Globalisation Flashcards
Glocalisation
when you adapt a product to meet the demand of the local market which may be different to the businesses market
Globalisation
involves widening and deepening global connections, interdependence and flows (commodities, capital, information, migrants and tourists)
-A process by which national and regional economies, societies and cultures have become integrated through the global network of trade, communication, immigration and transportation’ The Financial Times
Economic globalisation
this includes the growth of TNC’s which have a global brand image and presence, this accelerates cross border exchanges of raw materials, components, finished manufactured goods, shares, portfolio investment and purchasing.
- The spreading of investment around the world; rapid growth in world trade.
- Information and communication technology supports the growth of complex spatial divisions of labour for firms and a more international economy
- Online purchasing using Amazon on a smartphone
Political globalisation
includes spreading ideologies, global organisations, the dominance of western democracies in political and economic decision making.
- The growth of trading blocs allows TNC’s to merge with firms in neighbouring countries while reduced trade restrictions and tariffs help markets grow
- Global concerns such as free trade, credit crunch and the global response to natural disasters – 2011 tsunami
- The world bank, the IMF and the WTO work internationally to harmonise national economics
cultural globalisation
unifying and diversifying and people using increasingly similar food, clothes, music and values
- ‘successful’ Western cultural traits come to dominate in some territories e.g Americanisation and Mcdonaldisation
- Globalisation and hybridisation are a more complex outcome that takes place as old local cultures merge and meld with globalising influences
- The circulation of ideas and information has accelerated due to 24 -hour reporting
- People also keep in touch using virtual spaces such as Twitter and Facebook
social/ demographic globalisation
increasing migration and tourism makes populations more fluid and mixed
- International immigration has created extensive family networks that cross-national borders – world city societies become multi-ethnic and pluralistic
- Global improvements in education and health can be seen over time, with rising world life expectancy and literacy levels, although the changes are by no means uniform or universal
- Social interconnectivity has grown over time due to the spread of ‘universal’ connections such as mobile phones, internet and emails
environmental globalisation
-agreements between countries (Paris agreement), pollution affecting other countries, global warming being a global threat
What are the past ways global connection was achieved?
Trade - in 1492 when Columbus reached USA and traditional world economy began
Colonialism - end of the 19th century, British Empire controlled 1/4 of the world
What are commodities?
- things that are sold
- previously valuable raw materials
- more recently manufactured goods
- grown by low production costs and low wage economies (china)
How is capital linked with globalisation?
-businesses buy and sell money in different currencies to make profit
How is information linked with globalisation?
- internet has brought real-time between countries - allowing goods/services to be bought quicker and easier
- social media increased influence
- info stored in large ‘server farms’
How are people and tourism linked with globalisation?
- air passengers are holiday makers
- budget airlines have brought a ‘pleasure periphery’ of distant places within easy reach fro tourists of high-income nations
- increasing growth of people from emerging countries
How are people and immigration linked with globalisation?
- becoming harder due to border controls and immigration laws
- many governments have pick and mix view
- embrace trade flows but resist migrant flows
- the combined n.o. economic migrants and refugees reached almost a quarter of a billion in 2013
- same year $500bn of remittances were sent home by migrants = interdependency
What are the flows of globalisation?
commodities information capital migration tourism
cons of remittances
- money is taken from economy - not going to host economy
- jobs are taken which results in unemployment
pros of remittances
- higher aspirations of actual population
- fill job shortages
- increase cultural ideas in host country
Transport factors accelerating globalisation
- steam ships
- fibre optics
- containers
- jet aircraft
- railways
Role of planes in accelerating globalisation
- cultural globalisation
- movement of people leads to the movement and speed of culture
- allowed people to move taking with them businesses and knowledge
Role of containerisation in accelerating globalisation
- far east to Europe
- intermodal containerisation - when you have standardised containers that fit on lorries, boats and trains saving lots of time and making process more efficient
- saving time and money as you don’t have to load or unload
- shipping is the cheapest and efficient way of transporting goods and intermodal containerisation has accelerated this
How has technology and transport influenced globalisation?
- tech developments in transport and communication in the 19th century promoted globalisation and led to the development of TNC’s
- 19th century - developed of the railway, telegraph and steam ship
- the 20th century saw the development of the jet aircraft and containerisation
- these increase globalisation by reducing transport cost per unit output -so products are affordable for customers in a distant market - setting up a new flow of goods/info
How has development of energy influenced globalisation?
