Globalisation Flashcards
What is globalisation?
shapes/patterns of trade, development, culture, technology, urbanisation and power
- the process by which the world becomes increasingly interconnected (with deepening global connections, interdependence and flows) as a result of increased trade and cultural exchange. it is the integration of economies, industries, markets, cultures and policy-making around the world
What are the factors accelerating globalisation?
- development of transport (lower cost)
- advances in technology
- increased communication
- international organisations
- transactional corporations
- new markets
What is the timeline and facts for things that accelerate globalisation?
- 1787 steam-ships
- 1804 railways (1804 first steam train)
- 1830s telegraph (developed in 1830s)
- jet air craft - up to 600mph
- containerisation in 1956 by Malcolm Mclean - responsible for 60% of world seaborne trade, carries 25,000kg per container
- 1973 mobile phones
- 1990 www launched (internet means companies can become footloose)
- 1970s fibre optics - supplies to 2/3 of the UK, carry 65,000x more than copper wires
- 1980s electronic banking
- concept of a “digital economy” arose in 1995 has fundamentally changed how people interact
- social networking e.g. facebook has 1 billion members
What are the international organisations promoting globalisation?
- the Bretton Woods Agreement
- the International Monetary Fund (IMF)
- the International Bank for Reconstruction and Development (IBRD)
- the World Trade Organisation (WTO)
How did the Bretton Woods Agreement promote globalisation?
- set up to rebuild economies post-WW2
- provided initiatives to regulate the international monetary system for USA, Canada, Western Europe, NZ, Australia and japan - all of which linked their currencies to the US dollar
- also established the IMF and IBRD
How did the International Monetary Fund (IMF) promote globalisation?
- helps governments balance their payments
- e.g. by granting loans to members that cannot pay their debts
- main purpose is to prevent protectionism and ensure stability of the international monetary system (system of exchange rates and international payments that makes international transactions possible)
How did the International Bank for Reconstruction and Development (IBRD) promote globalisation?
- originally aimed to help rebuild economies post-WW2 and to alleviate poverty
- now part of the World Bank Group, focus changed to tackling extreme poverty and to encourage income growth for bottom 40% of each country e.g. by providing loans
How did the World Trade Organisation (WTO) promote globalisation?
- set up by the General Agreement on Tariffs and Trade (GATT)
- aim to reduce tariffs and other barriers to trade
- in turn, this will promote FDI, privatisation and market liberalisation
In what ways can national governments promote trade/globalisation?
- privatisation
- trade blocs
- transport
- policy of special economic zones
What is FDI and whats the difference between inorganic and organic FDI?
FDI - a controlling ownership in a business or enterprise in one country by a company in another country
- inorganic FDI is when a foreign firm buys a company in a different country (e.g. UK received £12 billion in FDI from the USA when Kraft bought Cadbury in 2010)
- organic FDI is when the operations of an existing business are expanded into another country (e.g. Nissan’s 2015 investment of £100 million into an existing car plant in Sunderland to produced the next generation of its Juke car - guaranteed 27,000 jobs in the supply chain)
What is privatisation?
the transfer in ownership of a business/service etc from the public sector to the private sector
What is market liberalisation?
the restriction of rules seen to restrain economic activity
How did the UK undergo privatisation?
conservative gov under Thatcher began a programme of deregulation and privatisation, British Telecom privatised in 1984, local bus services under the Transport Act 1985, British Rail 1993
- policies continued under new labour 1997 when the BofE was taken from gov control, meaning it could no longer control financial activities of banks in the UK
Why was privatisation introduced in the UK?
to encourage economic growth and FDI through ideologies that competition leads the market
What is a Trading Bloc?
an intergovernmental agreement where by barriers to trade are reduced among participating states (e.g. the EU)
What are the advantages of trade bloc membership? (3)
- creation of bigger markets without extra tax e.g. Teco’s expansion into EU - 65-508 million consumer base
- bigger markets encourage national firms to merge into TNCs e.g. Vodafone became the largest telecommunications company after merging with Germany’s Mannesmann
- protection from foreign competitors e.g. 2007 EU blocked £50 million of Chinese clothes
What are the disadvantages of trade bloc membership? (3)
- loss of sovereignty e.g. EU dictates human rights, consumer protection, gas emissions and issues - even though this is loosely linked to trade
- encourages interdependence e.g. trade disruption within a bloc impacts all participating countries
- foreign firms gain domestic market share - sometimes at the expense of local companies
How much has China’s FDI increased by since 1985?
