Globalisation - EQ1 - What are the causes of globalisation and why has it accelerated in recent decades? Flashcards
1
Q
Define Globalisation
A
- The process by which
- people, culture, finance, goods & information
- transfer between countries with few barriers
2
Q
Define cultural globalisation
A
- Refers to the transmission of ideas, meanings and values around the world
- in such a way as to extend and intensify social relations.
- This normally consists of western cultural traits dominating territories.
3
Q
Define environmental globalisation
A
- Refers to a holistic approach to natural problems and issues,
- looking at the international environment rather than just the local or national issues.
4
Q
Define political globalisation
A
- Refers to the growth of trading blocs, free trade agreements and global organisations.
- The emergence of national, international and nongovernmental organisations
- that act as watchdogs over governments
- have increased their activities and influence.
5
Q
Define social globalisation
A
- Refers to how population structures have changed as a result of shifting population characteristics such as migration, immigration and emigration.
- Global improvements in education and health has also accelerated this.
6
Q
Define economic globalisation
A
- Refers to the increasing integration and interdependence of
- national, regional and local economies across the world
- through a strengthening of cross-border movement of goods, services, technologies and capital.
- TNC’s are the biggest driver of this.
7
Q
Economic Integration means an increasing…
A
reliance of economies on eachother
8
Q
Economic Integration provides the opportunities to…
A
be able to buy or sell in any country in the world
9
Q
Economic Integration provides the opportunities for…
A
labour and capital to locate anywhere in the world
10
Q
What are the 3 aspects of globalisation in terms of connections
A
Lengthening
Deepening
Faster Connections
11
Q
Define “Global Flow”
A
connections between places
12
Q
Define “Global Networks”
A
connection of different parts of the world resulting in the expansion of international cultural, economic, and political activities
13
Q
Give examples of global flows
A
commodities (goods)
services
capital
people
information
technology
labour
culture
14
Q
Define remittances
A
how money & capital is transferred across the world
15
Q
Describe the strength of the global connections of low income nations
A
- the poorest people will be isolated from global influences
- limited connections to far off places for aid or growing of cash crops
16
Q
Describe the strength of the global connections of middle income nations
A
- poorer people still rely on local produce but work for foreign firms
- they have global cultural (e.g music & football) & political awareness
17
Q
Describe the strength of the global connections of high income nations
A
- the majority of people are affluent consumers of global products & culture (e.g imported film & TV)
- most people are widely travelled & fly overseas
18
Q
Define Glocalisation
A
-the changing of the design of products to meet local tastes or laws
19
Q
What is meant by Time Space Compression
A
the idea that distant places feel even closer & take less time to reach
20
Q
What lead to the theory of Time Space Compression
A
- Heightened connectivity & changes to our conception of time
- impacting the global flow, distance & potential barriers
- to the migration of people, goods, money & information
21
Q
What is meant by the Shrinking World Effect
A
- As travel times fall due to new inventions
- different places approach each other in ‘space-time’:
- they begin to feel closer together than in the past
22
Q
What led to the Shrinking World Effect
A
- Developments in transport and trade in the 19th century (railways, telegraph, steam-ships)
- & accellerations in the 20th century in jet aircraft & containerisation
- all contributing to a ‘shrinking world’
23
Q
Which factors lead to “the shrinking world”
A
- better transport
- broadband
- fiber-optics
24
Q
Define cartogram
A
a thematic mapping variable is substituted for land area or distance
25
Define choropleth
a variable is displayed using different shadings to show trends
26
Describe Tourists as a Global Flow
* High-income nations - Budget airlines bring a 'pleasure periphery' of distant places within easy reach
* Low-income nations - Increasingly people travel abroad too, using budget airlines
27
Describe Migrants as a Global Flow
* The permanent movement of people still faces the greatest number of obstacles due to border controls and immigration laws.
* So, most governments embrace trade flows but attempt to resist migrant flows unless there are specific work needs
28
The combined number of economic migrants and refugees worldwide reached almost ... in 2013
250 million
29
Give examples of ways Information as a Global Flow can be transferred
* Online Shopping
* Social networks
* On demand TV & Streaming services
* Information is stored in 'server farms'
30
Describe how developments in Railways contribute to a Shrinking World
* In the 1800s, railway networks expanded globally
* For governments, railway construction remains high priority
* HS2 (linking London and northern England) will halve some journey times.
31
Describe how developments in Steam-ships contribute to a Shrinking World
* Britain became the leading world power in the 1800 using steam technology.
* Steam ships (and trains) moved goods and armies quickly along trade routes into Asia and Africa.
32
Describe how developments in Telegraph contribute to a Shrinking World
* The first telegraph cables across the Atlantic in the 1860s replaced a three week boat journey with instantaneous communication.
* This revolutionised how business was conducted.
* The telephone, telegraph's successor, remains a core technology for communicating across distance.
33
Describe how developments in Jet Aircraft contribute to a Shrinking World
* 1960s - The intercontinental Boeing 747 made international travel more commonplace
* More recently - expansion of the cheap flights sector, including easyJet, has brought it to the masses in richer nations.
34
Describe how developments in Containerisation contribute to a Shrinking World
* Around 200 million individual container movements take place each year
* Containerisation has been labelled as the 'backbone of the global economy' since the 1950s.
* Intermodal containers transfer a wide variety of goods.