- harnessing new forms of energy allows larger loads to be transported
- larger loads produce an economy of scale - a reduced cost per unit output
e. g. coal in the railway steam engine, oil in internal combustion and jet engines in Lorries and aircraft
What have developments in transport technology been encouraged by?
- encouraged by growth in trade - the exchange of goods and services between people and companies which is increasingly cross-border between countries rather than just within a country.
- Transporting goods and people around the world has become cheaper over time.
How did transport change in 19th century?
-Faster steam trains replaced horse-drawn and canal transport
-1830s public railways (Liverpool and Manchester))
The electric telegraph was the first long-distance instant communication technology (1830s).
-Steam ships replaced sailing ships and increased speed and cargo capacity dramatically (1840s)
How did transport change in 20th century?
-jet aircraft
- The Boeing 747 ‘jumbo jet’ introduced in the 1960s lowered the cost of international air travel, bring international tourism within the purchasing capabilities of the middle class.
- They reduced travel time for passengers to hours, rather than days, replacing steam ships.
How did transport change in 20th century?
-containerisation
-less time spent when products change transport type, e.g. at a dock = more trade = cheaper
-Dramatically sped up goods trade and reduced costs, making consumer goods cheaper
-Process is easily mechanised; containers are unloaded by crane, increasingly automatically. In the past, cargo was loaded manually in crates or stacks.
-Fewer losses from theft.
The world’s fleet if 9500 container ships can carry up to 18,000 twenty-foot shipping containers each. -Faster transport times increase the distance perishable products can be transported, e.g. cut flowers from Kenya, opening up more distant markets and reducing losses.
What is meant by ‘the shrinking world’?
- the physical distance between places remains unchanged, but new technologies reduce the time taken to transport goods/people/communicate information
- the process of time-space compression
What is the process of time space compression?
-an effect of increased connectivity with more distant place and an effect of the shrinking world
How has ICT influenced globalisation?
- they have reduced communication costs and increase global communication flows, since the late 20th century
- developments have been very rapid since 1990
- banking (electronic apps), booking hotels (online), shopping online
How have mobile phones influenced globalisation?
- mid-1990s, even in many developing countries.
- extended information flows to locations beyond landline networks
- Reduced mobile phone costs expanded usage from an expensive business tool to an ubiquitous consumer product
- Used even in countries with a lack of communications infrastructure. By 2015, 70% of people in Africa owned a mobile phone.
How has the internet influenced globalisation?
- Internet access became common from the mid 1990s, followed by fast broadband.
- Close to 50% of the world’s population uses internet.
- Broadband internet in the 1980s and 90s meant that large amounts of data could be moved quickly through cyberspace.
How have social networks influenced globalisation?
- Social networks and Skype allow people to communicate instantly
- The development of social media (Facebook 2006, Instagram 2010, WhatsApp 2010) enabled much cheaper communication between friends and family than landline telephone.
- This has led to space-time compression, where the cost (time or money) of communicating over distance has fallen rapidly, so people can communicate regardless of distance.
How has economic banking influenced globalisation?
-The rise of mobile phones means they can be used for economic banking, revolutionising life for individuals and businesses.
-Electronic banking extends capital flows beyond the physical banking network
-E-banking allows migrants to transmit remittances of money back to their home countries.
-It has been a huge benefit to businesses, since they can:
Keep in touch with all parts of their production, supply and sales network, locally and globally.
-Transfer money and investments instantly.
Instantly analyse data on sales, employees and orders from anywhere within their business.
How have fibre-optic cables influenced globalisation?
Land-based and sub-sea fibre optic cables in the 2000s increased the speed and volume of data transmission through cyberspace, and allow instant, global communications.
- Global positioning systems (GPS) use continuously broadcasting satellites as beacons to triangulate information.
- Satellite-based television has meant that popular channels are available worldwide, in many languages.
How has ICT developments lead to cultural globalisation?
MP3 players and iPhones enable a rapid global transfer of music and video.
TNCs bring foreign styles and products, e.g. McDonalds, Starbucks, possibly creating a global ‘McCulture’?
How has ICT developments lead to political globalisation?
Social networks can be used to spread political messages, e.g. an environmental campaign or enhanced impact of a terrorist atrocity.
What are some economic effects of globalisation?
-specialisation
- Globalisation allows economic specialisation where the country focusses on production of certain goods/services it can produce most efficiently, lowering production costs.
