Globalisation EQ1 Flashcards
1
Q
what is globalisation?
A
The process of increasing interconnectivity between countries
2
Q
How has globalisation increased connectedness of the worlds economic system?
A
The growth of TNCs, which have a global brand image and presence; the spreading of investment around the world; rapid growth in world trade
3
Q
How has globalisation increased connectedness of the worlds cultural system?
A
Unifying and diversifying: people using increasingly similar: food, clothes, music, value - many of which are ‘western’ in origin (From North America and Europe)
4
Q
How has globalisation increased connectedness of the worlds political system?
A
Spreading ideologies, global organisations (e.g. the UN), the dominance of western democracies in political and economic decision making ; spread the view that democratic, consumerist societies are the most successful
5
Q
How has globalisation increased connectedness of the worlds environmental system?
A
agreements (Paris), pollution affecting other countries, species being spread to other countries; global warming is a global threat requires a global solution.
6
Q
How has globalisation increased connectedness of the worlds demographic system?
A
Increased migration and tourism makes populations more fluid and mixed
7
Q
what is the widening of connections?
A
links to new places, often further away
8
Q
definition of globalisation
A
The widening and deepening of global connections, interdependence and flows (commodities, capital, information, migrants and tourists)
9
Q
what is the deepening of connections
A
number and type of connections increase, and volume of flows grows
10
Q
How does the flow of trade increase interdependence?
A
Globalization has made it easier for countries to trade goods and services across borders. Countries now rely on each other for raw materials and services that cannot be produced in their homelands; this creates a mutual reliance in a supply chain.
11
Q
How does the flow of capital increase interdependence?
A
global financial markets are interconnected. Investments flow freely across borders, with countries relying on FDI and international loans to fund infrastructure and development projects. Economic downturns in one major economy can ripple through global markets, affected others.
12
Q
example of the impact of globalisation increasing independence
A
- April 2011, staff at Honda factory in Swindon worked only two days a week due to shortage of parts following the Japanese tsunami
- The German stock market lost 1.2% minutes after the tsunami
13
Q
impact of globalisation increasing independence
A
The success of one place then depends on the success of other places; economic problems in one country can often spread to its trading partners and affect distant people.
14
Q
What flows have increase due to globalisation
A
-goods and services
product and commodities (that are often made and grown in other countries)
-capital
flows of money between people, banks, businesses and governments
-people (including migrants and tourists)
-information
e.g.. data transferred between businesses and people, often using the internet
-
15
Q
What is globalisation caused by?
A
The development of new technologies and political and economic decisions (e.g. removing tariffs)
16
Q
Examples of increasing globalisation
A
- In the 1960s people holidayed in the UK or Spain - now holidaying in Dubai or Florida not too exotic
- 1960s: clothes made in UK - now: China, Vietnam, Bangladesh
- 1960s: curry and pasta considered exotic - now: eat food from all over the world
- Even recently isolated places like Sub- Saharan Africa are becoming increasingly connected through trade and tourism
- In the developed world, food, goods, media, music, friends and places visited are increasingly global
17
Q
What does railways, the telegraph and steam ships have in common?
A
They contributed to the development of transport and trade in the 19th century.
18
Q
What transport accelerated in the 20th century?
A
jet aircrafts and containerisation, contributing to a ‘shrinking world’.
19
Q
Explain the link of technological developments in transport and communication to globalisation
A
These developments in transport and com promoted globalisation and led to the development of TNCs.
20
Q
How did technological development in transport and communication increase globalisation
A
Reducing transport costs per unit output, so products are affordable for customers in a distant market, setting up a new flow of goods/information
21
Q
What had allowed larger loads to be transported?
A
Harnessing new forms of energy e.g., coal in the railway steam engine, oil in internal combusion, and jet engines in lorries and aircraft
22
Q
what is internal combusion
A
The modern engine in cars that releases energy from the fuel and air mixture in the engine
23
Q
What has encouraged the development of transport?
A
The growth of trade, because of the increasingly cross-border exchange of goods and services between people and companies, thus making transport cheaper over time.
24
Q
What had replaced horse-drawn and canal transport?
A
Faster steam trains that were invented in 1802 and put in place in the 1830s eg. liverpool and Manchester’s public railways
25
What was the first long-distance instant communication technology?
The electric telegraph, with the Trans-Atlantic telegraph cable replacing a 3 week boat journey with instant morse code.
26
What had replaced sailing ships?
