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Globalisation EQ1 Flashcards

1
Q

Definition of globalisation

A

Globalisation is the increasing integration of economies around do the world, through global flows such as people, capital and goods.

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2
Q

What’s does globalisation lead to?

A

Globalisation lead to the winding and deep if of global connections.

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3
Q

Transitional corporations

A

Businesses whose operations are spread across the world, operating in many nations as both makers and sellers of goods.

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4
Q

How’s has globalisation be accelerated?

A
  • development in transport
  • development in trade
  • TNC activity
  • Improvements in communication and ICT
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5
Q

How has development in transport accelerated globalisation?

A

Development in transport such as railway (19th century)m jet air craft and containerisation (20th century) has led to increased in globalisation by
- reducing transport cost per unit making reduces affordable for distant markets setting up more global flows
- New forms of power allow larger loads to be transported (coal in stem engines)
- encouraged growth in trade as cheaper and more efficient (flows of goods and people)

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6
Q

What is example of globalisation increased by transport?

A

Easyjet:
- Founded in 1995 with only two small aircrafts
- now has over 300 flight routes within the EU and serval long haul ones
- by 2014 has 200 planes carrying 64 million people annually
this made many destination affordable for UK citizens.

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7
Q

What is containerisation?

A

Containerisation is the development of large capacity intermodal containers which can be transported large distances through many differ to types of transport.

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8
Q

Role of containerisation in the acceleration of globalisation?

A
  • reduce transport costs making consumer goods cheaper
  • speed up trade by making it more efficient.
  • intermodal
  • the process has been easily mechanised (cranes) reducing labour costs.
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9
Q

Proof of role of containerisation in acceleration of globalisation

A

Container ships are so efficient that the transport coats of moving an iPhone or television from China in the UK are less than £1.

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10
Q

What is the ‘Shrinking world’?

A

Though the physical disgrace between places remain unchanged, heightened connectivity changes our conception of time and distance. Distance places begin to ‘feel’ closer.

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11
Q

Development in ICT and communication role in accelerating globalisation

A

ICT and communication have accelerated globalisation through
- reducing communication costs
- increases global communication flows
- helped to expand TNC allowing them to communicate from distant places.
- helps to foster a sense of global citizenship
- social networks and Skype allow people to communicate instantly and without charge increase global flows of people
- mobile banking aids wiht remittance
All contributing to the space-time compression

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12
Q

Communication and ICT 1 line case study’s

A
  • by 2015, 70% of people in Africa owned a mobile phone
  • Skype was founded in 2003
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13
Q

What did safaricom launch?

A

In 2007, Safariccom launched M-Pesa as simple mobile phone service that allowed credit to be directly transferred between phone users, consign lives in Kenya.
- 1/3 of counties GDP is send through M-Pesa system annually.
-allows farmers and fishermen to check market prices before selling products
- allows women in rural area to secure micro loans.

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14
Q

What is the role of the world trade organisation?

A

An international organisation that works to reduce both trade barriers and promote free trade.
Deals with flows of goods a services.

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15
Q

Role of the International Monetary Fund

A

Ain’t to maintain a stable international finically system, promoting free trade and globalisation.
They have been criticised as the make recipients adopt structural adjustments and trade liberalisation;programmes opening up country’s to free tease and FDI.

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16
Q

What is the role of the world bank and how it promotes globalisation?

A

Has the role of lending money and providing grants to the developing world to fund economic development and reduce poverty.
They require recipe at to adopt trade liberalisation policies and open up to FDI by removing legal restrictions and capital control.

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17
Q

World bank case studies

A

In 2014 it gave a $470 million loan to Philippines for poverty reduction
However in 2010 China loaned $110 billion more than the world bank

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18
Q

How has IMF promoted globalisation?

A

Promotes global economic and finically stability and encouraged more open economies.

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19
Q

What is foreign direct investment?

A

The finical capital flow from one country to another for the purpose of constructing physical capital (factories, infrastructure)

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20
Q

How have national government promoted trade blocs and economic liberalisation?