- The focus of specialisation determined by the country’s mix of natural resources (land). people (labour) and technology (capital)
- Specialisation and trade allows for an increase in global output and increases choice, raising quality of life.
What are some economic effects of globalisation?
-interdependance
Globalisation reduces self-sufficiency and increases interdependence - mutual reliance on inputs from other countries.
Increased complexity of global flows may reduce resilience as it increases vulnerability to shocks anywhere in the world, e.g. a natural disaster, economic recession, war, or political conflict.
What does the world bank do?
Its an International financial institution that provides loans and grants to the governments of poor countries for the purpose of pursuing capital projects
-working for sustainable solutions that reduce to poverty and build prosperity in developing countries
how many members does the world bank?
189 countries
-don’t want to give money to developing countries who have bad human rights
How is the world bank funded?
- borrows the money it lends as it has goof credit because it has well managed financial services
- can borrow money ay low interest rates from capital markets
- fees paid by member countries
- borrowing from countries
How does the IMF work?
international monetary fund
- maintain economic stability in emergencies
- organisation that aims to promote global economic growth and finical stability, encourages international trade and reduce trade tariffs and taxes
how many members does the IMF have?
- 189
- each have a representative on the IMF executives board in proportion to its financial; importance
- most powerful countries have most economic voting power
How is the IMF funded?
- quotas - pooled funds from member nations
- larger economic importance = larger quotas
- Loans - multilateral and bilateral borrowing -some countries ready to lend money
What does the WTO do?
world trade Organisation
- deals with the rules of trades between nations
- role is to help producers of good/services, export/importers conduct their businesses
- help facilitate global trade through the removal of taxes and tariffs
- allows globalisation and easier movement of goods
- allows fyi and foreign firms to set up
how is the WTO funded?
- contributions from members
- cost sharing by countries involved in an event or by international organisations
What does the WEF do?
world economic forum
-organisation that brings together its membership on a year basis to discuss major issues concerning the worlds political economy
How is the WEF funded?
-funded by its own members[which includes industry leaders, politicians, and companies
How can national governments accelerate globalisation?
- by joining trade blocs
- free market liberalisation
- privatisation
- encouraging business start ups
How do trade blocs accelerate globalisation?
- specialisation
- Countries specialise in goods being produced which have a comparative advantage (e.g. can produce at the lowest cost) and trade these products for other members’ specialisms
- Firms producing a country’s specialisation become TNCs as they sell outputs through the bloc.
export tax
companies set up in foreign countries must pay export tax, high export taxes = low fdi
import tax
companies bringing in goods, import taxes must be paid
high import = less fdi
Quota
- what is the aim?
an agreed amount of stock that you can bring into a country per month or per year
-this aims to protect domestic producers
Protectionalism
import taxes, export taxes, high quotes to protect domestic market
Subsidies
allows producers to sell it cheaper to protect domestic market
Trade surplus
when you make more money from your exports than you have to spend on your imported goods
trade deficit
when you spend more money on your imports than you make on your exports
trade Liberalisation
free trade - remove taxes, tariffs and any barriers
How do trade blocs accelerate globalisation?
-EU
-A single market trade bloc composed of 28 members and a population of 512 million.
-guarantees the free movement of goods, capital and people.
the euro has been adopted by 19 members.
-Integrated economic policy areas, e.g. Structural Funds to assist regions within member countries with a GDP per capita of less than 75% the EU average
-The original political aim was to integrate economies, so that interdependence prevents war.
Benefits of trade blocs for businesses
- removing barriers to intra-community trade allows markets for the firm to grow
- firms have a comparative advantage in the production of a product that should prosper
- an enlarged market increases demand, raising the volume of production and thereby lowering manufacturing costs per unit
- an improved economy of scale results, meaning products can be sold more cheaply and sales rise
- national firms can merge to form tnc’s - they need large domestic markets to generate economies of scale - increased sales = low production costs =high profit
How do trade blocs accelerate globalisation?
-ASEAN
- A free trade area with 10 members with a population of 625 million
- A uniform low tariff is applied between members for specified goods. It’s working towards the elimination of tariffs sector by sector.
- Political globalisation: ASEAN aims to co-ordinate response to regional political issues. It’s more political than economic.
- ASEAN pledged to remain nuclear weapons free in 1995
How does the movement of business lead to cultural diffusion and enrichment?