Steam ships in the 1840s with increased speed and cargo capacity
27
What transport developments were introduced in the 20th century?
-Jet Aircraft
-Containerisation
28
How had Jet Aircraft accelerated globalisation?
The Boeing 747 jumbo jet introduced in the 1960s lowered the cost of international air travel, bringing international tourism within the purchasing capabilities of the middle class, reducing travel time from days to hours , replacing the steam ships.
29
Advantages of containerisation
-Reduced transport costs for goods by lowering cost of 'break bulk cargo' (products that need to be loaded individually)
-This means less time spent changing transport type, meaning more trade so it gets cheaper
-This reduced costs makes the consumer goods cheaper
-fewer losses from theft
-Can be mechanised eg unloaded by cranes
-reduced labour costs because of this automation
-costs less than £1 to ship a TV or iphone from china to the uk
30
Advantage of faster travel times - containerisation
-shipping costs reduced
-increase distance perishable goods can be transported eg. cut flowers from Kenya, opening up more distant markets and reducing losses.
31
What is the shrinking world?
The physical distance between places remains unchanged, but new technologies reduce the time taken to transport goods/people and communicating information.
32
What is space time compression
Makes places seem closer due to technological advancements, a blurred sense of time. An effect of increased connectivity with more distant place, and an effect of the shrinking world.
33
Changing speeds of navigating the globe
1700s - three masted frigate (HMS Dolphin) took two years to navigate the globe.
1930s - propeller aircraft took 8days
1990s - jet aircraft took 31hours
34
what industry dominated the 21st century
Rapid developments in ICT and mobile communications (mobile phones, internet, social networking, economic banking, fire optics)
35
Impacts of ICT development
-reduced communication costs
-increased global communication flows since the late 20th century
-many activities are now done without any personal interaction -banking, booking hotels and increasingly shopping
36
What had replaced landline telephones in the 1990s
Mobile phones have become increasingly common, even in developing countries eg. by 2015, 70% of people in Africa owned a mobile phone
37
What flow had increased globally due to mobile phones
start phones, smart tablets and smart watches in the 2000s extended the information flows to locations beyond landline networks
38
What led to mobile phones wide usage
reduced mobile phone costs expanded usage from an expensive business tool to an ubiquitous consumer product
39
As well as mobile phones, what become more common in the 1990s?
Internet access became common, followed by fast broadband.
40
What is the percentage of the worlds population who use the internet?
50%
41
What flow had increased due to broadband internet in the 1980/90s?
Information and communication - large amounts of data could be moved quickly through cyberspace
42
What had the development of social media enabled?
much cheaper communication between friends and family than landline telephone
43
Benefit of social networks and skype
-Allowed people to communicate instantly and without charge (with an internet connection)
-in 2014, 5 billion facebook 'likes' were registered each day
44
What has the rise in social media led to?
Space time compression - where the cost (time and money) of communicating over distance has fallen rapidly, so people can communicate regardless of distance
45
impact on migrants of rise in skype (cheap, direct, face-to-face communication)
allows migrants to maintain stronger bonds with their distant family
46
Impact of the rise of mobile phones in Kenya
-Economic banking
1/3 of their countries GDP comes from M-Pesa system anually. This is a mobile phone service that allows credit to be directly transferred between phones.
Electronic banking extends capital flows beyond the physical banking network
47
Impact of economic banking on woman
woman in rural areas can secure micro-loans, using their M-pesa bills to proof they have a good credit score.
-They use this to electronically pay for school and utility bills.
48
Impacts of economic banking and mobile phones on farming
In rural areas, fisherman and farmers use mobiles to check market prices before selling produce.
49
Impact of e-banking on migrants
allows migrants to transmit remittances of money back home to their home countries
50
Impact of E-banking on businesses
- In store barcode recording automatically orders a replacement from a distant supplier, reducing warehouse and wasted transport costs
-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.
51
When had fibre optics become popular and what did it do
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
52
How much sub sea fibre optics is there?
more than 1 million kilometres of flexible undersea cables carry the world's data.
53
use of satellites for systems?
-GPS use continuous broadcasting satellites as beacons to triangulate information
-Delivery vehicles can continuously locate and transmit their position whilst satellite navigation (SATNAV) systems reduce costs of vehicles getting lost
-Satellite based television has meant that popular channels are available worldwide, in many languages.
54
How is politics impacted by social network?
Social networks can be used to spread political messages, e.g. an environmental campaign or enhanced impact of a terrorist atrocity.
