in the community
How has globalisation encouraged a ‘global conscience’?
- Global broadcasting is making us aware of global events
* Led to increased rights, recycling and other changes
What is the Bristol Pound?
Aims to encourage people to spend at local, independent businesses
Benefits of buying locally
Triggers the multiplier effect - locals gain employment and involvement in the local economy
Negatives of buying ethically
- Destroys more forests as more land is needed to produce as much as farmers who use fertilisers
- Increases overproduction - prices fall
- Driving out to buy products used more fossil fuels than getting home deliveries
- Growing cash crops can mean some families don’t grow enough crops to feed their own families
Fair trade
- A way of helping farmers in developing countries
* Products must match an ethical criteria
Fair trade purchasing
- A form of ethical consumption - consumers make the choice
- Producers in developing countries form cooperatives to market their products for a fair price - the consumer pays the price
Arguments against fair trade
- Increased production by 60% but still only a small %
* Some argue it should be called fairer trade
How fair trade works
- Growers are given a fair price for their crops by the companies that export them
- Farmers are paid a social premium which is invested in community development projects
Kuapa Kakoo Fair Trade case study
- 45,000 cocoa farmers who elect representatives
- Has a tryst which distributes money for community projects
- 2008, sold over 4,000 tonnes of cocoa to the FT market - farmers receive a guaranteed price even if the world price falls
- Founded Divine Chocolate Company - KK gets a fair price and has influence on the company
Eco-footprint
Measures the demand a person has on the environment
Recycling
Globalisation has increased awareness and therefore increased levels of recycling