$0 in 1985
$135 billion in 2015
(due to policy aiming to increase in inflows and outflows)
How has transport in China increased FDI?
- Zhengzhou airport aims to have 5 runways handling 70m porringers yearly by 2030
- the airport inspires to be the centre of a city filled with logistics facilities, R and D centres, factories etc linking China to the global economy
- over 100 airports built in China since 2011
- despite intentions of boosting FDI, many airports are operating at a loss
- Zhengzhou Airport Economic Zone allows duty-free export and re-export of goods
- attracted dozens of mobile phone makers e.g. Foxconn factory employing 200,000 people year-round
What are special economic zones?
- large areas of land set aside in locations well placed for international trade, in which companies can import raw materials and export manufactures without incurring domestic taxes
How has China increased FDI through special economic zones?
China’s “open door” policy in 1978 opened 4 special economic zones in Southern China with tax incentives, to attract foreign capital and businesses - its economic growth in the 1980s is one of the fastest in world history
In what ways does globalisation vary between countries?
- environmentally
- economically
- socially
- politically
(countries can either be “switched on” or “switched off” to globalisation)
How can countries be environmentally “switched on” to globalisation?
e.g. China has natural resources e.g. coal, oil - providing energy security and a base for links with other countries that need that commodity, borders many countries increasing its capabilities of trade
How can countries be environmentally “switched off” to globalisation?
e.g. Nepal is landlocked and has Himalayas running through the country, physically limiting its trade
How can countries be economically “switched on” to globalisation?
e.g. in the UK almost 1/4 of all foreign owned businesses are owned from within the USA, london attracts FDI
How can countries be economically “switched off” to globalisation?
- the Sahel Region has seen mismanagement of resources, loss of FDI, not seen as a viable market, farmers dependent on aid from OCED nations - however has seen economic growth in neighbouring countries
How can countries be socially “switched on” to globalisation?
- migration high - net migration into the UK as of march 2018 was 271,000
How can countries be socially “switched off” to globalisation?
e.g. north korea - only country where nobody knew “Yesterday” by The Beatles, no access to the internet or social media for normal residents
How can countries be politically “switched on” to globalisation?
Norway most democratic country in the world
How can countries be politically “switched off” to globalisation?
north korea is politically isolated by ignoring trade, limiting mobile phone and internet access
How can globalisation be measured?
- KOF Globalisation Index
- AT Kearney Index
- IMF annual report
- KAOPEN Index
How does the KOF Globalisation Index measure globalisation?
- founded 2002. measures the extent to which countries are socially, politically (one of few that includes this) and economically linked to others
- e.g. 2015: top social globalisation - Austria
top economic globalisation - Singapore - however data from all countries is not available
How does the AT Kearney Index measure globalisation?
- uses business activity, human capital, information exchange, cultural experience and political engagement to rank cities in terms of the quantity and quality of their connections e.g. in 2014 New York and London were top
How does the IMF Annual Report measure globalisation?
records the existence of restrictions to trade in different countries
How does the KAOPEN index measure globalisation?
measures how easy it is to invest and withdraw investment in different countries
How has globalisation shifted over time?
- USA and EU dominate global trade as their markets are so large
- China and India rise due to shifting pattern of global production
- prices of manufacturing decrease and price of commodities increase
- 1950/60s - shift in low tech production e.g. textiles to “Asian Tigers” e.g. Taiwan
- 1980s - consumer electronics flourish in Japan
- 1990s - electronics production outsourced to China
- 2008 global financial crisis reinforces the shift as trade balances out in emerging countries as developed countries decline
Why has India seen a growth in globalisation?
- gov promotion of growth in the electronics sector since 1970s, causing major companies to locate there e.g. Apple, iOS design and development accelerator to be opened in Bangalore (outsourcing of services) - any investor exempted from corporate taxes by up to 90%
How has India seen advantages from its growth/shift in globalisation?
- infrastructure development: e.g. development of Metro Rail, international airport at Devanhalli, four-laning of Bangalore-Mysore Road
- waged work: thousands of IT specialists, stable employment with companies setting wages at appropriate levels, disposable income in Bangalore 103% above national average
- poverty reduction: charity effort e.g. the Art of Living helped 7,000 students increasing attendance levels in schools by 10% - making population more employable
- education and training: highly skilled and educated workforce that attracts international investment
How has India seen disadvantages from its growth/shift in globalisation?