35
Define containerisation
A system of standardised transport that uses a common size of steel container to transport goods
36
How is the method of containerisation efficient and cheaper
These containers can be easily transferred between different modes of transport e.g containerships, lorries & trains
37
Describe how developments in Mobile Phones contribute to a Shrinking World
Core technologies used to communicate across distances
38
Describe how developments in the Internet contribute to a Shrinking World
* The internet began life as part of a scheme funded by the US Defence department during the Cold War.
* Early social networks were designed during the 1960s as a way of linking important research computers in just a few different locations.
* Since then, connectivity between people and places has grown exponentially.
39
Describe how developments in GIS & GPS contribute to a Shrinking World
* Satellites continuously broadcast position and time data to users throughout the world.
* First GPS launched in 1970s.
* Deliveries can be tracked by companies using vehicle-tracking systems, helping the growth of global production networks to be managed.
40
Define Fordism
* a manufacturing philosophy
* that aims to achieve high productivity
* by standardising the output using conqueror assembly lines (essentially mass production)
41
Describe how developments in Fibre Optics contribute to a Shrinking World
Gigantic amounts of data flow across the Earth's ocean floors through fibre optic cables owned by national governments or Internet TNCs e.g Google
42
Define Fiber Optics
-Refers to the technology associated with the transmission of information as light pulses along a glass or plastic fibre
43
Describe the features of Fiber Optics
long distance
very high performance data networking & telecommunications
44
The cost of data transmission has become ______ due to global fibre optic communication network
cheaper
45
How has better communication technologies accelerated communication
* Modern computers handle large amounts of data and complex calculations quickly
* relatively inexpensive and accesibly - heightened connectivity
* these technologies have raised the standard of living by making commerce between countries more efficient
46
Define Protectionism
Policies to protect business and workers in a country by restricting/regulating trade with foreign nations
47
Define Trade Barrier
A barrier to free trade that restricts it or makes it harder
48
Define Tarriff
A tax imposed on imports
49
Define Quota
A limit on the quantity of a good a country allows into a country
50
Define Subsidy
Financial assistance to a domestic business by government to make it more competitive against foreign competition (or to save it from collapse)
51
Define Free Trade
A policy where a government does not interfere with trade (imports or exports) by using tariffs, subsidies or quotas
52
Define Trade Liberalisation
A policy of removing trade barriers and protectionism so that trade becomes free again
53
Define FDI
Investment by a foreign business into another business in a different country
54
Define Transnational Corporation
A company that operates across more than one national border
55
Define Special Economic Zone
An area set up by government to attract more FDI by using tax breaks and subsidies
56
Define Trade Bloc
A type of intergovernmental agreement, often part of a regional IGO, where barriers to trade are reduced or eliminated among the participating states and there is a free flow of goods and capital between member countries.
57
How can Global Flows be threats
Information
Information can provide citizens with knowledge that their government finds threatening
e.g China or North Korea
58
How can Global Flows be threats
Industries
Imports of raw materials & commodities can threaten a nation's own industries
e.g closed economies like Ukraine
59
How can Global Flows be threats
Migrants
Migrants can bring cultural change & religious diversity, not everyone welcomes this
e.g Brexit
60
What are the 3 main IGOs
The World Bank
World Trade Organisation
International MonetaryFund
61
What is the world bank
-Lends money on a global scale
62
What did the world bank do in the 1950s
It began to finance the development of ex-colonies
63
Why did the world bank gain a bad reputation in the 1970s & 80s
For financing projects which were environmentally damaging or, beyond the ability of developing countries to repay
64
What is the world bank's role in Globalisation
Lends money on a global scale to projects, particularly in developing countries as apart of its Millennium Development Goals which aim to eliminate poverty and implement sustainable development.
This provides financial stability & better quality of life
65
Positives of the World Bank
-Aims to eliminate poverty and implement sustainable development
-this provides financial stability & better quality of life
-Contributed to Congo's Dam development program, + environmental impact
66
Negatives of the World Bank
-Proportional Voting System - 16% of power lies with USA, and other wealthier countries.
-Imposes conditions on its loans and grants.
-1970s & 80s financed environmentally damaging projects, beyond the abilities of developing countries to repay.
67
Name 2 examples of the World Bank helping developing countries
2014 - US$470 million loan granted to Philippines for a poverty reduction programme
- Help given to Congo to kick start a stalled mega-dam project
68
What is the world trade organisation
-draws up rules for International trade
-intends to supervise and liberalize world trade
69
What is the world trade organisation's role in globalisation
-Asks countries to remove tariffs/ taxes on foreign imports and subsidies to domestic products so that trade is free without barriers, which would make a free global economy possible
70
Positives of the world trade organisation
Provides the possibility of a free Global economy, providing access to the market for free Global economies
71
Negatives of the world trade organisation
International trade exposes home grown products to foreign competition.
If foreign goods are cheaper and are of higher quality, local firms go out of business.
This reduces local employment
72
What is the International Monetary Fund (IMF)
-Based in Washington D.C.
-Channels loans from rich nations to countries that apply for help.
-In return, the recipients must agree to run free market economies that are open to outside investment.
-As a result, TNCs can enter these countries more easily.
73
What is the International Monetary Fund (IMF)'s role in globalisation
Formed in 1944 in the USA to stabilise currencies following The Great Depression and WW2.
44 governments originally joined to create a fund that could be loaned out to help countries in debt, thus helping to stabilise their currencies and economies with the intention of preventing Communism.
74
Positives of the International Monetary Fund (IMF)
Can help to stabilise economies, providing them with new trade opportunites
75
Negatives of the International Monetary Fund (IMF)
* The USA exerts significant influence over IMF policy
* IMF rules and regulations can be controversial, especially the strict financial conditions imposed on borrowing governments, who may be required to cut back on health care, education, sanitation and housing programmes.