A

They adopt policies that allow TNCs to grow in size and influence by
- joining and promoting free trade blocs
- Free market liberalisation
- privatisation
- encouraging business start ups

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21
Q

What is a trade bloc

A

A free trade bloc is an agreement between a group of countries to remove all barriers to trade e.g. EU and ASEAN

22
Q

How to trade blocs promote globalisation?

A
  • specialisation, countries specialises in goods being produced which have a comparative advantage (produce and lower cost)and can trade these products for other members specialisms
  • firms producing a countries specialism become TNCs as they sell outputs through the bloc.
  • removing barriers of trade open up wider markets for TNCs, when ten new nations joined the EU in 2004, Tesco gained accesses to 75 million extra customers.
23
Q

The EU

A

The European Union is a single market trade bloc composed of 28 members and a population of 512 million.
It guarantees the free movement of goods,capital and people .
E.g. a single current euro has been adopted by 19 members
Uniform product labour and environmental regulations
Promotes globalisation by integrating economies preventing war and free trade

24
Q

ASEAN

A

Association of Southeast Asian Nations. A free trade area with 10 members and a 625 million population .
It promotes globalisation by adopting a upfield tariff (working towards eliminating it), coordinating repose to regional political issues (political globalisation).

25
Q

What is free market liberalisation

A

This involves promoting free markets and reduces government intervention in the economy.

26
Q

How does free market liberalisation promote globalisation?

A

It lead to an increased about of comet ion between firms encouraging innovation and lower cost production.
It also ends the monopoly provisions of some services like telephones and broadbands so supplier can be based on quality and price.
Removing price controls, breaking up monopolies and increase completions increase efficiency and globalisation.

27
Q

Privatisation

A

Involves the selling of industries once owned by governments.
E.g. the UKs steel , car, electricity, gas and water are now all privately owned.

28
Q

How does privatisation a promote globalisation?

A
  • it may increase efficiency as the profit motive minimises loss (government owned industry may have higher labour cost a reluctant to sack workers)
  • permitting foreign ownership allows injection of foreign capital through FDI, introduces new technologies and interdependency/connectivity.
29
Q

Encouraging business start ups

A

Grants and loans made to new businesses especially in areas that seen to be globally important for growth. (ICT, pharmaceutical abs renewable energy)
Low business taxes and minimum regulations.

30
Q

How does encouraging business start up encourage globalisation ?

A
  • encourage new firm start up and growth
  • creates innovation and competition in new production techniques eroding excess profits of monopolies
31
Q

What is the roles of government of attracting FDI?

A
  • changing attitude to FDI
  • Subsidies
  • special economic zones
  • open door policies
32
Q

How have attitudes to FDI changed?

A

Attitudes to FDI has rapidly changed in developing and emerging countries accelerating the process of globalisation. In the mid 1900s newly independent countries preferred self sufficiency viewing FDI as exploitative however several countries (Asian tiger’ economies) changed to export led growth and began to see rapid development (economic growth). By 1980 most countries had changed their attitudes towards FDI and globalisation.

33
Q

Subsidies

A

Payments by the government to a company to promote a particular activities (relocation costs) attracting FDI.

34
Q

Special economic zones

A

Enclaves where investors revive special tax, tariff and regulatory incentives attracting FDI and spreading globalisations ;to new regions.
Around 50 million people in more than 100 countries work in such locations.

35
Q

China’s open door policy

A

Under Mao Zendong communist China, the countries was extremely switched of to globalisation resulting in majority of rural eared had high poverty levels.
In 1978 Deng Xiaoping introduced the ‘open door policy’ slowly introducing economic liberalisation and opening the couture up to FDI. SEZs were created in the coastlines (Pearl river delta) attracting a rapid inflow of FDI.
- exports soared form $2 billion in 1980 to $200 billion in 2000.
- by 2006 china’s was receiving $60 bullion in FDI annually.
- 400 million people lifted from poverty
Contrasting point > There are still FDI restriction in some sectors. Coca-colas attempted acquisition of Huiyan Juices was blocked in 2008.