55
how has ICT developments led to cultural globalisation
-cassette recorders, mp3 players and Iphones enables a rapid global transfer of music and video e.g. South Korean k-pop and Psy's 1.8billion online views of 'gangnam style' in 2012
-TNC's bring foreign styles and products e.g. Mcdonalds, starbucks, possibly creating a global mcculture
56
Economic effects of globalisation
-Allows specialisation where the country focusses on production of certain goods/services it can produce most efficiently, lowering production costs
-The focus of specialisation is determined by the countries mix of natural resources(land), people(labour), and tech(capital)
-Specialisation and trade allows for an increase in global output and increases choice, raising quality of life
- 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., natural disaster, economic recession, war, or political conflict
57
definition of commodities
Undifferentiated primary products bought in bulk e.g., wheat, iron ore. They are actually used as raw materials in the manufacturing process.
58
definition of Capital
Money (financial capital) or things used to make other things e.g. machinery factories (physical capital) or improvements of a workers' productivity capital, e.g. through education, training and health (human capital).
59
definition of resilience
The ability to rapidly regain normal state following an adverse change
60
How have international political and economic organisations contributed to globalisation
through the promotion of free trade policies and foreign direct investment
61
History of world trade
-Amount of world trade increased fairly slowly from the 1970s to the mid 1990s
-There was a huge growth in export trade after 2002
-A sharp dip in 2008-2009 due to the global recession / global financial crisis
-It returned to 'normal' levels in 2011, but growth has been slow ever since
-in 2014, there is about US $19 trillion world trade in goods, compared with less than $1 trillion in the early 1970s.
62
How had countries protected their own industries and business in the past? (Protectionism)
-demanding payment of taxes and tariffs on imported goods, so making them more expensive than home-produced goods
-using quotas to limit the volume of imports, protecting home producers from foreign competition
-Banning foreign firms from operating in services like banking, retail and insurance
-Restricting, or banning, foreign companies from investing in their country
63
protectionism vs free trade
protectionism reduces total trade volume, whereas free trade increases it (no taxes, tariffs or quotas)
64
What did the Bretton woods conference in the USA 1944 do?
Allied powers agreed to set up three IPEOs,
-The world bank
-international monetary fund
-world trade organisation (this was not founded until 1995)
65
what are IPEOs
Financial institutions
66
What were the economic objectives of the three IPEO's set up by Bretten woods conference 1944?
rebuilding the world economy following WW2
67
What were the political objectives of the three IPEO's set up by Bretten woods conference 1944?
promoting free-market democracy in the face of the looming cold war thread of command economy one-part communism
68
What is the world bank and what is their role?
International Bank for Reconstruction and Development.
Role of lending money and giving grants to the developing world to fund economic development and reduce poverty.
69
Example of world bank providing loan and grant
In 2014 it gave a US $470 million loan to the Phillippines for a poverty reduction programme and a $70 million grant to the Democratic republic of Congo for the Inga 3 mega-dam HEP project
70
What does the world bank require from a country?
-recipients of loans and grants must adopt liberalisation policies
-to open up to FDI by removing legal restrictions and capital controls.
-also requires them to adopt structural adjustment programmes to reduce government budget deficits
71
Why might a developing country decide to borrow from China instead?
the chinese-led asian instrastructure investment bank dont impose the conditions for a loan like the world bank.
72
how much did china give for loans to countries?
110 billion us dollars, more than the world bank
73
How has the world bank helped developing countries?
helped to develop deeper ties to the global economy but has been critizised for having policies that put economic development before social development
74
What governmental things do the world bank get involved with when providing loans and grants?
-deals with flows of capital
-often involves government spending cuts
-privatisation of state owned firms
-opening up to foreign competition
75
Definition of foreign direct investment
The financial capital flow from one country to another for the purpose of constructing physical capital e.g. building a factory in another country
76
What is the aim of the International monetary fund (IMF)
aims to maintain a stable international financial system, and this promotes free trade , open economies and globalisation
77
Role of the IMF
provides loans to countries facing short-term balance of payment difficulties and deals with the flow of capital in recipient countries
78
example of IMF providing loan
In 2008 Greece received the first in a series of IMF loans when its foreign currency earnings were insufficient to pay for its existing debt obligations
79
what are the country requirements to receive a loan from IMF
-recipients must adopt structural adjustments
-adopt trade liberalisation programmes, including measures opening up the economy to FDI and Free trade
80
what has the IMF been critisised for?
promoting a 'western' model of economic development that works for the interest of developed countries and their TNCs.