76
What 2 things do the 3 main IGOs aim to promote
FDI and Free Trade
77
What is a SAP
policies imposed by the IMF which forced the state to play a reduced part in the economy and in social welfare, in return for rearranging loans at adjusted rates of interest, and at more affordable repayments.
78
Positive Impacts of SAPs
-developing country receives loan & debt relief
-SAP IMFs restructure loans to make them more affordable
79
Negative Impacts of SAPs
-Developing county must stop protectionism and adopt the free market
-Developing country must privatise its oil drilling facilities and cut back on education spending
-Developing country must privatise its water services, a foreign TNC takes over and raises prices
80
What is a Trade Bloc
Where flows of goods, money & sometimes workers can flow freely over national borders
81
Describe what is meant by a Preferential Trade Area
Lower, but not eliminate barriers between members
82
Describe what is meant by a Free Trade Area
Eliminate internal barriers, but maintain independent external barriers e.g NAFTA
83
Describe what is meant by a Customs Union
Eliminate internal barriers, agree on common external barriers e.g EU
84
Describe what is meant by a Common Market
* -Eliminate internal barriers
* -adopt common external barriers
* -allow free movement of resources (i.e. labour) among member countries
e.g East or West African Common Markets
85
What is meant by an Economic Union
-Eliminate internal barriers
-adopt common external barriers
-allow free barriers
-free movement of resources
-AND a uniform set of economic policies
e.g. European Union
86
What type of Trade Bloc is the United States and example of
Full Integration
87
Why would national governments want to attract FDI and TNCs in their country?
* Job creation/increased employment opportunities
* Increased tax revenues for government
* Positive multiplier effect --> economic growth
* Improve infrastructure
* Increase competition + services for domestic firms
* Technology transfer from TNCs
88
What would attract a TNC to invest in a country? (FDI)
* Wage rates (cheaper employment opportunities)
* Labour skills in the population
* Size of economy and population
* Political stability (little risk of a war)
* Raw materials
* Physical location and features (climate)
89
What can a government do to try and attract TNCs to invest in their country?
* Lower corporation tax
* Give a tax 'holiday' or concession
* Give preferential tariffs
* Give free or subsidised land
* Grant easier VISAs for expat staff
* Subsidise building infrastructure (provide some)
90
One of the biggest benefits of free trade is how it helps nations...
forge new trade deals and links easily
91
Examples of free trade enabling nations to forge new trade deals and links easily
EU & Vietnam
* EU and Vietnam trade deal in August 2015 removed all import tariffs and quotas on trade
* EU gain easy access to trade with 90 million consumers (electricals, aircraft, vehicles etc.)
* Vietnam gains access to over 300 million consumers (clothes, coffee, rice etc.)
* Prices in the EU become cheaper with lower prices now too
92
What is one of the biggest criticisms of free trade
* Western nations and trade blocs (e.g. EU) insist on LEDCs removing trade barriers (tarifts, quotas etc.) but still use them on LeDCs
* This means that MEDCs have easy access to LEDC markets but not vice versa - no level playing field
* e.g The EU sets a tariff on processed cocoa to prevent Ghana imports undercutting EU firms but ghana is not allowed to subsidise its farmers or put tariffs on western food
93
Name 3 Trade Blocs
ASEAN
EU
NAFTA
94
What does ASEAN stand for
Association
South
East
Asian
Nations
95
What are the main aims of ASEAN
* To accelerate economic, cultural & social development in the regions
* Promote regional peace
96
How many members are there in the EU
29
97
Main Aims of the EU
borders
to offer EU citizens freedom, security & justice, without internal borders, whilst also controlling external borders
98
Main Aims of the EU
sustainability
to work towards the sustainable development of Europe, promoting equality & social justice
99
Main Aims of the EU
money
to establish an economic union with the euro as its currency
100
What does NAFTA stand for
North
American
Free
Trade
Agreement
101
When was NAFTA signed
1994
102
Which 3 countries are apart of NAFTA
USA
Canada
Mexico
103
Mains aims of NAFTA
* to promote trade & economic cooperation between member countries
* to eliminate tariffs & other restrictions on trade
104
What are the strengths of ASEAN
* increases quality of life due to more development
* wide variety of countries involved, plethora of trade opportunities
* creates production and markets with equal economic development and a competitive region integrated in the global economy
* attracts considerable external FDI
* global flows of goods, people & finance between countries
105
What are the strengths of the EU
* a continent at peace with no internal conflicts
* freedom for its citizens to live, study, or work anywhere in the EU
* the worlds biggest single market
* aid & development assistance for millions of people worldwide
* increases political and economic interactions within the bloc
* increases global power for the bloc
106
What are the strengths of NAFTA
* creates jobs
* increased economic output
* lowers prices of goods
* increases FDI
107
What are the weaknesses of ASEAN
* weak leadership
* wide variety of countries involved could result in dominant countries corrupting the market
108
What are the weaknesses of the EU
* Fewer borders - increased danger
* local governments are powerless to act in some instances
* lack of transparency in elections of European Commission members
* EU favours bigger countries
109
What are the weaknesses of NAFTA
lowers wages
often poorer working conditions
110
How does the EU operate
* A trade bloc
* with intergovernmental agreement on trade within the group of countries
* and common tariffs on goods from outside the bloc.
