Globalisation From notes Flashcards
What is Visible trade?
Trade of goods which can be counted, weighed and given value. eg food stuffs and manufactured goods.
What is invisible trade?
Trade of services eg. tourism and financial services
What is comparative advantage?
the ability of an individual or group to carry out a particular economic activity (such as making a specific product more efficiently than another activity with a lower opportunity
unequal distribution of resources.
Trade in essential economic growth
Triadic geographical structure of trade-
80% between Europe, North America and Asia. Increased by 8x since 1980.
Trans-pacific vs trans atlantic Trade-
Emerging economies (trans-pacific china/india) trade is growing fastest and challenging previously dominant trans- atlantic (G7)
Less developed countries - sidelined with slow growth-
In 1995 African countries accounted for 2% of world trade, 2010 3%- poorest 49 counties- 10% worlds popularity 0.4% worlds trade.
Intra-regional dominance, intensity of trade decrease with distance-
2006, 74% of internal trade in Europe was between EU countries
TNCs dominate-
Top 500 TWCs account for 70% of world trade
Draw international trading characteristics summary
check notes
Why do developed countries dominate world trade?
6
- Similar well-developed infrastructure
- High value products
- High market volume
- Geographical proximity
- members of trade agreements
- High literacy rate and skill level
What are the advantages of international trade?
6
- Can exploit comparative advantages
- Economies of scale
- Multiplier effect
- purchasing power
- fewer domestic domoplius
- transfer of technology
What are the disadvantages of international trade?
5
- Specialisation (over- specialisation)
- Protectionism
- Deskilling
- Decline of local industries
- Exploitative work practices
What is Single product economy?
A country, usually a LIC which relies on one or very small number of products (usually raw material) for its export earning
What is Primary product dependency?
Heavy dependence measured as a share in GDP, total exports or employment from extraction/cultivation of primary commodities such as copper and oils.
What is fair trade?
- Fair price to producer (minimum price)
- Fairtrade premium (additional money for investment) in socioeconomic welfare)
- Compliance with environmental standards
comparative advantage-
Countries specialise in producing goods which can be produced efficiently and ata low opportunity cost. Higher profits
Economies of scale-
Increasing production causes lower cost per unit (e.g. lower average electric costs, bulk buying. Greater profits, lower prices.
Purchasing power-
Increasing trade causes greater competition that lowers prices and allows consumers to buy more goods and services for their money.
Fewer domestic monopolies-
Greater external competition means one company can never fully control a countries market e.g. where one company controls 25% of market > High prices low quality
Transfer of technology-
Movement of new methods of production ( e.g. between parts of a company) > many lead to design improvements and cost savings as well as supporting innovation.
Multiplier effect-
Small initial change has a larger eventual impact. Positive: International trade > greater prodution> more jobs > greater sending power> creation of more jobs>
Or negative
Over- specialisation-
Countries may concentrate on producing one good> higher output. But: dependence on one good (price falls, droughts etc. can cause problems) and if demand falls or if the same good is produced more cheaply overseas, then production will shift and these places will find it hard to diversify (structural unemployment).
Decline of local industries-
Smaller home - grown industries find it hard to compete with large international companies.
Protectionism-
Country may protect domestic industries from external competition by restricting trade in goods and services (e.g. tariffs).
Deskilling-
As goods produced elsewhere, quality and usage of (traditional) knowledge and skills decreases.
Exploitative work practices-
Labor remains biggest cost> aim to reduce costs by basing factories in LICs with less strict regulations.
What are the positives of fair trade?
Fair price
What are the negatives of Fair trade?
5
- Only receive if produce primary product
- Minimum price- supply not needed inpoversvers no-fair trade farmers
- Minimum standard
- Recipients tend to be well off MNC
- Transfer of products in poor- most in HIC for advertising
What are Tariffs?
Tax on imports- imports more expensive & buy domestically
What are quotas?
Physical limits on the amount of goods you import
What are subsidies?
grant to domestic produces so sell at lower price
What are Voluntary Export Restrain (VER)
Chosen to reduce exports
What are Embargoes?
Ban imports of goods from certain places
What is the WTO?
World trade organisation
The WTO with rules of trade between countries at a global or near-global level.
How many members does the WTO have?
164 members
representing more than 98% of total world trade
What are the strengths of the WTO?
3
Promotes free trade
Prevents trade wars
Equalty in trade
-> tariffs reduced - 1930s- 50%
-2000- 9%What are the weaknesses of the WTO?
7
- Disadvantaged LIC as their import industries- cannot grow
- Consensus- difficult to pass a decision
- Trade agreements outside more important
- TNCs advantages
- Intellectual property rights
- LICs and NIC’s cannot afford copy rights
- Undermines the ability of countries to run themselves
What is the IMF?
International Monetary Fund
- Gives loans to countries in economic crisis
What are the positives of the IMF?
-Provides loans to member countries in need of a bailout
What are the negatives of the IMF?
5
- Conditions attached to loans exacerbate economic problems
- Decline in public services as a result to spending cuts
- removes political sovereignty
- Total staff 2300 from 185 countries.
- always european director- based in usa
- Voting power based on capital
- Contribution
What is the world bank?
Providing loans for developing countries to reduce poverty.
What are the weaknesses of the world bank?
- Top down development- doesnt consider local people
- USA based, American president
- Loan
What are the positives of the world bank?