- bring people
- causes clustering of ethnic groups
- encourages more migrants of that ethnicity
- ghettoisation
- more power of ethnic people in area
- services adapt to people
- cultural diffusions and enrichment
Drawbacks of trade blocs
- loss of sovereignty
- interdependence
- compromise and concession
- cultural erosion
- trade distortion
- short term unemployment
Drawbacks of trade blocs
-loss of sovereignty
the EU deals not only with trade matters but also with human rights, consumer protection, greenhouse gas emissions
Drawbacks of trade blocs
-interdependence
-they increase trade between countries, the countries become dependant on each other, a disruption of trade may have severe consequences fro the economies of countries
Drawbacks of trade blocs
-compromise and concession
-countries must allow foreign firms to gain domestic market share, sometimes at the expense of local companies - they do this in the expectation that their consumers will benefit from better products and keener prices as well as company expanding abroad
Drawbacks of trade blocs
-cultural erosion
-cheap uniform products across the bloc replace more expensive local variants
Drawbacks of trade blocs
-trade distortion
-Imposition of common external tariff makes goods from non-members expensive. Trade distorted as the switch from cheaper non-member producer to more expensive member producer. Prices rise
Drawbacks of trade blocs
-short term unemployment
-Specialisation shifts resources to industries which have a comparative advantage.
-Firms being specialised away from will shut down. Workers’ employment lost (though there are new jobs in the expanding specialised industry and in new demand areas from increases purchasing power)
new jobs likely to benefit new workers and older ones less likely to retrain
Sovereignty
governments ability to make designs without any others getting involved
What is free market liberalisation?
- This involves promoting free markets and reduces government intervention in the economy
- make it easier and more attractive to fdi
- deregulation of capital markets
- It means ending the monopoly provision of some services like telephones, broadband, gas and electricity, so you can choose your supplier based on quality and price.
- Foreign competition can be encouraged by removing legal restrictions on foreign ownership and removing capital controls, allowing inflows of FDI (and outflows)
Advantages of free market liberalisation
- Competition between firms leads to innovation and lowest cost production
- Outcome is higher output, lower prices and greater choice - higher SOL
- It has created competition in once restricted markets.
- It involves removing price controls, breaking up monopolies (e.g. trade union monopolies of labour supply) and encouraging competition - including foreign competition, which increases efficiency further and promotes globalisation.
Disadvantages of free market liberalisation
- structural unemployment - often leads to a shift in the balance of an economy. Some industries grow, some decline. Therefore, there may often be structural unemployment from certain industries closing.
- Environmental costs -could lead to greater exploitation of the environment, e.g. greater production of raw materials, trading toxic waste to countries with lower environmental laws.
2 examples of foreign investment by TNC’s and sovereign wealth funds in the UK
- e.g. Hinkley Point C Nuclear Power Station in Somerset will be 40% owned by Chinese SWF’s
- e.g. China owns 10% of Heathrow Airport and Qatar owns 10% of BA
What is privatisation?
It is the transfer of a business, industry, or service from public to private ownership and control.
- sold services to private companies to reduce govt spending and to raise money
- allows injection of foreign capital as it increases technology and information
Example of privatisation
- Since the 1980s many governments have sold of industries they once owned (so-called ‘nationalised industries)
- In the UK the steel, car, electricity, gas and water industries were all state-owned but are now privately owned
Advantages of privatisation
- It may increase efficiency as the profit motive minimises loss (government reluctant to sack workers, leading to higher labour costs)
- Permitting foreign ownership allows an injection of foreign capital through FDI, introduces new technologies and promotes globalisation - innovation
- lack of political interference - It is argued governments make poor economic managers. They are motivated by political pressures rather than sound economic and business sense - may employ too many people and increase inefficiency
- Often privatisation of state-owned monopolies occurs alongside deregulation – more firms to enter the industry and increase the competitiveness of the market. It is this increase in competition that can increase efficiency
- allows countries to specialise in goods where they have a comparative advantage
Disadvantages of privatisation
- public interest - There are many industries which perform an important public service, e.g., health care, education and public transport. In these industries, the profit motive shouldn’t be the primary objective of firms and the industry
- Many of the privatised companies in the UK are quite profitable. This means the government misses out on their dividends
- Privatisation creates private monopolies, such as the water companies and rail companies. These need regulating to prevent abuse of monopoly power
How do governments accelerate globalisation through encouraging business start ups?