111
Which 3 policies would national governments follow to increase globalisation
free-market liberalisation
privatisation
encouraging business start-ups
112
What is free-market liberalisation
* national governments encourage entrepreneurs to start businesses (e.g lower taxes)
* and privatise businesses as a part of free-market economy (e.g removing restrictive rules)
* they also join and promote free trade blocks
113
How does Free Trade increase globalisation
1. Governments take away...
barriers that make trade more difficult and costly
114
How does Free Trade increase globalisation
2. Governments take away barriers that make trade more difficult and costly, so as costs are reduced...
TNCSs will see a profit & want to invest in nations
115
How does Free Trade increase globalisation
3, As costs are reduced, TNCSs will see a profit & want to invest in nations. Moreover, TNCs will bring
new ideas, products, cultures and will generate more wealth
116
How does Free Trade increase globalisation
4. TNCs will bring new ideas, products, cultures and will generate more wealth. This wealth and development will...
Increase standard of living & demand for foreign products
117
How does Free Trade increase globalisation
5. This wealth and development will increase standard of living & demand for foreign products. As an economy has more TNCs, TNCs become...
interconnected and interdependent on each other
118
What are the advantages of Trade Blocs
How is money saved
Larger market (population) to sell goods to
Higher population = more sales
More sales = More products made
Raw materials can be bought "in bulk", saving money
119
What are the disadvantages of Trade Blocs
* Non-members are excluded, which prevents their development
* Some blocs subsidise their producers such as EU farmers to protect them.
* Free trade affects local industries, as the imported goods without taxes are usually cheaper than locally produced goods.
* Trade wars - Trade blocs arguing with one another e.g EU and NAFTA
120
What are the advantages of Trade Blocs
How is trade increased
* Easier to trade different goods and services due to fewer restrictions
* So can concentrate on making what they're good at making, and import what would be cheaper than to make
* Production will be more efficient, increasing trade overall
121
define trade liberalisation
the removal of trade barriers such as subsidies, tariffs & quotas
122
How has the world trade organisation acted to encourage global trade
* The WTO advocates for:
* trade liberalisation
* encouraging all trade between countries free of tariffs, quotas or restrictions on trade (e.g. by preferring to trade with some countries over others).
123
Which 3 policies did the UK government follow to enable economic growth & globalisation
Subsidies
Trade Liberalisation
Privatisation
124
Explain how the UK used subsidies to increase outward FDI and therefore globalisation from the 1980s
* It gave subsidies to companies investing in areas such as London Docklands
* This is a highly attracctive benefit, so many large overseas firms relocated to London and the UK.
* Many of these on Canry Wharf have been given life-long tax breaks.
125
alternative phrase for subsidies
tax breaks
126
Explain how the UK used trade liberalisation to increase globalisation from the 1980s
* removed trade barriers in the 1980s
* then the government also refused to artificially support industries facing competition from cheaper overseas products
* this lead to the collapse of industries, e.g coal-mining, decimated by cheap foreign coal imports
127
Explain how the UK used privatisation to increase globalisation from the 1980s
Privatisation gave opportunities for FDI in assets and industries closed off before
128
Explain how the UK used subsidies to increase inward FDI and therefore globalisation from the 1980s
* Grants and subsidies were provided to encourage inward FDI in declining industries& the secondary sector e.g manufacturing
129
Outside of FDI, the Uk is very...
liberal and open to global flows
130
Which 4 policies did the Chinese government follow to enable economic growth & globalisation
* Open Door Policy
* SEZs
* Infrastructure Investment
* joined the WTO
131
Explain how China used its 'Open Door Policy' to increase globalisation
* After decades of economic and political isolation,
* 'open door' policy in 1978 removed barriers to FDI and trade.
* It needed Western technology and investment to develop its economy
* so govt welcomed foreign businesses setting up in China.
132
When did China launch its 'Open Door Policy'
1978
133
Explain how China used SEZs to increase globalisation
* Set up four special economic zones
* with tax incentives and a wide cheap pool of labour
* attracted many TNCs and outsourcing from American and European countries
134
Define SEZ
* Special Economic Zones
* Set up by national governments to offer financial or tax incentives, to attract FDI
* which differ from those incentives normally offered by a country.
* China now uses the term 'Export Processing Zones'
135
Explain how China used the WTO to increase globalisation
* Joined the WTO in 2001 whilst it was becoming more involved with world trade and reducing trade barriers
* By 2005, around 50% of Chinese exports came from foreign companies with connections to these zones
136
Explain how China invested in infrastructure to increase globalisation
* China plans to build 66 new airports over the next five years
* $11.7 billion to be spent on civil aviation infrastructure this year alone.
* this will increase the flow of people & goods into China
137
Describe the situation of China's investment in Africa
* The chinese government owns most of the businesses in Africa & uses them to invest in other firms or branches abroad (outward FDI)
* Moreover, it increased its outflow of FDI
138
How do SEZs operate in China more efficiently
* In SEZs, businesses can import raw materials, process, manufacture & re-export goods paying reduced tariffs or duties
* This cuts costs & maximises profits - as SEZs have economic laws which are more liberal & open than in the mainland
* Hence it is more easy for TNCs to operate in SEZs
139
How does China control its flows of FDI
* Foreign TNCs cannot invest in every sector & are restricted from the domestic market
* China controls inflows and outflows of FDI with governments in the BRICs, inwhich there ae lower wage rates
140
Which flows has China invested in in South Africa
mining
gold
manufacturing
141
Which flows has China invested in in Nambia
Uranium
142
Which flows has China invested in in Nigeria
oil & natural gas
rail & road
manufacturing
143
Which flows has China invested in in Sierra Leone
iron
civil construction
144
Which flows has China invested in in Kenya
rail & road
aid
manufacturing
145
Which flows has China invested in in Egypt
manufacturing
146
Which flows has China invested in in Algeria
civil construction
147
Why has China attracted so much FDI since 1978?