81
Aim of the World trade organisation (WTO)
this international organisation works to reduce trade barriers (both tariff and non-tariff) and create free trade
82
where is the headquarters of the WTO
Geneva, Switzerland
83
what did WTO replace?
Gatt rounds - general agreement on tariffs and trade in 1995
84
What has the world trade organisation's global agreements succeeded in?
has gradually reduced trade barriers and increased free trade
85
What are the latest round of talks in Doha 2001 about (WTO)
seeking to reduce tariff on agricultural products, to benefit developing countries, but no agreement has been made yet.
86
What does the WTO deal with
flow of goods and services (commodities) , not about FDI
87
What is WTO's most favoured nation required to do
the MFN must treat all WTO member nations equally in terms of trade policies, in terms of tariffs, import quotas and other trade barriers
88
What had Gatt rounds agreed to ?
-repeated reductions on tariffs on manufactured goods, mainly benefiting developed and emerging countries
89
What is tariffs?
tax on goods entering or leaving a country
90
What are Non-tariff trade barriers?
these are restrictions or regulations put in place for a country to control the amount of goods that can enter or leave their markets.
These trade barriers include:
-quotas
-quantitative limits on imports or exports
-subsidies to domestic producers (financial assistance to companies within its own country)
91
What is the problem with the IMF encouraging government spending cuts?
this might slow economic growth, making the country less able to pay debts. Cuts are inapropriate for developing countries, since they need to invest in health and education.
92
What are austerity programmes?
policies to reduce government deficit and dept levels, usually by reducing public spending(health, military ext) and increasing taxes and privatisation
93
How can national governments accelerate globalisation?
1. by joining/promoting free trade blocs
2.free market liberalisation
3.Privatisation
4.Encouraging business start-ups
94
What is a free trade bloc
A free trade bloc is an agreement between a group of countries to remove all barriers to trade, e.g. import/export taxes, tariffs and quotas.
95
How do trade blocs lead to globalisation?
1. Countries specialise in goods being produced which have a comparative advantage (e.g. can produce at the lowest price) and trade these products for other members' specialisms.
2.Firms producing a countries specialisation become TNC's as they sell outputs through the bloc.
96
What is the European Union?
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.
97
What is the Schengen area?
A group of 27 European countries that have abolished passport control and other types of border checks. This allows for the free movement of people within the area, similar to travelling to different provinces of the same country. This was established in 1985 and implemented in 1995.
98
What do these countries in the EU share?
-uniform product labour and environmental regulations
-a single currency, euro, adopted by 19 members.
99
What is the Integrated economic policy area and its purpose?
This helps to coordinate the economic activities of EU member countries and this helps to align national economic policies to promote sustainability and growth in a single market. E.g. common agricultural policy ( fair income for farmers), and structural funds to assist regions within member countries with a GDP per capita of less than 75% the EU average.
100
What was the founding treat in Rome 1957 for?
This treaty committed members to work towards an 'even closer union'
101
What was the original political aim of the EU?
to integrate economies, so that interdependence prevents war.
102
European parliaments role in political globalisation?
-through legislation, trade agreements, human rights advocacy and international partnerships, the European parliament contributes to the EU's political influence globally, promoting democratic values , social policies and environmental standards.
103
Impact on globalisation of Foreign policy determined at EU level
member states coordinate their foreign foreign relations and defence policies through EU institutions, the EU's common foreign and security policy enables the EU to present as a stronger united stance in global affairs, making it a stronger political actor.
104
example of supranational governance?
The EU - due to countries cooperation of foreign policy and legislative alignment, they are a supranational governance. This means that member countries can express their issues and the EU can function as a united front, increased political power for all members.
105
What is ASEAN?
The Association of South East Asian Nations.
This is a free trade area with 10 members and a population of 625 million.
106
What is the purpose of ASEAN?
a uniform low tariff is applied between members for specified goods, its working towards the elimination of tariffs sector by sector.
107
What was planned but not achieved by ASEAN
making a single market by 2015
108
what pledge did ASEAN make in 1995
to remain nuclear weapons free
109
What is ASEAN way?
this is a distinctive approach that ASEAN uses to manage internal affairs and external relationships. This scheme emphasises informal consultations and discussions instead of formal voting to avoid confrontational outcomes and promote harmony among members. A core principle is there non-interference in domestic affairs of other members countries, meaning members do not engage in each others internal issues, respecting each others sovereignty (A country has the authority to do what they need to in their own country without discussion).