- Grants and loans are often made to new businesses especially in areas that are seen to be globally important growth areas such as ICT development, pharmaceuticals or renewable energy.
- There could also be low business taxes, well-enforced contract laws, minimum regulation and efficiency bankruptcy procedures, which encourage new firm creation.
Advantages of encouraging business start ups
- It creates innovation and competition in new production techniques, erodes excess profit of monopolies, lowers prices and increases household purchasing power
- Where legal restrictions on foreign ownership and capital controls are also removed, foreign new businesses will be attracted to start up, promoting globalisation.
- incentives such as grants, tax break attract foreign businesses - provides jobs, lower level of unemployment
What is FDI?
- a financial injection made by TNC’s into a nation’s economy, either to build new facilities or to acquire, merge with an existing firm already based there
How has FDI increased over the years?
50s-70s - many new independent countries rejected fdi as being exploitative - low labour wages and polluting environment
80s - most countries were pro fdi - new jobs, better pay and working conditions
Horizontal fdi
a business expands its domestic operations to a foreign country
-conducting same activities but in foreign countries
Vertical fdi
a business expands into a foreign country by moving to a different level of the supply chain
- outsourcing/offshoring
- different activities that still relate to business
Conglomerate fdi
a business acquires an unrelated business in a foreign country
entering a new industry/market and foreign country
platform fdi
a business expands into a foreign country but the output from the foreign operations is exported to a third country
-occurs in low-cost locations inside free trade areas
Benefits of fdi
- creating new jobs
- introduces new technology
- economic growth by opening it up to new markets
Drawbacks of fdi
- long term capital movement - once fdi becomes more profitable capital flows cut off host country to investors country
- disruption of local industry - attracts the highly-skilled workers which creates income disparities
What are attitudes to fdi? - Asian countries
four Asian countries (Singapore, Taiwan, South Korea, Hong Kong) chose export led growth.
-They experienced much faster economic growth than countries following import substitution, and became known as ‘Asian Tiger economies’.
What are special economic zones?
an industrial area, often near a coastline, where favourable conditions are created to attract foreign TNC’s. These conditions include low tax rates and exemption from tariffs and export duties
-SEZs are used by some countries to attract FDI, spreading globalisation to new regions.
What do successful SEZ’s need?
Successful SEZs need good infrastructure, close proximity to trade routes or emerging markets, minimum bureaucracy and rule of law (contract security, minimal corruption, freedom from crime and violence.)
Why are SEZ’s attractive to FDI?
- They are tariff and quota free, allowing manufactured goods to be exported at no cost.
- Unions are usually banned, so workers cannot neither strike nor complain.
- Infrastructure such as port facilities, roads, power and water connections are provided by the government, providing a subsidy for investors and lowering their cost.
- All profits made can be sent to the company HQ overseas.
- Taxes are usually very low, and often there is a tax-free period of up to 10 years, after a business invests.
- Environmental regulations are usually limited.
What was China like before it was an SEZ?
-China was switched off from global economy and many people were living in poverty in rural areas
When did China change its open door policy?
- Open door policy created in 1978 after death of chairman Mao
- slowly introducing economic liberalisation and opening up to FDI
- rural farmers were given land and could run it for profit
What happened when China changed to open door policy?
- exports soared to $2bn in 1980 to $200bn in 2000
- China then joined WTO -allowing low tariffs for exports for countries
- huge surge of rural to urban migration - 300m people
- 400m people escaped poverty
What happened when China changed to open door policy?
-sovereign wealth fund
- legal restrictions were relaxed on fdi is some sectors of China’s domestic market - rail freight, chemicals
- Chinese sovereign wealth fund and TNC’s are now major sources of FDI in other countries
Open door approach to global flows in china
- FDI from China and TNC’s is predicted US $1.25 tn from 2015-2025
- China agreed to export more rare earth minerals due to WTO rules
- Foreign TNC’s are allowed to invest into some of China’s domestic markets - rail freight and chemicals
Close door approach to global flows in china
- Google and Facebook have little access to China’s markets
- Governments set strict quota of only 34 foreign films to be screened in cinemas per year
- strict controls in some sectors
What is a subsidy?
A sum of money granted by the government to help an industry or businesses keep the price of a commodity or service low
WTO usually prohibits subsidies to domestic firms as this acts as a trade barrier
-the government payment allows a firm to accept a lower market price, undercutting the price of imports
Types of subsidy
- production subsidy
- consumption subsidy
- export subsidy
- employment subsidy
What is a production subsidy?
encourages the production of a product
-compensates for some manufacturers expenses to increase production output
What is consumption subsidy?