Government Backing
* Many Chinese TNCs would do business which are part-owned or backed by the state.
* This reduces the risk of losses for TNCS
148
Why has China attracted so much FDI since 1978?
Good Infrastructure
* Chinese government has built large industrial estates
* with mega-buildings (25km^2), roads, reliable water and electricity supply
* and a management company which will find TNCs migrant employees to come and work.
149
Why has China attracted so much FDI since 1978?
Tax Incentives/ SEZs
* SEZs - businesses can import raw materials, process, manufacture & re-export them paying reduced tariffs or duties (taxes).
* This cuts costs and maximises profits.
* SEZs have economic laws which are more liberal and open than in the mainland.
150
Why has China attracted so much FDI since 1978?
Politically stable
* The Communist party has been in power since 1949
* Stability reduces risk for TNCs and encourages FDI
* However, it is also quite controlling and still places restrictions on western TNCs
151
Why has China attracted so much FDI since 1978?
Open Door Policy
* Opens up the country to outside investment and TNC activity
* trade liberalisation, reduced regulations incentivise TNCs
* China did this to help kick start the economy, multiplier effect, job creation and especially for technology transfer.
152
Why has China attracted so much FDI since 1978?
Cheap skilled labour
* Labour is much cheaper in China than in the EU and USA
* This reduces costs and maximises profits. Prolonged spending on health & education has ensured a healthy, literate and skilled workforce
* However, the increase in highly skilled workers has resulted in wage inflation
153
Why has China attracted so much FDI since 1978?
Emerging Market
* As wealth trickles-down into Chinese population via the multiplier effect
* there is a huge potential market to sell goods to China's 1.34 billion residents
* However, many of the current population are not wealthy enough to demand consumer goods from TNCS.
154
Why has China attracted so much FDI since 1978?
Cheaper shipping
* 1980 to 2000 cargo & fuel shipping fees were lowering
* which enables TNCs to outsource manufacturing to far off places, such as China, more profitably
* However there is now a shortage of shipping slots driving up the price
155
China is located on the South East coast - this _______ trade
accelerates
156
Advantages of NAFTA for the USA
* higher profits made in Mexico, returned to US shareholders
* less strict environmental laws, less environment spending
* lower labour costs in Mexico
157
Advantages of NAFTA for the USA
Explain comparative advantage
From US point of view all countries would be better with free trade as they can specialise in what they are good at
158
Disadvantages of NAFTA for the USA
* American manufacturing jobs lost - higher unemployment
* Mexican trucks allowed full access to US roads but are not limited by driving hour limits - increased accidents
159
Advantages of NAFTA for Canada
* Visible trade with Mexico doubled in 1998
* US investment in Canada grew 63% from 1993 to 1998
* More than 1 million new jobs created since 1994
* In 1998, 68% of FDI was from US and Mexico
160
Disadvantages of NAFTA for Canada
* Environmental groups concerned about damage
* Canadian manufacturing jobs are lost to Mexicans leading - higher unemployment
161
Advantages of NAFTA for Mexico
* Keeps Mexico as politically modern as it is influenced by US and Canadian governments
* NAFTA means Mexico has zero or reduced tariffs with 60% of the world
* Mexican companies are forced to adopt higher foreign standards and business practises
162
Disadvantages of NAFTA for Mexico
* Mexico is dependent on USA for 88% of its exports
* Many of the jobs created by foreign TNCs are poorly paid and do not put in high standards of health and safety (Maquiladoras)
163
Meaning of Maquiladoras
a factory in Mexico run by a foreign company and exporting its products to that company's country of origin.
164
Disadvantages of Trade Blocs
-issues for those not in trade bloc
* tariffs on non-members discourages trade and interconnection with the world outside the blocs- anti-globalisation?
* tariffs on nonmembers make foreign goods cost more, raising prices for consumers
165
Disadvantages of Trade Blocs
-issues for poorer nations
* TNCs from poorer nations have difficulties trading with richer trade blocs (EU/ NAFTA) due to trade barriers
166
Disadvantages of Trade Blocs
-internal issues caused
* take power away from national governments and mean a loss in sovereignty interfering in too many areas
* too greater interdependence can lead to domino effect of problems
167
Disadvantages of Trade Blocs
-external conflicts
* Sometimes a trade war erupts between trade blocs where they put up lots of trade barriers
168
Advantages of Trade Blocs
-TNCs gain....
* TNC gain more economies of scale - more competitive
169
Advantages of Trade Blocs
-Protects firms....
* Protects firms in the trade bloc from cheaper, producers outside the bloc
170
Advantages of Trade Blocs
-collaborating in trade deals
* By joining together to negotiate trade deals
* gain bargaining power and bulk discounts
* better trade deals
171
Advantages of Trade Blocs
-compartive....
* competitive advantage:
* tariffs, taxes and quotas on non-members, make foreign goods more expensive
* this will encourage consumers to buy goods from within the trade bloc
172
Advantages of Trade Blocs
-boost...
* boost job creation
173
Advantages of Trade Blocs
-increase...