110
what type of globalisation is accelerated due to ASEAN?
political globalisation - as the organisation makes effort to coordinate and manage regional political issues through collaborative and collective approach, while maintaining stability and promoting peace within the region e.g. ASEAN members wont comment on Burma's internal policies
111
What does free market liberalisation involve?
Promoting free markets and reduces government intervention in the economy
112
How would free markets reduce government intervention in the economy?
As the role of the market forces will be emphasised, such as supply, demand and competition (letting the demand decide the prices instead of the government) - regulatory and administrative control will be diminished.
113
Benefits 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
114
Who initially promoted free market liberalisation and why?
Margaret Thatcher (UK PM) and Ronald Reagan (US President) 1980s- They were both strong believers in free market capitalism and that reducing gov intervention would lead to more efficient and dynamic economies. They were influenced by neoliberal economic theories that emphasized the benefit of free markets, deregulation and privatisation.
115
How would free market liberalisation impact provisions on services?
It would end the monopoly provision of some services such as telephones, broadband, gas and electricity so you can choose your supplier based on quality and price.
116
What is a monopoly?
A monopoly is represented by a single seller who sets prices and controls the market. The high cost of entry into that market restricts other businesses from taking part. Thus, there is no competition and no product substitutes.
117
How does ending the monopoly provisions encourage competition?
As it involves removing price controls, foreign competition may come in as there is no dictator controlling the market and citizens are now able to choose who they want to get their services from, this leads to increased efficiency and further promotes globalisation
118
How can the removal of legal restrictions on foreign ownership bring in inflow and outflow of FDI?
this is because foreign competition will enter the market as there are fewer capital controls dictating the market.
119
what are nationalised industries
the process of taking privately-controlled companies, industries, or assets and putting them under the control of the government
120
what industries were previously state-owned but are now privately owned
steel, car, electricity, gas and water, however countries like France still own a portion of industry
121
How does a profit motive lead to increased efficiency in a company
a profit motive means that the business will have an incentive to reduce losses to maximise profits, therefore increasing efficiency
122
What is a profit motive
the desire for financial gain as an incentive in economic activity
123
what does permitting foreign ownership through FDI introduce?
-new technologies
-promotes globalisation
124
who are grants and loans usually given to?
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. e.g. UK gov support for ICT start-ups in Tech City (silicon roundabout) in old street.
125
What encourages new firm creation?
-low business taxes
-well-enforced contract law
-minimum regulation
-efficiency bankruptcy procedures
126
what does encouraging business start-ups lead to?
-creates innovation and competition in new production techniques
-erodes excess profit of monopolies
-lowers prices
-increases household PP
127
How does encouraging business start-ups promote globalisation?
foreign new businesses will be attracted to start up where legal restrictions of foreign ownership and capital controls are removed, thus promoting globalisation
128
what is a trade bloc?
A trade bloc (not free trade) is a group of countries that agree to reduce trade barriers between them. They promote free trade between members, increasing economic globalisation
129
problems with trade blocs
-trade distortion
-short term unemployment
-cultural erosion
-sovereignty loss
130
How is trade distortion a problem with trade blocs
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 and SOL falls
131
How is short term unemployment a problem with trade blocs
-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
132
How is cultural erosion a problem with trade blocs
cheap uniform products across the bloc replace more expensive local variants
133
How is sovereignty loss a problem with trade blocs
nation gives up determination of some areas of economic (and in single market, immigration) policy
134
Why have attitudes to FDI changed in developing and emerging countries?
-During the period of decolonisation in the 1950s, 1960s and 1970s, many newly independent countries rejected international trade as exploitative.
They preferred self-sufficiency through import substitution.
135
What four countries 'Asian Tiger economies' decided to choose export led growth instead of self sufficiency?
-singapore
-taiwan
-south Korea
-hong kong
136
what did the asian tiger economies experience?
they experienced much faster economic growth than countries following import substitution
137
what is import substitution
Import substitution is an economic policy that aims to replace foreign imports with domestic production. It's based on the idea that a country can reduce its reliance on foreign imports by producing industrialized goods locally
138
what had happened to some of the countries attitudes to FDI by the 1980s?
