Globalisation EQ1 Flashcards
what is globalisation
process by which world is becoming increasingly globally interconnected as a result of increased trade, communication and cultural exchange
what are the 4 strands of globalisation
economic
political
social
cultural
what causes social globalisation
- international migration created extensive family networks
- global improvements in education and health7
- social interconnectivity through phones and internet
what causes cultural globalisation
- westernisation and Americanisation
- glocalisation- old culture and new culture merge
- media circulates ideas and information
what causes political globalisation
- growth of trading blocs- TNCs merging and making acquisitions in neighbouring countries
- global concerns such as free trade and global response to natural disasters
- WTO, IMF, WB
what causes economic globalisation
-growth of TNCs accelerates cross border exchanges of goods and services
- information and communications technology supports more international economy
- online purchasing - amazon etc
what does widening, deepening and quickening links mean
widening = new links growing over countries a greater distance apart
deepening= more peoples lives increasingly connected with far away places
quickening- shrinking world, can immediately access people across the world and fly wherever
what is the world’s largest cargo ship
Maersk McKinley Moller
contained 18,000 containers
Danish, ran by Pilipino crew, built in south Korea and shipping Chinese goods to Europe
name some key transport innovations
- steam power in 1800s, UK
- Railways from 1800 expanded globally
- Jet Aircraft developed 960s-1990s, low cost easyJet
- container shipping backbone of global trade, avg boat carries 10000 containers
how many container movements are there per year
200 million
how does transport increase trade
- trade in larger amts more frequently made possible
- competition creates improvement
- allows tncs to set up and prosper
- global shift- production shift to cheaper countries
- cheaper production and mass consumption allows economies of scale
how many visitors flew via easy jet into malaga in 2008
how much has it increased per year
2.1 million
16% increase each year
why do so many people fly to malaga
UK tourism hub
many retirees influenced by warm climate and relaxed lifestyle pull factors
how much weight can each container carry
25000kg
why are containers so popular for retailers ad manufacturers
- standardised size in 196s
- acts as mobile storeroom cutting warehouse costs
- reduced cost of storage as can deliver stock at perfect time
what happened at 1945 Bretton woods agreement
- system of rules, procedures and policies devised
- regulation of currencies
- global organisation established to encourage a globalised world
- 44 countries signed
4 examples of International governmental organisations
World bank
IMF
UN
WTO
what are IGOs
organisations of 2 or more nations working together on issues of shared interest
what is a broker
connects two interest groups and assists with transactions between them
what is ratification
the official way to confirm something, usually by vote
what is the UN
international organisation working to maintain peace and security, protect human rights, uphold international law
what are the UN’s main bodies
- general assembly (all un states)
- security council (responsible for international peace and security)
- international court of justice (universal court)
- UN secretariat (administrative department of the UN)
how many member states does the UN have
193 in 2024
what is the world bank
provides loans and grants to governments of LICS and MICs too pay for big infrastructure projects
how many members does world bank have
189
what is the IMF 3 critical missions
- furthering international monetary cooperation
- encouraging expansion of trade ad economic growth
- discouraging policies that harm prosperity
how many members in IMF
190
example of IMF
Jamaica 1980s
enforced strict cuts in exchange for loans
1990- 97% completed primary
2015- 73% completed primary
huge interest payments, has repaid more than original loan but still owes $8bn
world bank example
2014 DRC
loan for mega-dam project
produces hep
but will displace 35000 from homes
UN example
Sudan 2005-2011
trying to maintain peace between 2 factions fighting for oil
country split in 2
WTO example
China persuaded to lift export restrictions on rare earth metals 2014
west indies grow bananas on small family farms
more expensive to produce than on US TNC farms
tariff placed on US goods but they complained about ack of free trade so it was removed
west indies out competed
what are the 2 main measures of globalisation
the KOF index
the AT kearney index
KOF index measures
measures globalisation trough links
- economic
- social
- political
kearney index measures
-political
- economic
- personal
- technological
links
pro con of KOF index
pros:
- compares countries overtime
- available for 158 countries
- calculated on 24 variables
cons
- quantitative
- doesn’t include cities so large areas skewed (USA)
pro con of Kearney index
pros
- covers 98% of worlds gdp
- covers 86% of the popn
- weighted measures
cons
- only 64 countries involved
- more qualitative data
example of politically switched off place
North Korea
hereditary autocracy ruled by Kim Jong-Un
one party system
minimised trade
no emigration
no internet or social media
economic example of switched off country
Sahel region
poor infrastructure and low literacy levels so unattractive to FDI
low income so lacks retail market for FDI
rural subsidence farming - food to eat not sell
physical example of switched off country