* Increase trade between members
174
What 5 ways do TNCs contribute to globalisation
* Global Production Networks
* New Markets
* Glocalisation
* Outsourcing
* Offshoring
175
How do TNCs use global production networks to increase globalisation
* Extract raw materials in one country,
* refine materials in another,
* make components in several countries and assemble them in others.
* Includes selling licences to other companies or permitting local companies to make the products.
176
How do TNCs use new markets to increase globalisation
* Sell finished products to main markets in developed countries
* plus create new markets in emerging economies using global branding and marketing (such as advertising) to meet local needs
177
Define Outsourcing
When some of the business (usually manufacturing) is contracted out to be done by another company (often abroad) rather than within the company
178
Define Offshoring
when a company moved part of its own operations to another country (normally by buying up a foreign firm in a foreign merger)
179
How do TNCs use outsourcing & offshoring to increase globalisation
Use economic liberalisation of countries to locate outsourcing and offshore operations aborad to lower costs
180
Define glocalisation
the way that companies adapt products to meet local tastes, traditions or laws
181
TNCs are vital to the spread of globalisation because their expansion involves the
free flow of capital, labour, goods and services
182
What is a Global Production Network (GPN)
a matrix of tens of thousands of outsourcing partnerships
183
Why have GPNs been able to grow in scale
due to economic liberalisation & governments embracing globalisation
184
TNCs earn more annual revenue than the value of certain....
countries GDP's
Walmart earns more than Sweden's GDP annually
185
Give an example of the impacts of a poorly managed GPN
* The Rana Plaza building collapse
* April 24, 2013 - 1,100 killed, 2,000 injured
* Most killed were female garment workers
* 27 brands operated in the building
186
What does the KOF index measure
Measures the degree of globalisation, since 2002, in 3 areas of study
187
What are the 3 areas of study in the KOF index
economic
social
political
188
The KOF accesses economic, social & political aspects in...
207 countries & territories
189
Give examples of what is measured in the economic sector of the KOF index
* long distance flows of goods, capital and services
* trade & FDI
* trade as a % of GDP
* restrictions to trade & capital
190
Give examples of what is measured in the social sector of the KOF index
* tv ownership
* degree of tourism
* internet subscriptions
* number of IKEA store/ McDonalds
* imported and exported books
* international telecom traffic
191
Give examples of what is measured in the political sector of the KOF index
* n. of embassies & high commissions
* n. of UN peace missions a country participated in
* n. of treaties signed between 2 or more states
* n. of international organisations to which a country is a member
192
In the KOF index, what is economic globalisation regarded as
long distance flows of goods, capital, services and information
193
In the KOF index, what is economic globalisation divided into
Two Sections:
1. Actual flows e.g. FDI and trade as a % of GDP
2. Restrictions e.g. tariffs and trade barriers
194
Economic Globalisation takes a ...% weighting in the KOF Index
37%
195
In the KOF index, what is social globalisation regarded as
Expressed as the spread of ideas, images and people.
196
In the KOF index, what is social globalisation divided into
* Three sections:
* Personal contact- international telephone call and tourism
* Information flows - internet users per 1,000 people and trade in newspapers as a % of GDP
* Cultural proximity - number of McDonald's
197
Social Globalisation takes a ...% weighting in the KOF Index
39%
198
In the KOF index, what is political globalisation regarded as
the diffusion of government policies
199
In the KOF index, what is political globalisation divided into
* 3 sections:
* Membership of international organisations
* Number of foreign embassies
* Participation in international treaties
200
Political Globalisation takes a ...% weighting in the KOF Index
24%
201
In the KOF index, how do they analyse the data once collected
* Converting all 24 variables into an index value with a scale of 1 - 100
* Substituting missing data with the most recent data available
* Averaging the individual scores to give a final score out of 100
202
How can the KOF index be used to understand globalisation levels numerically
* Higher values denotes greater globalisation
* The new scores are compared with previous scores dating back to 1970
203
What does the AT Kearney index measure
Globalisation in comparison to cities
204
What are the 4 areas of study in the AT Kearney index
* Political Engagement
* Personal Contact
* Economic Integration
* Technological Activity
205
In the AT kearney Index, what is political engagement regarded as
a country's participation in international treaties & organisations, as well as peace keeping operations
206
In the AT kearney Index, what is personal contact regarded as
through telephone calls & travel remittance payments
207
In the AT kearney Index, what is economic integration regarded as
volume of international trade & FDI
208
In the AT kearney Index, what is technological activity regarded as
the number of internet users, hosts and services
209
How is the AT kearney index measured
* The lowest value is 0, the highest value is 1
* different factors of the AT Kearney Index have different weighted values
* FDI, Internet and Telephone Traffic is weighted double
* measures globalisation in cities, so at a different scale to the KOF index
210
Advantages of the AT kearney index
* covers 96% of world GDP
* covers 84% of world's Population
* Allows comparison between countries & overtime
* Uses more holistic indicators e.g. number of net servers rather than internet communications
211
Disadvantages of the AT kearney index
* Only 64 countries are listed
* Smaller countries tend to take the top places in the index due to higher proportion of FDI
* Hard to measure cultural trends.
212
Similarities of the KOF Index and the AT Kearney Index
* factors are both weighted differently
* different weightings for different indicators globalisation
* both focus on social, economic & political globalisation
* both focus on the importance of FDI
213
Differences of the KOF Index and the AT Kearney Index
* KOF index includes demands of cultural globalisation e.g McDonalds - Westernisation/ Americanisation
* KOF - 209 territories and countries
A.T Kearney - cities in 64 countries
214
What are 'switched on' factors
* Factors that increase a place's connectivity and connectedness which benefit globalisation
* These contribute to/improve the economic development of the place
* which in turn will increase the population's quality of life and standard of living.