They no longer viewed FDI as exploitative:
-paying low prices for resources
-low wages to workers
-demanding low taxes
-polluting the environment
Instead they viewed FDI as positive
-creating new jobs
-better paying than the existing alternative (e.g. subsistence farming) with reliable wages
-better working conditions, which introduced new technology and were reliable tax contributors.
139
What was the result of the countries shifted opinions on FDI to a positive one?
As a result, FDI by developed country TNCs expanded to new areas, initially to the Asian Tigers, then to other Asian and South American countries, and since 2000 also African countries.
140
what are subsidies
Subsidies are payments by the government to a company to promote a particular activity
141
why might governments provide subsidies
to attract FDI, e.g. a subsidy to cover relocation costs, payment per worker employed &c.
142
why does the WTO usually prohibit subsidies to domestic firms?
acts as a trade barrier - the government payment allows a firm to accept a lower market price, undercutting the price of imports.
WTO may accept a subsidy for FDI, e.g. in SEZs, as this promotes trade.
143
what are special economic zones?
Special economic zones are enclaves where investors receive special tax, tariff and regulatory incentives.
144
what is the population of people who live in SEZs?
About 50 million people in more than 100 countries work in such locations.
145
what are SEZs used for?
SEZs are used by some countries to attract FDI, spreading globalisation to new regions.
146
What do successful SEZs need to have?
Successful SEZs need:
-good infrastructure
-close proximity to trade routes or emerging markets
-minimum bureaucracy
-rule of law (contract security, minimal corruption, freedom from crime and violence.)
147
Example of SEZ?
In the 1960s President Suharto of Indonesia created the Jakarta Export Zone with attractive legal and economic conditions designed in consultation with US and European TNCs.
The World Bank funded infrastructure improvements for ports, power supplies and roads. Gap and Levis FDI followed.
148
Why are SEZs and similar models attractive for 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.
149
when was chinas open door policy?
1978
150
What happened in 1978 China?
Deng Xiaoping introduced the 'Open Door Policy', slowly introducing economic liberalisation and opening up to FDI while maintaining a strict one party political system.
150
Under Chairman Mao Zedong what was China like?
Communist China was 'switched off' from the global economy. Most people lived in poverty in rural areas during his time as chairman.
151
What was created on the coast of China?
SEZs were created on the coast, such as the Pearl River Delta Zone, the Shanghai Economic Zone, attracting a rapid inflow of FDI.
152
What was created in 1980?
Shenzhen Special Economic Zone.
153
How did the export profits in China shift from 1980 to 2000?
Exports soared from $2 billion in 1980 to $200 billion in 2000.
154
when did China join the WTO?
2001
155
What happened when china joined the WTO?
other countries lowered tariffs on exports from China.
156
by 2006, how much was china receiving from FDI per year?
$60 billion
157
How were 400 million people able to be lifted from poverty in China
China experienced rapid economic growth, reaching 10% p.a.(the percentage the economy had grown to per annual) in the 1990s.
158
what were legal restrictions that were relaxed in China?
FDI in some sector's of China's domestic economy, e.g. rail freight and chemicals.
159
Following a WTO ruling, what had china agreed to do?
China agreed to remove export restrictions on 'rare earth' minerals that china controls 70% of, as it was trade restrictive and in violation of international trade rules.
160
Why are many countries financially interdependent with china?
The Chinese government's sovereign wealth fund(investments in stocks ext) and Chinese TNCs are now a major source of FDI in other countries.
161
What flow has china removed and restricted with outside countries from their citizens?
Information flows are controlled. Google and Facebook access is limited. The Chinese Youku is the social media provider.
162
What is the impact of cultural erosion on china?
Cultural erosion is limited - a quota of 34 foreign films per annum in Chinese cinemas.
163
What restrictions has china put in place in some sectors?
FDI restrictions in some sectors. Coca-Cola's attempted acquisition of Huiyan Juice was blocked in 2008.
164
What is the problem with wages increasing to global standards in China's SEZs?
countries like Vietnam are more competitive.
165
What is the conflict with SEZs?
question marks about pay and working conditions in factories in the SEZs.
166
Example of public scrutiny over SEZs?
E.g., Apple was subject to negative publicity in 2010 when working conditions in its supplier factories (owned by Foxconn) making iPhones and iPads, came under scrutiny.
167
What are the indicators and indices of the degree of globalisation of countries?
-AT Kearney Index
-KOF index
168
What is an indicator
An indicator is a measure of an individual aspect (of globalisation), e.g. the amount of FDI.