-offsets the costs for food, water, healthcare and education
What is export subsidy?
-subsidies the costs for exports
What is employment subsidy?
-given to companies and organisations in order to enable them to provide job opportunities
Advantages of subsidies
- lowering costs and controlling inflation
- preventing long-term decline of industries - farming
- increases overall supply of goods and lowers the price of product
Disadvantages of subsidies
- hard to quantify the success of subsidies
- high taxes
- can act as a trade barrier - the government payment allows a firm to accept a lower market price, undercutting the price of imports
3.3B What are TNC’s?
firms with operations in more than one country
3.3B How does a TNC accelerate globalisation?
-When a firm changed from a national company to a TNC by opening operation in another country (FDI), it creates international connections, spreading globalisation.
3.3b What is the growth in size and number of TNC’s encouraged by?
-by the creation of trade blocs, removing international barriers, and changing government policies to encourage economic liberalisation, including removing capital controls and legal restrictions, and creating SEZs.
3.3b why do firms become TNC’s?
- Firms aim to maximise profit, becoming a TNC helps to do this by reducing costs, or generating higher revenues from new markets.
- New foreign operation may be part of production process in a lower cost location, or a retail outlet to access new markets and increase revenue.
3.3b what is offshoring?
- This is the process of moving part of a company’s own production process to another country
- e.g. building a new factory in China, where wage rates are lower - Nike
- Especially to SEZs in Asian countries.
- It reduces costs as wage rates are lower, tax rates are lower, proximity to raw materials reduces transport costs, less environmental regulation.
3.3b What is outsourcing?
-This is the process where a firm contracts with another company to obtain goods or services from it.
-Apple - Foxxcon
-Outsourcing is more flexible than offshoring as the TNC can quickly shift supplier if a cheaper source becomes available.
However, less direct control over the production process can lead to problems, e.g. in 2013 Tesco discovered that its Romanian supplier was mixing horsemeat into budget beefburgers.
This is usually administration and data processing - Bangalore in India is known for this.
3.3bNegatives of outsourcing
However, less direct control over the production process can lead to problems, e.g. in 2013 Tesco discovered that its Romanian supplier was mixing horse-meat into budget beef burgers.
3.3b How do offshoring and outsourcing accelerate globalisation?
- Outsourcing and offshoring lead to the production of global production networks. These reduce costs, allowing TNCs to make larger profits, and/or lower prices.
- increased interconnections = increased flows of commodities and people
3.3b How has offshoring and outsourcing affected China?
-Much of China’s rapid economic growth has been fuelled by western TNCs locating manufacturing plants in its SEZs, creating jobs and boosting exports, taking advantage of China’s economic liberalisation since 1978.
3.3B What does it mean by TNC’s develop new markets?
Opening new outlets in another country increases revenue for TNCs.
3.3b How have TNC’s helped acceleration?
- Some TNCs sell identical ‘authentic’ products in all countries, e.g. Lego, Louis Vuitton handbags
- Glocalisation is the process of adapting brands and products to suit the local market conditions, such as taste, laws or culture.
3.3B What are the drawbacks of TNC’s?
- Global production networks may make TNCs more vulnerable to shocks in different parts of the world that halt production. 2011 Japanese tsunami halted component supplies to offshore Nissan factory in Sunderland.
- In 2013, the Rana Plaza textile factory in Bangladesh collapsed, killing 1,100 workers and halting supplies of outsourced garments to Benetton and Wal-Mart.
- TNCs have been accused of exploiting workers in the developing/emerging world by paying them low wages.
- Outsourcing jobs can lead to job losses in the home country.
- Local cultures and traditions can be eroded by TNC brands and western ideas.
3.3b why may governments not want TNC’s?
- leakages - go back to another country
- bring foreign workers don’t benefit unemployment of host country
- cultural dilution
- protect domestic market
What does increased interconnections result in?
- increased interconnections= increased flows of commodities and people
- creates large digital footprint
- spread of cultural globalisation
3.3c What are the economic reasons why some locations are switched off from globalisation?
- lack of investment in infrastructure
- government debt
- over dependance on a single industry
- natural resource curse
- 3c What are the economic reasons why some locations are switched off from globalisation?