- loss of productive land: clear decrease in local farmland due to urban sprawl, development causes increase in flooding leading to productive land being damaged, 32% of land facing degradation
- unplanned settlements: 2015 reported that 1.4 million live in slums in Bangalore, unregulated with high rates of disease , 66% of statutory towns in India have slums
- environmental and resource pressure: 59% of tap water in Bangalore is not potable mostly due to groundwater contamination from sewage, over-abstraction of water for industrial use means only 184/1000 lakes exist in Bangalore, loss of 50,000 trees in recent years from infrastructure development in recent years in Bangalore
Why has China seen a growth in globalisation?
- Guangdong province - Free Trade zone in 2015 has contributed to its status of the richest province in China, lots of FDI and TNCs e.g. Coca Cola and Toyota
- 2004, Coca Cola launched new bottling plant in response to its competition with Pepsi in the region - Cola currently has 3 plants in the region
How has China seen advantages from its growth/shift in globalisation?
- increased infrastructure development generates a cycle of investment
- waged work due to the decrease in cottage industries creating job security
- boosted economy such that more can be invested in poverty reduction - aims to end extreme poverty by 2020, 700 million lifted out of poverty in last 30 years
- education and training increase due to better resources from trade links, growth of interconnectivity means people have access to better education
How has China seen disadvantages from its growth/shift in globalisation?
- TNCs treat workers poorly e.g. Umbro (British company) refuses workers time off and if workers leave they lose a month’s back pay
- growth of a western culture in China leading damage to Chinese culture/identity, brings a westernised standard of beauty to China
- rapid increase in urbanisation leads to unplanned settlements
- industrial waste causes water pollution e.g. 3/4 of water in urban areas of China is unsuitable for drinking, 180 million drink contaminated water daily
How do developed countries benefit from globalisation?
- reduced cost in manufacturing
- redeployment of capital and labour to new industry
- development of tertiary industries
What are the negative impacts of globalisation on developed countries?
- dereliction
- contamination
- depopulation
- crime
- unemployment
(due to economic restructuring)
What has happened in Detroit?
- greater competition from abroad from the use of free trade policies that offer little protection of domestic markets, coupled with environmental restrictions, labour regulations and a minimal wage - has made it difficult for the USA to compete
- this has led to dereliction in Detroit
- depopulation - has lost 25% of its population in last decade due to decline of the car manufacturing industry
- 1/3 of families live below the poverty line
- highest murder rate of any city - 45/100,000 in 2014
- no. of seats in US House of Representative for Michigan has decreased 19-14 as a result
What are the causes of rural-urban migration?
(Maharashtra/Mumbai)
- push factors - green revolution, low educational/health standards, rapid population growth in rural areas with tradition of splitting land equally, farming provides little prospects
- pull factors - investment into cities e.g. the UN in public works, more job prospects in cities, contacts already in cities, better education/healthcare
What are the social and environmental challenges of rural-urban migration?
- waste e.g. 1 million rubbish bags daily in Mumbai
- informal economy e.g. worth $1 billion in Dharavi
- sanitation e.g. 500 people /toilet, 4,000 cases of diphtheria and typhoid daily
- housing e.g. squatter settlements develop in Dharavi
What are the two causes of the growth of megacities?
- rural-urban migration
- natural increase (birth rate)
What has been the impact of increased international migration into global hub cities?
- deepening interdependence between regions (elite migration - Russian oligarchs to London)
- mass low-wage economic migration (India to UAE)
What is an example of an elite Russian migrant in London?
- Blavatnik (in Access Industries) Britain’s richest man in 2015 with net worth of £17.1 billion
What is the positive impact of elite migrants in London? (host country)
- every buyer of a £10 million property provide £4.5 million to economy per year
- high class culture brought into London
What is the negative impact of elite migrants in London? (host country)
- eviction of residents from Knightsbridge and Mayfair who cannot compete with Russian wealth
- account for 2% of the super-prime ‘core’ of the capital
- high class culture in London
How many ‘new Russians’ now live in London?
100,000
What is the positive impact of elite migrants on the source country (Russia)?
- improves a positive image of Russia
What is the negative impact of elite migrants on the source country (Russia)?
- economic recession in Moscow
- economic investment is being directed abroad
What percentage of properties in London over £5 million are bought by Russians?
20%
What is the positive impact of low-wage migration on the host country?
- some educated Indians become wealthy e.g. 2005 Shetty paid $12.25 million to buy 100th floor on Burj Khalifa
What is the negative impact of low-wage migration on the host country?