169
What are indices
Indices express indicators as a percentage
Indices may be composite measures, combining several indicators.
170
How do you measure multiple indicators of the degree of globalisation?
1.Indices may be composite measures, combining several indicators.
2.Each component indicator is expressed as a percentage.
3.Component index values can then simply be added and the mean value calculated to give the overall index value.
171
what is the alternative method of measuring several indicators of globalisation?
1.Alternatively, component index values might be scaled (weighted).
2.Each component multiplied by a fraction of 1.0 and then the components are added.
172
Who produces the KOF index of globalisation
Produced annually by the Swiss Institute for Business Cycle Research
173
How many indicators does the composite KOF index have?
24 Indicators
174
What are the three categories the indicators for KOF index are separated into?
-economic globalisation
-social globalisation
-political globalisation
175
What are the indicators of KOF that measure economic globalisation?
-cross-border trade
-FDI
-tariff rates
-money flows.
176
What are the indicators of KOF that measure social globalisation?
-international telephone calls
-tourist flows
-resident foreign population
-access to foreign internet
-households with a TV set
-'global affinity' (presence of international TNC retail outlets)
-international mail
-import and exports of books
177
What are the indicators of KOF that measure political globalisation?
-foreign embassies in a country
-membership of international organisations
-number of UN Peacekeeping missions participated in
-trade
-other agreements with foreign countries
178
How long has the KOF index been calculated?
since 1970 (158 countries 1970 - 2006)
179
What is the benefit of having a long scale set of results for countries?
this allows comparisons over time e.g. economic globalisation has risen faster than political or social since 1970
180
What is the correlation between development and globalisation?
positive correlation -
Developed countries top the list
emerging countries mid-way
developing at the bottom
181
Example of countries in the KOF index?
In 2016, the Netherlands and Ireland topped the list, then Austria, Switzerland. There were only two non-European countries in the top 15, Singapore and Canada.
182
Why do USA and BRICs have lower index values?
because the KOF index measures international interactions - internal flows between diverse regions in large countries (each the size of a small country) are not recorded. Large parts inside of the USA are not well connected to the rest of the world, eg cities like LA and New york are well connected but alot of the country isnt so an accurate score isnt represented, so larger countries end up with lower scores.
183
why are small european countries at the top of the list of the KOF Index
1. Small countries have short distances to neighbouring countries, fewer domestic attractions and a smaller domestic market.
2.High European indicator value reflects the very large interactions within the EU. Suggests the decision to join a trade bloc effective in promoting globalisation.
184
Why might some indicators look dated for the KOF Index?
technological developments - eg. international mail, given the rise of email and social media, and the trade of books given ebooks
185
What is the problem with measuring trade flows in KOF?
Trade flows will not include informal economy flows. Will understate degree of globalisation in developing and emerging countries.
186
How does personal judgement impact KOF indicators?
choice and weighting of indicators values judgement, and may contain cultural bias (e.g., no. of mcdonalds)
187
What is a problem with having a wide range of indicators for the KOF index
wide range of international connections means it may be difficult to understand what exact factor drives a countries score and what to compare countries with.
188
Where are the results for AT Kearney Index produced?
Produced annually by the AT Kearney management consulting firm in conjunction with Carnegie Endowment for International Peace's 'Foreign Policy' magazine.
189
How many Indicators are used by AT Kearney to measure degree of globalisation
12 Indicators
190
What are the categories that the 12 indicators are split into in the AT Kearney Index?
-Economic integration
-Technological connectivity
-Political engagement
-Personal contact
191
What are the indicators that are used to measure economic integration?
-Trade
-FDI flows
192
What are the indicators that are used to measure Technological connectivity?
-number of internet users
-internet hosts
-secure servers
193
What are the indicators that are used to measure Political engagement?
-Membership of international organisations and treaties
-contribution to UN peacekeeping
-level of governmental transfers (e.g. aid)
194
What are the indicators that are used to measure Personal Contact?
-International travel and tourism
-international telephone traffic
-personal cross border financial transfers (e.g. remittances)
195
How to work out index value of AT Kearney
Index value calculated for each indicator based on its relative position on the scale - with the highest actual value scoring 1.0 and the lowest 0.
FDI, internet usage and international traffic telephone weighted double.
196
Issues with AT Kearney Index?
-Only includes 62 countries, though these include 84% of the world's population and 96% of global GDP.
