GLOBALISATION - LESSON 2 - POLITICAL AND ECONOMIC FACTORS LEADING TO THE ACCELERATION OF GLOBALISATION Flashcards
What is privatisation
Something traditionally run by the government is run separately by industrial companies or businesses e.g. British rail - 1993, British Gas - 1986, British Telecom - 1984, local bus services - 1985
What do IGOs believe in
privatisation, deregulation and free trade
What is the only negative to privatisation
Everything is no longer available to everyone
What is deregulation
Removal of rules/laws involved in trade to make trade easier to run, and goods cheaper
What is free trade
Trade without barriers and tariffs
When was privatisation introduced, by whom and why
1979, Margaret Thatcher
To drive competition in the market create an opportunity to improve the economic climate. Companies would then invest through FDI.
What are trade blocs
Types of intergovernmental agreement where barriers to trade in a world region are reduced or eliminated among the participating state. Can be standalone agreements between several states, e.g. Association of Southeast, Asian states or the EU
What are the positives for trade blocs
Action from foreign competitors, and political stability
Big markets, but no extra taxes
National firms can merge to form TNCs
Interdependence
Compromise and concession
What are the negatives for trade blocks?
Loss of Sovereignty
Interdependence
Compromise and concession
What is compromise and concession?
Countries entering a trade block must allow foreign firms to gain domestic market share sometimes at the expense of local companies. They do this in the expectation that their consumers will benefit from better products and keen prices, as well as in the hope that their firms will also expand abroad.
What is loss of sovereignty?
Losing ability of a nation to govern/control its own affairs
A trading bloc and political union is likely to lead to some loss of sovereignty. For example, the EU deals not only with trade matters but also issues such as human rights, consumer protection, greenhouse, gas emissions and other negative issues only marginally related to trade.
What is sovereignty?
The ability of a nation to govern/control its own affairs
How much did the EU block of Chinese made clothes entering the UK in 2007
£50 million
What TNC did Vodafone merge with to become the largest mobile telecommunications company in 2000
German company Mannesmann
How do you bigger market without extra taxes, benefit the globalised world?
The UK has a population of 68 million and the EU has a population of 448, million. UK companies like Tesco have benefited by expanding into EU countries and sourcing their goods at the best price from within the 27 member states.