215
What are 'switched off' factors
* Factors that decrease a place's connectivity and connectedness which goes against globalisation.
* This limits the economic development of the place
* which will negatively impact the quality of life and standard of living for the population.
216
Examples of 'switched on' factors
* Access to electricity
* Marine traffic (movement of goods from port to port over bodies of water)
* FDI and investment from TNCs
* Transport links (trains, airports)
217
Examples of 'switched off' factors
* low population (density)
* geographically isolated
* poor quality infrastructure
* climate
* areas where there are a lack of major roads and motorways
* corruption within the government
* censorship
* dictatorship
218
What are the political reasons for countries to be switched off
* Corruption or presence of organised crime/ terrorist groups/ civil conflicts e.g Yemen
* High level of government debt e.g Sri Lanka interest payments are 44% of GDP
* Weak commitment of government to development
* Censorship
* Isolation as government policy
219
What are the environmental reasons for countries to be switched off
* Distance from market - landlocked or inaccessible e.g Nepal
* Highly vulnerable to climate change and natural disasters e.g Maldives
* Unsuitable for agriculture - tundra or desert e.g Mali
220
What are the economic reasons for countries to be switched off
* Weak education levels and poor workforce skills e.g Senegal
* Poor infrastructure, particularly transport/communications e.g Angola
* Dependence on commodity industries e.g Zambia
* Exclusion from trade blocs or disadvantaged by trade rules e.g Mexico
221
Why are large parts of Africa switched off
Political reasons
Corruption
Little government support
Politically unstable
222
Why are large parts of Africa switched off
Physical reasons
weak market
poor infrastructure
223
Why are large parts of Africa switched off
Economic reasons
unskilled labour
debt
unstable currencies
224
Why are large parts of Africa switched off
Corruption
* Corruption pervades many African societies.
* Politicians and police can abuse authority by being corrupt.
* This increases risk of losses and makes it timeconsuming and frustrating for TNCs to operate.
225
Why are large parts of Africa switched off
Little government support
* Due to a lack of volume of business it is harder for TNCs to gain incentives
* e.g. planning permission for the best sites, tax incentives etc.
226
Why are large parts of Africa switched off
Unskilled labour
* Due to a lack of volume of business it is harder for TNCs to gain incentives
* e.g. planning permission for the best sites, tax incentives etc.
227
Why are large parts of Africa switched off
Politically Unstable
* Many countries have been marred by civil wars and insurrection
* A supportive government can suddenly be replaced by a hostile one
* This can increase risk of losses for TNCs
228
Why are large parts of Africa switched off
Debt
* Many Sub-Saharan countries are weighed down by enormous debts taken on to fund infrastructure projects in the 1970s.
* They could not repay these loans so the IMF has made the loans more affordable (Structural Adjustment Packages).
* In return many LDCs have had to cut their government spending.
229
Why are large parts of Africa switched off
weak market
* Although some TNCs do operate in Africa
* e.g. flower exports from Kenya
* the wages are not high enough to kick start the multiplier effect
* This results in a weak market - TNCs cannot sell their goods
230
Why are large parts of Africa switched off
unstable currencies
A rapidly changing exchange rate would be financial suicide for TNCs.
This brings a high risk of losses
231
Why are large parts of Africa switched off
Poor infrastructure
* International debts mean African governments have no money to invest in a modern world-class infrastructure.
* Few regular flights and shipping operators.
* They cannot compete with China, India and other NICs
232
Tanzania Water Privatisation Case Study
What happened on June 1 2005
The senior managers of City Water, 3 British men, were detained and labelled as ‘undesirable immigrants’ & told to leave the country
233
How many people have access to running water in Dar es Salaam
Less than 100,000 households in a city of 3.5 million (not only the poor have water insecurity)
234
Why do less than 100,000 households in a city of 3.5 million have limited access to running water
* Decades of neglect and underinvestment in the city’s infrastructure
* A collapsed economy following a failed attempt at socialism
235
Describe how prior to City Water’s management, low to middle income households accessed water and electricity
* Most have access to electricity,
* but few have water
* due to a reliance on ‘pushcart men’ - charging between 300 shillings & 1,000 shillings for 20 litres of varying water quality
236
Why has the privatisation of water supply systems always been controversial in the developing world
* The conflicting motives of foreign companies who want to maximise profit ;
* & governments who seem to want to improve water access for those with limited pay
237
What were the fundamentals of the deal between the government of Tanzania and City Water
1. City Water would operate the system - have to collect revenue from consumers & do routine maintenance
2. 10 year contract with a 6 year tax holiday
3. Dawasa would still own the infrastructure
238
Tanzania Water Privatisation Case Study
What happened on August 1 2003
* City water take charge & begin haemorrhaging money
* They are unable to meet revenue collection targets which would be crucial to attain profits
* so they madke less than the state-run predecessor
* People if the capital saw their water bills rising
239
Tanzania Water Privatisation Case Study
What happened in July 2004
According to the World Bank - City Water stopped paying its monthly fee for leasing Dawasa’s piping & infrastructure
240
What did the World Bank assurance group award the City Water privatisation project in 2004
A highly satisfactory (top) score
241
Following changes in the city water’s senior management, the companies problems ________
Proliferated
242
Tanzania Water Privatisation Case Study
What did employees think
An engineer among 1,300 employees said there was a distance between the all white chiefs, (‘them and us”), with no teamwork
243
Tanzania Water Privatisation Case Study