- Encourage development
- Reduce poverty
Trade agreements:
Two or more countries agree on terms that help them trade
Trade bloc-
group of countries with a common agreement that promote and manges trade.
Trade blocs remove trade barriers between members, while keeping common barriers to non-members
Special Economic Zones-
Area with different rules to the rest of the country
Free trade areas-
2 or more countries remove some barriers to trade
Custom unions-
all tariffs removed & common external trade
Common market-
all barriers to trade removed- common external tariff
Economic unions-
Custom unions; common market & shared currency
What are examples of groups-
EU COMESA ASEAN MERCOSUR NAFTA CARICM
What are the positives of Trade blocs?
- Encourage trade
- Greater negotiating power
- Protect member powers from external competition
- economic peaks through fitted through
- Compartature
- Economies of scale
- shored regulation
- environment laws
What are the negatives of Trade blocs?
-Trade diversion = lower cost goods from outside subside to those inside
-loss of soureigrity
loss of financial control ECB
-pressure to adopt central regulation
What is the 2008 financial crisis- an example of?
Economic interdependence
How important is the trade in bananas?
- Shoppers spend £100 billions on bananas
- 4th on the list of staple crops - for 4 million people
- One of the biggest profit makers in surpermarkets
How is the trade in bananas distributed?
Mainly EU and America importing 27%
caribbean and south america exporting
ACP- small farms
‘Ecuador’
What are the issues in banana production?
- Unfair work trends - low wages
- long hours - Accidents common
- Chemicals used are toxic- cause cancer
- under age workers
- Prone to diseases-> killing out speices
- mono-culture
How has the impact of TNC’s changed?
Bananas
Chiquita, Del monte, Dole
- outsourcing more
- large TNC’s merging
- Domminating exports
- power has grown
What happened in the Banana trade war 1975?
EEC- Lome convention- preferential treatment to old colonies ACP -> 7% of exports 75% latin america
What happened in the Banana trade war 1992?
TNCs file a complaint against the EU in the WTO by 1997 the WTO rules against the EU
What happened in the Banana trade war 1999?
Clinton administration imposes sanctions on the EU
Chiquta- go to clinton gives them ‘money’- tarrifs on the EU $520 million
What happened in the Banana trade war 2009?
EU agrees to gradually reduce tarrifs on Latin America bananas.
What is the race to the bottom?
Lower the price to as small as possible but still making profit.
Lower wages and cut environmental laws
What difference has fair trade made?
Better employment
Higher wages
Social premium
What is the difference between fair and free trade?
Free trade- no barriers to trade
Fair trade- is the conditions
What are the benefits of fair trade in ecuador/windward island?
- Industry can survive
- Introduction of stable wage- higher than minimum wage
- Saved from primary product dependency
What power inequalities have been at play here?
Supermarkets
Global Governance-
Make and remake global systems and geographical consequences for citizen, ecosystems and human and physical
What are examples of international organisations-
WTO, WHO, UN, WB, IMF
rules
standards for activities
norms
expectations about what is considered normal and reason
Laws
obligation and duties on signatories
How many countries are in the UN?
193
What are the 4 objectives of the UN?
Promote peace
protect Human rights
Advance human/economic dev
Climate change
General Assembly-
Everyone a member 193
recommendations
Meet once a year
Security council-
15 members
5 permanente (UK, US, Russia, China, France)
Legally binding
Veto power stop anything going through
Economic and social council-
54 members
Development goals
International court of justice-
War crimes
Can’t be dealt my with one country
What are the Millennium development goals?
2000-2015
8 anti-poverty targets
What are sustainable development goals?
2015-2030
disaster risk reduction
Environmental degreduction
What are the weaknesses of the UN?
Inequalities- veto power
-> most issues in Africa but are not in security council
General Assembly- recommendations only
MDGs
What is one weakness of the UN?
- Peace keeping force
Does Not have its own peace keeping force- has to borrow from individual counties
Rwandan genocide- left by belgium in one place all killed
What are the Successes of the UN?
MDGs
Less global wars
-> Iraq and Kuwait
Can hear global issues impartially
What was the successes of the MDGs?
Reduced global poverty 47% -> 14% below poverty line
Asia 66%
Africa 23%
What was the weakeness the MDGs?
% of people down but population up
actual number the same
What was the 2015 paris agreement?
Carbon emissions reduce target- hold global temperature rises to a max of 1.5*C reduce net emissions to 0 by 2100 Green climate fund Track progress Voluntary system of pledges
What are the strengths of Paris agreement?
Aims to reduce global climate change
180 summit pledges
supportive of developed countries
track process
What are the weaknesses of the Paris agreement ?
Trump pulled out
Already warmed by 1*C- triggered sea ice
Pledges= a promise
needs to consider carbon sinks
What are global commons?
Resources or domains beyond the political reach of any one nation state. The belong to all and are available to everyone’s use and benefit
What are the 4 global commons?
High seas- beyond 200 miles of economic zone
Atmosphere- 60,000 feet above a country
Antarctica
Outer space
What is the common heritage of mankind?
Ethics based
Holding things in trust for the future
Biodiversity
Cyberspace
Heritage
Peace
What is tragedy of the commons?
All individuals work independently and according to their own self interest, as a result resources are over exploited and depleted with negative consequences for the group as a whole
What treaties protect global commons?
UNCLOS UNEP UNFCCC ATS PEP Moon treaty
