GS: Global Systems

Question 1

What does this section examine

Answer 1

The form and nature of the interdependence and interconnections (economic, political, social and environment) in the world today

Question 2

List me two issues globalisation and global systems have created

Answer 2

Unequal flows of people, money, ideas and technology

Unequal power relations

These are very complex issues, with a recurrent theme of inequality.

Question 3

Tell me about an issue of globalisation and global systems have created to do with unequal flows of people, money, ideas and technology

Answer 3

Unequal flows of people, money, ideas and technology, which in some cases can act to promote stability, economic growth and development but can also further inequalities, conflicts and injustices for people and the places in which they live.

Question 4

Tell me about an issue of globalisation and global systems have created: unequal power relations

Answer 4

Unequal power relations enable some nations to drive global systems to their own advantage and directly influence geopolitical events, while other nations are only able to respond or resist in a more constrained way.

Question 5

What do the benefits of globalisation depend on

Answer 5

Perspective of the person seeking benefit.

Question 6

Tell me about the benefit of TNCs to the host country (globalisation): FDI

Answer 6

TNCs are a vital source of FDI - globalisation has created jobs all over the world.

Question 7

Tell me about the benefit of TNCs to the host country (globalisation): multiplier effect

Answer 7

TNCs stimulate the multiplier effect, locally and nationally. The company itself may require locally produced components and other supply and distribution services. Meanwhile, increased wealth and disposable incomes will generate domestic demand and stimulate further growth. At a national level, revenues become available for investment in social forms of development- in public services such as health and education.

Question 8

Define multiplier effect

Answer 8

A form of positive feedback where an initial investment creates more investment, both social and economic.

Question 9

Tell me about the benefit of TNCs to the host country (globalisation): skills

Answer 9

TNCs not only provide employment, they also increase local skills. In some cases, this may help to offset large scale unemployment caused by the mechanisation of agriculture.

Question 10

Tell me about the benefit of TNCs to the host country (globalisation): transfer of technology

Answer 10

TNCs are often responsible for the transfer of technology such as ‘just in time’ (JIT) production.

Question 11

Tell me about the benefit of TNCs to the host country (globalisation): improved infrastructure

Answer 11

TNCs may construct or improve local infrastructure such as roads, bridges, etc., which benefits not only the company but the local area overall.

Question 12

In the context of host countries (TNCs) how has globalisation brought stability to the world

Answer 12

Perhaps not economically as seen by the recession that took place during and since 2007/8, but politically. It is suggested that countries that depend upon each other economically are unlikely to be at odds with each other, certainly not in a military context. Whether or not countries are friendlier towards each other, it seems to be the case that the world appears to have a greater degree of political stability. That said, another country reaping the benefit of globalisation is Russia, and yet it seems to want to spread its political influence once again, thereby creating some sense of instability around the world.

Question 13

Tell me about the benefits of TNCs to the country of orang (globalisation)

Answer 13

Although it is common for TNCs to move production to overseas locations, the headquarters usually remain in the company’s country of origin. Other high salary jobs stay, such as those in R&D, further enhancing skills levels. TNCs that move to locations with cheaper labour usually increase their profitability, which benefits the country of origin, as profits are returned for distribution to shareholders. Even the largest TNCs retain a physical foothold in the countries in which they are domiciled. This provides them with a sense of national identity. The national government of the country where a TNC is domiciled will benefit, as it collects corporation tax on its profits.

Question 14

The costs of globalisation have particularly affected

Answer 14

Local economies, people, cultures and the environment. They have often led to disagreements, conflicts, instability and injustices.

Question 15

Tell me about the costs of TNCs (globalisation) to the host country: competition

Answer 15

TNCs can prove lethal competition for local firms, which may go out of business, creating hostility among local people.

Question 16

Tell me about the costs of TNCs (globalisation) to the host country: negative attitudes

Answer 16

TNCs often face negative attitudes from local authorities, residents and environmentalists.

Question 17

Tell me about the costs of TNCs (globalisation) to the host country: low skilled jobs

Answer 17

Many of the jobs offered are low skilled. Managerial positions are often filled by people who have moved with the TNC, providing little prospect for locals to develop within their jobs and gain promotion.

Question 18

Tell me about the costs of TNCs (globalisation) to the host country: exploitation of labour

Answer 18

Some TNCs stand accused of exploiting cheap, flexible, non unionised labour in sweatshops in developing countries. Working conditions in some factories are harsh: long hours for very little pay and employees get fee work related benefits.

Question 19

Tell me about the costs of TNCs (globalisation) to the host country: fickle employers

Answer 19

TNCs can be fickle employers, moving elsewhere in the interests of profitability with little concerns for locals. Branch plants can often be the first to close, or be subject to merger, causing job losses.