36
Q

AT Kearney

A

The Kearney index using 12 indicators spread across different categories. Economic integration (Trade and FDI flow), technological connectivity (number of internet users, internet host and secure servers), political engagement (membership of international organisations and treaties, contribution to UN peacekeeping), personal contact (international travel and tourism, telephone traffic).
Index value calculated for each indicator based in its relative position on the scale 0-1.

37
Q

AT Kearney negatives

A
  • 62 counties
  • heavily weighted toward ICT Connectivity enabling USA to gain a high index score despite low political engagement.
38
Q

KOF Index

A

It’s a composite index combining 24 indicators spread across three categories. Economic globalisation (cross border trade, FDI), social globalisation (international telephone calls, tourist) and political globalisation (memberships to international organisations, UN peacekeeping).
The data is then scaled and index value given.

39
Q

Role of TNCs in globalisation

A
  • take advantage of economic liberalisation through outsourcing and offshoring
  • developing new markets
  • glocalisation
40
Q

Offshoring and why TNCs do it

A

The process of moving part of a company’s own production process to another country (building a new factory in China where wage rates are lower) especially to SEZ in Asia.
TNCs offshore as it
- reduce cost (lower wages and tax rates)
- proximity to raw materials (reduce transport costs)
- less environmental regulations

41
Q

Outsourcing and why TNCs do it

A

Outsourcing in the process where a firm contracts with another company to obtain goods or services from it.
TNCS use outsourcing as it is more flexible than offshoring meaning the TNCs can quickly change supplier if a cheaper source becomes available.
C > it results in less direct control over production.

42
Q

How has offshoring and outsourcing promoted globalisation?

A

It has lead to the production of a global production network (branch plant economy). This reduction in cost allow TNCs to make a large profit and lower prices and open a wider product market.

43
Q

Case study’s for outsourcing

A
  • BMW outsource 2,500 different supplier for the Mini (wind screen made in France were there a little tariff due to EU)
  • 2013 Tesco discovered that its Romanian supplier was mixing horse meat into budget beef burgers.
44
Q

What is developing new markets?

A

Open new outlets in another country increases revenue for TNCs.

45
Q

What is glocalisation?

A

The processes of adapting brands and products to suit the local market conditions such as taste, culture and laws maximising markets and profits.
Cadbury making their chocolate sweeter in China due to local taste.

46
Q

Benefits of TNCs

A

Much of the emerging economies has been fuelled by the production of a global production network made many TNCs magi terming plants in SEZs. It has created jobs and boosting exports.

47
Q

Negatives of TNCs

A
  • unsafe working conditions > 2013 the Rana Plaza textile factory collapsed killing 1,100 workers and halting supplies.
  • exploitation of workers in the emerging world paying them low wages
  • job losses in origin countries (deindustrialise)
  • Local cultures and tradition can be eroded by TNC brands ideologies.
48
Q

Why are some locations switched of to globalisation?

A
  • political reasons (North Korea)
  • economic reasons (Poor infrastructure, Lowe literacy levels, extreme poverty)
  • physical (Landlocked regions)
  • environmental (bad agricultural climate)
49
Q

Why is North Korea closed of to globalisation?

A

Ruled by Kim Jong-Un as a 1 party system citizens don’t have access
- to internet or social media
- no under sea data cables connected else where
Making them cut of from the rest of the world and globally isolated.

50
Q

The Sahel region

A

The shale region overall has poor long term investment due to political and religious reasons and high level of corruption mainframe it unattractive to FDI.
Economic
- poor infrastructure and low literacy levels
- dominated by subsidence farming (little exports)
Physical
- all four of the Sahel countries are landlocked having very little access to coastal ports and high transport costs.
- harsh environment making agricultural and travel difficult
Environmental
- semi-arid conditions making export reliant of the lack of precipitation
- high levels of desertification

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