- only 1/8 of Dubai residents are of the UAE
- most wages go to the source country so workers have little to live on and spend in Dubai
What is the positive impact of low-wage migration on the source country?
- most wages go back to families in source countries (South Asian guest workers make $5 a day)
What is the negative impact of low-wage migration on the source country?
- South Asian guest workers make up 60% of population with poor wages of $5 a day - many are trapped in UAE by debts to agents in their source country (for work visas)
How much do EU migrants contribute to the UK economy?
£78,000 per person
How much did annual turnover increase by due to Polish workers in UK?
20-30%
How much was unemployment up by in the first year of Accession 8 2004?
275,000
How many new primary school places were needed in first 3 years of Accession 8?
130,000
What have been the positive results of cultural diffusion?
- Opportunities for disadvantaged groups (first Paralympics in London 1948 and has grown in success)
- Equality and Diversity (British Nationality Act 1948 granted british empire members the right to live in the UK, Race Relations Act 1968 gave housing/employment rights and made gov accountable for discrimination)
What have been the negative results of cultural diffusion?
- Loss of tribal lifestyles (Papa New Guinea has 7,000 cultural groups, but British colonial rule from 1884 meant political, social, economic integration, led to disappearance of a native language, alienation of village kin and cultural conflict, exacerbated by copper discovery 1964)
- Americanisation (Friedman stated USA need for bigger and better promotes Americanisation and the need for material things, fast food, high tech goods)
What are the attitudes towards migration in the UK?
- immigration consistently ranks in top 5 on Britain’s ‘most important issues’ on Ipsos MORI polls
- Brexit campaign dominated by anti-immigration stances
Why has there been a rise in localism?
- globalisation means goods once sourced locally are now imported
- negative effects of consumerism where goods are not consumed
- consumers dont know whole footprint, leaves room for exploitation
- means rise in local groups and NGOs promoting local sourcing wiht aim of increasing sustainability - prioritising local philosophies and production
What are the attempts to control the spread of globalisation?
- protecting cultural identity (1993 creation of Gwaii Haanas National Park Reserve protected the entire archipelago from Canadian influence)
- ## trade protectionism (limiting trade through tariffs, restrictive quotas and regulations in favour of domestic companies, to protect economy and allow new businesses to establish)
How has globalisation/localism created a rise in the far right?
- social tensions increase as a result of globalisation
- popular right wing parties argue for controls e.g. UKIP
How have the costs of globalisation been reduced?
fairtrade and ethical consumption schemes:
- fair trade practised through ‘positive buying’ ie choosing products due to ethical nature/boycotting unethical products (improves inequalities in global trade/improves conditions for disadvantaged)
- M,S ‘Plan A’ sets out 100 commitments to source responsibly, reduce waste and help communities
- EU aims to recycle 1/2 of municipal waste by 2020 (waste diverted from landfill, raw materials reused - offers employment and low environmental costs e.g. recycling aluminium saves 95% energy) EU successfully cut greenhouse emissions from municipal waste by 56% 2001-10
- ‘keep Britain Tidy’ 1954 raised awareness of waste, linked to consumerism, ‘Tidyman’ logo on bins/packaging by 1969
- Transition Towns e.g. Totnes encourages buying locally incl local currency, seen in 1000 communities in 2006 - minimises cultural erosion
What are the different viewpoints of globalisation?
- hyper globaliser
- transformalist
- sceptic
What do hyper globalisers believe?
- globalisation is successful and cultures/economies will become more integrated. the world will more towards homogenous cultures
- for example TNC marketing strategies create a similar consumer demand cross-culturally, leading to uniformity in culture components and so a decline of local identity
What do globalisation transformalists believe?
- cultures are dynamic in their response to globalisation, all cultures will change in different ways and new cultures may evolve, however world may move towards homogeneity
- e.g. rap music emerged in US cities and has spread globally, but developed culturally distinct variants e.g. in France
What do globalisation sceptics believe?
- globalisation is profound in core global economies and reflects their interdependence, beyond this there is marginalisation but not destruction of poorer groups
- e.g. rise of China and India limits the dominance of Western cultures and ensures continuation of cultural heterogeneity at a global scale
What is the Gini Coefficient and what factors affect it?
- a measure of inequality by country
- can be expressed as the Lorenz Curve
- factors contributing to the Gini Coefficient include: gov. corruption, welfare state, taxation
