Globalisation and Trade Flashcards
What is globalisation?
Process of worlds economies, political systems and cultures becoming more interconnected
driven by advancements in communication and transport making it easer for goods and people to move across boarders
3 aspects of globalisation
economic - exchange of goods and services across boarders, creation of global supply chains
social - exchange of cultures and ideas
political - countries working together in international organisations
dimensions of globalisation (causes)
things that promote globalisation
- Flows of:
- information
- capital
- products
- services
- labour - global marketing
- patterns of production, distribution and consumption
How have flows of information promoted globalisation
- developments in technology -> large amounts of information to be spread quickly and easily
- allows people in different countries to communicate
- increasing flows of information = more interconnected, can learn about different cultures and countries
How have flows of capital promoted globalisation
- historically, capital mostly invested within a country
- improvements in ICT, capital can be moved instantly (via internet)
- means amounts of capital invested in foreign counties increased
- increasing flows of capital = more interconnected, many countries dependent on investment to and from foreign countries
How have flows of products promoted globalisation
- historically, manufacturing in developed countries (made and sold where made)
- recently, manufacturing declined in developed countries
- because it moved abroad, cheaper labour costs
- changing flows of products = more interconnected, products imported from other countries
How have flows of services promoted globalisation
- improvements in ICT allowed services to become global industries
- means services can locate anywhere and serve anyone
- deregulation in 70/80s made it easier for financial institutions to do buisness abroad
- increasing flows of services = more interconnected, people connected in more ways, eg having a bank account
- high level services - HICs
- low level services - LICs, cheaper labour
How have flows of labour promoted globalisation
- more people are moving overseas - have to or for work
- some migrants highly skilled, move to HICs for pay and better conditions
- increasing flows of labour = more interconnected, family and culture spread globally
- global marketing
Promoting and selling of products and services globally
- treats world as one single market
- creates economies of scale - cheaper to have one strategy then many
- creates global brand awareness
- but marketing should adapt to regional markets (glocalisation)
- different cultures and attitudes
accelerates globalisation - everyone recognises same logos, more similar and connected
- patterns of production, distribution and consumption
lower labour costs in less developed = developed countries production sites located abroad
imported to more developed countries where sold
increasing international trade in goods = more interconnected
financial investment in factories needed to produce goods = increased flows of capital, promoting globalisation
movement of factories = increased flows of people
5 factors in globalisation
financial systems
global trade systems
communications technology
transport
new systems
How do financial systems promote globalisation
Global financial system governs flow of capital globally
technology and financial deregulation = increased flows of money between countries
(internet = transactions more secure)
= countries more connected
however a financial crisis or recession in one countries has significant impacts on others
- eg 2008
How do global trade systems affect globalisation
trade regulated by countries governments
- put tariffs on goods
- this makes trade more expensive
trade agreements/blocks reduce costs
- remove controls if other country does
- create trade blocs, encourage trade between members
Leads to cheaper and easier trade = more interconnected
World Trade Organisation - governs global trade system
- promotes free trade (no barriers)
- gives SDT to LICs
= promotes trade = connected
how does rise of technology effect globalisation?
digital communications allow quick and easy communication
fibre optics and satalites - large volumes of data transmitted quickly
internet - instant communication across world eg email
how does rise of transport affect globalisation
improved transport - easier and faster to move people and products
- containerisation - more goods cheaper
- low cost airlines allow people to move easier
how have new systems affected globalisation
- supply chains become global - makes production is cheaper
= countries more connected, more trade - large companies can benefit from economies of scale, buy raw material in bulk
- gives larger companies advantage over smaller ones
what are unequal flows?
flows of people, money, ideas and technology
promote growth and stability
cause injustice and inequalities
outline unequal flows of people
- people tend to move from LICs to HICs, to areas with more opportunities
- also leave countries due to famine and war
- easier for wealthier people to move
benefits of flows of people
+ reduced unemployment in less developed countries as people move to get jobs elsewhere
+ remittance payments (sending money back home to family) promote economic growth back home
how to unequal flows of people create inequalities
less developed countries suffer from ‘brain drain’
- skilled people leave, taking knowledge with them, reinforces inequalities
- some people unable to migrate, remain trapped = cycle of poverty
how do unequal flows of people create conflict
migrants willing to work for lower wages than locals
- lower pay, creates conflict between migrants and locals
how do unequal flows of people create injustice
migrants may be exploited
often made to work in dangerous conditions for less money
- eg Qatar, building Fifa stadium, thousands died
outline unequal flows of money
- includes remittance payments, foreign aid, FDI and income from trade
- unequal as flows from HICs to LICs
benefits of flows of money
+ economic growth from remittances, FDI and aid
+ foreign aid can help countries recover from disasters
+ Lowe production costs = cheaper goods for people and profits for TNCs
how does unequal flows of money create inequalities
foreign aid can create dependancy - governments have little incentive to improve own countries
local business cant compete with TNCs, forced to close
how does unequal flows of money create conflict
foreign aid can find its way to armed groups, funds conflicts
how does unequal flows of money create injustice
can lead to exploitation an environmental degradation
outline flows of ideas
- neo-liberalism - political approach that promotes globalisation, free trade and deregulation
benefits of flows of ideas
+ neoliberalism increased free trade, created more development and reduced conflicts
how do flows of ideas create inequalities
- neo-liberalism started in HICs, concentrates money in hands of a few, often large businesses in HICs
- wealthiest benefit most, reinforcing inequalities
outline flows of technology
- globalisation created unequal flows from HICs to LICs
benefits of flows of technology
concentration of technology can lead to rapid innovation
- helps people all over world
improve quality of life - better access to healthcare and cleaner energy
can create jobs - promoting economic growth
better education - access to information on internet
how do flows of technology lead to inequalities
HICs can afford latest technology, LICs can’t
- can make products cheaper, better access to information
- gives HICs advantage
how can flows of technology create conflict and injustice
weapons technology sold from HICs to LICs
- can be used against own people
cause environmental degradation and pollution
what are unequal power relations?
developed countries have more control over global systems
- drive to their own advantage
- control over global economy and political events
less developed lack money and technology
- limited power
- can only respond to events
what is the International Monetary Fund
- a global financial institution
monitors global economy
advises governments to improve economic situation
loans to countries with economic issues
what is the World Bank
- a global financial institution
loans to LICs to invest in health and infrastructure
all members pay in and money goes to countries most in need
however loans are expected to be paid back
how do global financial institutions reinforce unequal power
IMF and WB based in USA, led by HICs
- LICs who receive the loans have little influence over decisions
- HICs have more power
promote neoliberalism
loans from WB are conditional
- LICs must make changes to receive loan
when borrowing, countries remove trade barriers can damage economy
What is global governance?
Rule, norms and regulations used to regulate human activity at an international scale
how is globalisation measured?
KOF index
- measures 3 dimensions of globalisation
- economic, amount of trade and investment
- social, flow in information and people
- political, cooperation and participation
how does globalisation create interdependence
when two or more countries are reliant upon eachother
countries rely on each other for:
- imports and exports of goods, therefore economic growth
- flow of labour for work
- solve issues that can’t be solved by one country
- protection of environment
