Globalisation - Spec Flashcards
3.1A - What is Globalisation (Definition, flows)
Definition:
Widening & deepening global connections, interdependence, & flows.
Increasing interconnectivity of economic, social, cultural, political, & environmental systems.
Key Aspects:
Economic: TNC growth, global trade, investment spread.
Cultural: Shared/global values (often Western: food, clothes, media).
Political: Global organisations (UN), spread of ideologies, dominance of Western democracies.
Environmental: Global threats (e.g., climate change) need global solutions (e.g., Paris Agreement).
Demographic: Fluid/mixed populations due to migration & tourism.
Flows:
Goods/Services: Trade of products & commodities.
Capital: Money flow (banks, businesses, governments).
People: Migration, tourism.
Information: Data transfer (internet-driven).
Interdependence:
Success of one place impacts others.
Example: 2011 Japanese tsunami disrupted global supply chains (e.g., Honda Swindon, German DAX).
Widening and deepening Connections:
Widening: Links to new, distant places.
Deepening: Increased volume & variety of flows.
3.1B - Transport and Technology
Technological developments in transport and communication in the 19th century promoted globalisation and led to the development of TNCs.
The 19th Century saw the development of the railway, telegraph and steam ship.
The 20th Century saw the development of the jet aircraft and containerisation.
These increase globalisation by reducing transport costs per unit output - so products are affordable for customers in a distant market, setting up a new flow of goods/information
Harnessing new forms of energy allows larger loads to be transported
Larger loads produce an economy of scale - a reduced cost per unit output
Shrinking World: Time-space compression reduces transport/communication times, making distant places feel closer.
e.g. Cost of an iPhone or television from China to the UK costs less than £1
3.1C Communication Technologies
Mobile phones
- Allows for flow of information beyond landline networks. Reduced the cost since landline days which increases the usage and therefore flow of information, increasing globalisation.
- By 2015 , 70% of people in Africa owned a mobile phone.
Internet
- 50% of the worlds population uses internet so large amounts of data are being shared worldwide
Social Media
- Space time compression. The cost of time or money to communicate with friends and family worldwide has fallen rapidly. Communication is possible regardless of distance. This is beneficial especially to migrants maintaining closer bonds to family at home
Economic banking
- Helpful for sending remittances to home countries
- Helpful for rural farmers or fishermen as they are able to check market prices before selling produce
3.2A - International Organisations
In 1944, Allied Powers agreed to set up three IPEOs, the World Bank, the International Monetary Fund and the World Trade Organisation. They had the economic objective of rebuilding the world economy following WW2.
They also had the political objective in promoting free-market democracy in the face of the looming cold war thread of command economy one-party communism.
World Bank
Has the role of lending money and giving grants to the developing world to fund economic development and reduce poverty.
IMF
Aims to maintain a stable international financial system, and this promotes free trade and globalisation.
The IMF provides loans to countries facing short-term balance of payment difficulties.
e.g. in 2008 Greece received the first in a series of IMF loans when its foreign currency earnings were insufficient to pay its existing debt obligations.
World Trade Organisation (WTO)
An international organisation that works to reduce trade barriers (both tariff and non-tariff) and create free trade.
FDI
Foreign Direct Investment is the financial capital flow from one country to another for the purpose of constructing physical capital
3.2B - Promoting trade blocs and economic liberalisation
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.
Trade blocs lead to globalisation through
Specialisation
Countries specialise in goods being produced which have a comparative advantage (e.g. can produce at the lowest cost) and trade these products for other members’ specialisms.
Use the EU as a case study - 28 countries
Free market liberalisation
This involves promoting free markets and reduces government intervention in the economy
Privatisation
In the UK the steel, car, electricity, gas and water industries were all state-owned but are now privately owned
However, many governments still own big slices of industry, even in big countries like France.
It may increase efficiency as the profit motive minimises loss (government reluctant to sack workers, leading to higher labour costs)
Permitting foreign ownership allows an injection of foreign capital through FDI, introduces new technologies and promotes globalisation.