What did the public think
Few had seen any benefit from privatisation:
-prices rose sharply
-no discernible improvement in supply, reliability & quality
244
As a result of the _________ ________, the Tanzanian government were encouraged to…
-upcoming election
-cancel City Water’s contact on May 13 2005
245
How did the Government of Tanzania handle the cancelling of City Water’s contract
The government announced the cancellation at a televised press conference, forcing the 3 senior managers out the country
246
Consequences of Tanzania Water Privatisation
Name 3
-bad press
-bad image for the World Bank
-reluctancy for future privatisation projects globally
247
Explain the consequence of Tanzania Water Privatisation
Bad Press
The public’s view was exasperated as opposition towards the government grew on the belief that:
‘when aid flows through political pipes, it sometimes leaks’
248
Explain the consequence of Tanzania Water Privatisation
Bad image for the World Bank
The World Bank, which pressed Tanzania to renter into the contract, now faces the possibility of seeing the country penalised in a tribunal of the bank’s own creation, which portrays the World Bank in an extremely negative light, for limiting the development of an emerging country
249
Explain the consequence of Tanzania Water Privatisation
reluctancy for future privatisation projects globally
-Around the world, future participation in privatisation deals by other water & utility companies also stand to be influenced
-It is an example of global cooperations trampling over the interests of the developing world
250
Tanzania Water Privatisation Case Study
How many bilateral investments treaties are there between a rich country & a developing nation today
2,500
251
Tanzania Water Privatisation Case Study
How many bilateral investments treaties were there between a rich country & a developing nation in 1989
385
252
Tanzania Water Privatisation Case Study
More than ____of bilateral investment treaty cases have ended with a government paying….
2/3
Compensation to the investor
253
Tanzania Water Privatisation Case Study
Describe the difference of the outcome for the 2/3 of lawsuits filed under bilateral investment treaties
1% of current claims are aimed at the G8 group of leading industrial nations; whereas the vast majority of claims are filed at developing countries - e.g Argentina which faces 32 actions against it
254
Tanzania Water Privatisation Case Study
Name a disadvantage for the government
Could be argued investment treaties diminish a country’s sovereignty
255
Tanzania Water Privatisation Case Study
Why might investments like these not be appropriate
Many investor state cases are in appropriate for arbitration as public welfare issues are involved
256
Tanzania Water Privatisation Case Study
What will the Tanzanian Government have to pay
The government’s payout will absorb the equivalent of 2 years worth of water payments by the people to Dar es Salaam
257
Name 3 examples of how Disney glocalised in movies
Lion King - aimed at African Markets
Mulan - marked a decision to enter the Chinese market
Hunchback Notre Dame (1997) - launched to rebrand Disneyland Paris
258
How does Disney operate around the world?
How many employees does Disney have
180,000
259
How does Disney operate around the world?
How many suppliers does disney have, in how many countries
40,000 suppliers in 70 countries
260
How does Disney operate around the world?
Why does Disney utilise offshoring & outsourcing
-to avoid operating its own expensive production lines
-overseas workers often earn lower wages
261
How does Disney operate around the world?
What are the issues of outsourcing
-Overseas factories have used toxic substances banned in the USA (e.g between 2007-2013, some toys manufactured in China had to be recalled from shops because of unsafe levels of toxic lead used in their paint)
-they are aware of the poor publicity that can result from such production methods, so they increasingly monitor their supplies
262
Describe Disney's role in Global Media Activities
6 film/TV production companies
12 publishing companies
over 250 linked satellite & cable TV companies
24 hour TV channels in 6 continents
Chinese state TV uses Disney's ESPN for sports coverage
263
How does Disney have a large influence around the world
Name 3 different services it provides
728 shops worldwide
disney fast food outlets
property development & human resource agencies
264
How Disney have a large influence around the world?
How does Disney Influence Urban Planning
Shopping malls like Disneyland on suburban out-of-town developments
Disney-themed fast-food outlets
Crowed monitoring with CCTV cameras Resort tourism with everything on site
265
How does Disney have a large influence around the world?
Influencing governments
-The US government enforces copyright for US companies and Disney
-The French government paid US$2 billion towards
EuroDisney's construction (providing 300 jobs)
-The Hong Kong and Tokyo governments paid US$1 billion
towards their respective Disneylands
266
What was Disney’s revenue in 2014
US$ 48.8 billion
267
Merchandise alone earns Disney US$…….. each year
US$ 37 billion
268
In 2009 Forbes regarded Disney as its #… company
7
269
What anti-globalisation policies does North Korea follow under Kim Jong-Un which leads them to remain very switched off?
-Absolute rejection of FDI
-Discouragement of foreigner visits
270
When was the end of the Korean War
1953
271
How did South Korea become increasingly globalised flowing the end of the Korean War
Chose industrialization with cheap labour forces to attract FDI
As a result of this, by 1987, dictatorship was gone
Quality of life improved
272
What is the GDP per capita of South Korea compared to North Korea
South - $30,200 (45th in the world)
North - $1,800 (195th in the world)
273
How did North Korea cat following the end of the Korean War
Followed isolation & interdependence policies
274
Describe the features of the low quality of life in North Korea
extreme shortage of electricity & manufactured goods
prolonged malnutrition (only escape from starvation has been large scale international food aid deliveries)
poor living conditions
extreme economic insufficiency & political corruption
275
Describe the minor globalisation of North Korea via their exports
Export military arms, weapons, drugs & human trafficking