- lack of investment in infrastructure
- poorly developed transport and teleconnections infrastructure
- can’t increase interconnections, information flow of commodities/people
- 3c What are the economic reasons why some locations are switched off from globalisation?
- government debt
-high level of government debt meaning there is a lack of money to invest into interconnections and teleconnections infrastructure
- 3c What are the economic reasons why some locations are switched off from globalisation?
- over dependance on a single industry
- over reliance on one industry due to natural resource cycle and commodity cycle
- 3c What are the economic reasons why some locations are switched off from globalisation?
- natural resource curse
- when you specialise in one industry in one natural resource
- high risk - external shocks can affect countries economy
- lack of interconnections
3.3c An example of an area where it is switched off due to economic reasons
e. g. Sahel Region
- poor infrastructure and low literacy levels of the working age population make it unattractive for offshoring FDI
- low income levels mean it lacks market size to attract retail outlet FDI. Few households other than elite can afford to purchase imported goods or engage in foreign tourism.
- dominated by a subsistence farming economy with food produced to eat, not sell. These places are also poor, and their capacity to create connections is limited.
3.3c What are the political reasons why some locations are switched off from globalisation?
- governments may want complete control over the country and do not allow movement into or out of the country - they reject westernisation, globalisation and capitalism (North Korea)
- unstable governments as a consequence of Neo-colonilalism
- corruption/organised crime/terrorism
- excluded from trade blocs/not allowed to trade fairly
- 3c What are the political reasons why some locations are switched off from globalisation?
- unstable governments as a consequence of Neo-colonilalism
- indigenous populations were isolated during colonialism
- after interdependence = civil wars for land and resources
- constant fight for power within African countries
3.3c What are the environmental reasons why some locations are switched off from globalisation?
- arid conditions
- desertification - clouds keep area cool, no trees means sun bakes ground which kills land and nutrients removed and no rapid run off
- lack of natural resources
- landlocked countries
- isolation from market
- 3c What are the political reasons why some locations are switched off from globalisation?
- North Korea
- North Korea is a hereditary autocracy ruled by Kim Jong-Un.
- It’s run as a one-party system with a command economy organised on the communist system.
- Since 1955 it has followed the policy of Junche ‘self-sufficiency’, minimising trade with other countries.
- Emigration and foreign tourism by ordinary North Koreans is prohibited.
- Ordinary North Koreans have no access to internet or social media. There are no undersea data cable connections.
- This is because there is a personality cult where all successes are attributed to the wide leadership of Kim, and the internet and foreign travel would not maintain this.
- 3c What are the environmental reasons why some locations are switched off from globalisation?
- The Sahel
-Sahel region countries have a semi-arid climate with 200-400 mm of precipitation p.a., making agricultural exports reliant on a good rainy season.
-Climate change is increasing aridity, leading to desertification as savanna gives way to desert.
-This reduces land area available for producing agricultural exports.
Harsh desert climates, extreme polar cold and dense tropical forests all limit the development of transport and trade connections meaning continental interiors and polar regions are less well connected than coastal locations
3.3b What are the roles of TNC’s?
- outsourcing
- offshoring
- global production markets
- glocalisation
- investment into new markets
3.3b How have TNC’s changed overtime?
- outsourcing and offshoring due to economic liberalisation
- global production markets due to transport advancements
- investment in new markets due to trade blocs
- advancements in tech and transport = TNC’s able to access global markets
- 3c What are the physical reasons why some locations are switched off from globalisation?
- the Sahel
- All four Sahel region countries are landlocked, rely on poor quality roads, and freedom of passage through neighbouring countries to access coastal ports.
- Resulting high transport costs may make exports unattractive in foreign markets and deter FDI
3.4a What is the global shift?
-is the relocating of the global economic centre of gravity to Asia from Europe and North America
3.4a What was the shift of jobs?
- the shift of manufacturing from Europe, Japan and North America to China
- the shift of service and administration jobs to India (Bangalore)
3.4a what was the global shift driven by?
- Global shift was driven by improvements in transport and communications, plus the lowering of trade barriers and economic liberalisation, opening up to FDI.
- Labour-intensive manufacturing was attracted to Asia by the large pool of workers willing to work for low wage rates.
3.4a What is the general impact on eastern countries from global shift?
- countries in the east are growing at a faster rate than western countries
- overall increasing the wealth of all regions of the world but some increasing at a faster rate
3.4a The global shift in the 50s
-began in the 50s with cheap mass-produced goods relocating to Japan