-First published in 2008 - limits usefulness for long term comparisons, cant assess change of a countries connectedness over time
-Small European countries dominate the top 20, though the USA is 4th and Canada is 6th. Smaller countries have higher FDI indicators due to small domestic markets.
-Heavy weighting given to ICT connectivity enables the USA to gain a high index score despite low political engagement in terms of treaties signed.
197
What were the most economically success cities according to AT Kearney global cities index
In 2016, London, New York, Paris, Tokyo and Hong Kong ranked highest
198
Why are TNCs important in globalisation?
contributing to globalisation's spread (global production networks, glocalisation and the development of new markets) and taking advantage of economic liberalisation (outsourcing and offshoring)
199
what are TNCs?
Transnational corporations (TNCs) are firms with operations in more than one country.
For example, Wal-Mart Stores had a 2016 turnover of $482 billion, the equivalent of Poland's GDP and 2,300,000 employees.
200
How does changing from a national company to a TNC spread globalisation?
By opening operation in another country (FDI), it creates international connections, spreading globalisation.
201
What encourages the growth and size of TNCs?
-creation of trade blocs
-removing international barriers
-changing government policies to encourage economic liberalisation
-including removing capital
controls and legal restrictions
-creating SEZs
202
Why do firms become TNCs?
1. Firms aim to maximise profit, becoming a TNC helps to do this by reducing costs, or generating higher revenues from new markets.
2. 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.
203
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.
204
Where is offshoring most popular to?
Especially to SEZs in Asian countries.
205
Advantage of offshoring
It reduces costs as wage rates are lower
-tax rates are lower
-proximity to raw materials reduces transport costs
-less environmental regulation
206
what is a vertically integrated company + example
carrying all stages of the production process out themselves, e.g. Royal Dutch Shell.
207
what is outsourcing?
This is the process where a firm contracts with another company to obtain goods or services from it.
This is usually administration and data processing - Bangalore in India is known for this.
208
Example of Outsourcing
E.g. BMW, the German TNC, outsources component production to 2,500 different suppliers for the Mini - the engine is made by Brazilian suppliers, where the wage rate is lower, windscreen made in France where there are no tariffs because it's in the EU etc.
209
Advantage of outsourcing
Outsourcing is more flexible than offshoring as the TNC can quickly shift supplier if a cheaper source becomes available.
210
issue with 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 horsemeat into budget beefburgers.
211
How can outsourcing and offshoring allow TNCs to make larger profits/lower prices?
Outsourcing and offshoring lead to the production of global production networks. These reduce costs, allowing TNCs to make larger profits, and/or lower prices.
212
How has offshoring led to chinas rapid economic growth?
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.
213
Impact of developing in a new market
Opening new outlets in another country increases revenue for TNCs.
214
what is glocalisation?
Glocalisation is the process of adapting brands and products to suit the local market conditions, such as taste, laws or culture.
215
Examples of Glocalisation
-McDonald's only has vegetarian outlets in some parts of India due to the local Hindu and Sikh beliefs
-Volvo driving seats positioned on the different sides of the car
-Dutch 'big brother' refilmed using local participants
-MTV avoid overtly sexual music videos in the Middle East due to local culture and religion
216
Drawbacks of TNCs
1.GPNs 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.
2.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.
3.TNCs have been accused of exploiting workers in the developing/emerging world by paying them low wages.
4.Outsourcing jobs can lead to job losses in the home country.
5.Local cultures and traditions can be eroded by TNC brands and western ideas.
217
What are the four main reasons why regions remain switched off from globalisation
1. Physical
2. Political
3. Economic
4. Environment
218
What are examples of places that remain switched off due to politics
North korea
Sahel Region
219
What is hereditary autocracy
Hereditary autocracy is a form of government where power is concentrated in the hands of a single ruler, In this system, the leadership is not elected or chosen by the people, but rather inherited
220
What country is an hereditary autocracy
North Korea - Kim Jong-Un
It's run as a one-party system with a command economy organised on the communist system.
221
since 1955 South korea has followed which policy?
policy of Junche 'self-sufficiency', minimising trade with other countries, emigration and foreign tourism is also prohibited
222
Example of North Korean independence
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.
223
what is the north korean GNI per capita?
$4,600
224
What trading does north korea associate with
NK trades with China, and set up the Kaesong Special Economic Zone, employing 52,000 people on the border with South Korea.
225
where is the Sahel region
The Sahel Region is an area of west Africa just south of the Sahara Desert, e.g. Chad, Mali, Niger, Burkina Faso...
226