Sahel
all 4 countries landlocked w poor quality roads
rely on freedom of passage from neighbouring coastal countries
Himalayan Mountains isolate Nepal, Bhutan and Chinese Tibet
Example of glocalisation
Mc veggie instead of Big Mac in Indian Mac Donald’s to accommodate vegetarian culture
What is acquisition
TNC aggressively buying out other companies
Eg US Kraft to Cadbury, Walmar to asda
What is vertical integration
When TNCs buy every stage of the process
Eg exon Mobil platforms, tankers, refineries and petroleum stations
What is horizontal integration
When companies try to buy all the competition making or doing the same thing
Eg Kraft bought Cadbury
What are the three Ms required to set up global expansion of a TNC
Motive - prospect of global market and increased profit
Means - financial means to move across the globe, borrow, invest and sell
Mobility- set up complex supply chains and global production networks, reduce trade barriers between nations
Jaguar Land Rover
Owned by Indian TNC Tara (bought up most of UK steel inductry)
Invested in international manufacturing sites - china and India
Established joint partnership with Chinese Chery automobile
Continuing to outsource production plants
Technological advances in 21st century
Telephone - global comms
Broadband - large amounts of data quickly transferred across cables on sea floor
Fibre optics - increased internet speeds
GPS - satellites allow tracking across the world, google maps
Internet - 40% with access
What are the flows of globalisation
Capital
Labour
Products
Services
Information
What is free market liberalisation
Associated with thatcher USA and Reagan USA policies
Belief that government interventions in the market would hinder economic growth and development long term
Banking and finance deregulated
What is privatisation
Thatcher
Private owned companies bought and ran state owned industries
Eg railways and utilities
Allows gov to make a lot of money in the short term
Can decrease quality of service as being ran to make a profit
How are business startups encouraged in the uk
Incentives such as grants, tax breaks, infrastructure
Sunday trading attracted Disney
What are the types of FDI
Offshoring - production facilities set up in developing countries with large cheap workforces (Bangladesh)
Foreign mergers - TNCs join to form one large company
Foreign acquisition - TNC acquires another country from abroad (hostile)
Transfer pricing - TNCs channel profits through subsidiaries in tax havens
How can governments hinder globalisation
Censorship - limits flow of information through internet, limits knowledge of foreign ideas eg democracy which could undermine a dictatorship government
Limiting migration- border control etc
Trade protectionism - subsidies, tariffs and quotas to help country protect domestic industries
E.g. Chinese steel flooding market in 2016 (dumping) meaning Tara steel had to close due to losses
What are free trade blocs
Where governments sign agreements to reduce restrictions of flow of capital and goods
e.g. EU freedom of trade and movement
Pros of trade blocs
- Gives Businesses a larger potential market
- many more businesses benefit from being part of supply chain as volume and demand increases
- reliable trade of materials and services
- less economic risk and better pathways for essentials
Cons of trade blocs
- other countries feel excluded and find it difficult to join in trade
- foreign industry directly damaged when outcompeted or have lack of opportunity
- blocs don’t guarantee fare treatment within - eg USA and Mexico
What is a tariff
A tax for importing and exporting goods
What is a quota
Limited/ fixed number of goods
What is GNI
Gross national income
Measures value of goods and services of a country, taking overseas earnings into account
What is ppp
Purchasing power parity
Expenditure of a countries population
Takes into account cost of living
What is GDP
Gross domestic product
Measures value of goods and services
Doesn’t include informal earnings
Exchange rates vary as measured in USD
What is economic sector balance measure
Considers all 4 economic sectors
Primary secondary tertiary quaternary
As a country develops they move away from primary and eventually secondary
What is HDI
Human development index
Measure of social development considering LE, wealth and Education
What outsourcing
TNCs outsource tasks to other companies to save time and money
What is offshoring
TNCs have manufacturing in LICs with lower labour costs and environmental laws
What is financial leakage
The movement of earnings of a TNC back to its source country
What is ‘just in time’
Method of stock control
Involves countries keeping very little stock and relying on deliveries made exactly when they are needed
What is free market liberalisation
Government model
Encourages privatisation and reduced government intervention/ restriction in business
What is sovereign wealth fund
SWFs
Government owned investment funds and banks
Associated with china and oil wealthy countries
Used for FDI in free market economies
What is a subsidy
Grant given by the government to increase profitability of guarantee the survival of key industries
Eg farming in the UK
What is a subsidy
Grant given by the government to increase profitability
When did china transition from a planned economy to a mixed economy with increasingly open market environment?
1976- When Mao died and Xiaoping took power
What are SEZs
Special economic zones
Large areas of land set aside by governments in locations well placed for international trade (ports)
Companies can import and export without incurring domestic tax
Encourages TNCS