Question 20

Tell me about the costs of TNCs (globalisation) to the host country: repatriation of profits

Answer 20

Much of the capital generated find its way back to the country of origin.

Globalisation also results in TNCs being vulnerable to risks beyond their control, some natural and some human. Exposure to risks and to more volatile market forces in an interconnected and interdependent world is a big concern for major companies.

Question 21

Tell me about the impacts of globalisation (TNCs) on host countries

Answer 21

It is often stated that TNCs exploit cheap, flexible, non unionised labour forces in the developing world. It is true that in the last two decades there has been considerable use of outsourcing and offshoring strategies. It is equally true that most large TNCs have established a basic standard of operation, which involves setting up training facilities for workers and providing promotion opportunities for the host country employees, and minimum wage and safety limits.

Question 22

Define outsourcing

Answer 22

When a TNC subcontracts an ‘overseas’ company to produce goods or services on its behalf.

Question 23

Define offshoring

Answer 23

The manufacture or assembly of a product in a developing country using components produced in the developed country.

Question 24

Why have TNCS moved to developing countries

Answer 24

In order to make use of their labour supplies created by the so called demographic dividend. A demographic dividend occurs when the population of working age in a country is large in relation to the population of non working age. High rates of economic growth led by high productivity and supported by large working populations create the dividend.

Question 25

Tell me about the international movement of labour

Answer 25

There have also been movements of people around the world to find employment where it is available. In most cases labour migrants are in search of work and better paid jobs so that they can send money back to their families as remittances. This phenomenon is called the international movement of labour.

Question 26

Define demographic dividend

Answer 26

Occurs when there are fewer dependant children and elderly with relativity more productive adults in a population.

Question 27

Tell me about unequal power relations: when China began to ‘open its doors’ to the rest of the world

Answer 27

Unequal power relations at a national scale can be discussed in the context of China and its relations with the rest of the world. At the end of the 1970s Deng Xiaoping’s China began to open its doors to the rest of the world, turning its back on the period under chairman Mao. Xiaoping recognised that if China as a whole was to become prosperous, some regions would have to become rich before others. He allowed the coastal regions to develop at a much faster pace than the inland regions, even if inequality occurred as a result. The liberalisation of trade through joining the WTO in 2001 has also helped greatly.

Question 28

Tell me about special economic zones in China

Answer 28

A key aspect of china’s growth has been the setting up of special economic zones (SEZs) along the east coast. These are designated areas of very fast economic development. They have special regulations and fewer restrictions on growth, while also offering higher wages than in the rest of China.

China’s eastern region contains its top three municipalities - Beijing, Shanghai and Tianjin. It also includes the country’s largest city economies of Guangdong province (including Guangzhou and Shenzen), Shenyang and Hangzhou. Guangdong province alone has the same population as Mexico and if it was an independent country it would have the 17th largest GDP in the world. It accounts for 25% of china’s international trade and has become a magnet for migrant workers from across the country. Its growth and economic development has been huge. However, there has been an associated increase in income inequality within the country.

Question 29

Tell me what SOE stands for

Answer 29

State-owned enterprise

Question 30

Tell me about the reforms of SOEs in China

Answer 30

In terms of industry, the state-owned enterprises (SOEs) were reformed. A key incentive was to allow them to keep some of their profits for further investment. In addition, they improved their management strategies, and some smaller SOEs were privatised. On a general level there have been fewer barriers to collaboration with foreign partners, and hence several SOEs have attracted foreign TNCs as partners and FDI has been significant, as have joint ventures (JVs). There has also been more westernisation in terms of profit and loss accounting, patent legislation, and scientific and technological research. Competition is now encouraged. Some major Chinese companies have set up JVs with other foreign companies include Sinopec, Petrochina, China mobile and Shanghai automotive industry corps (SAIC)

Question 31

Tell me about other benefits from china’s growth

Answer 31

There were other benefits from china’s growth. Infrastructural improvements - ports, railways, roads, airports - built initially for industrial and trade purposes are also available for other forms of international travel or trade. They allow China to integrate more with the world and they are also a catalyst for rapidly rising living standards. It is not just the case that China can export more; it can also import more, increasing its dependence on other countries for the goods and services that the rising number of middle classes desire.

Question 32

Who are china’s rivals

Answer 32

For some time now, Brazil, Russia, India, China and South Africa have been grouped together under the acronym BRICS.

The BRICS’ gross domestic product (GDP) totalled US$16 trillion in 2012. This compares with US$17 trillion for the EU and US$16 trillion for the USA. However, China alone accounts for 55% of the BRICS GDP; take China out, and they are much less powerful economically.

We must also note that there are other ‘kids on the bloc’ such as mexico, Nigeria, Bangladesh, Vietnam, South Korea, Indonesia, turkey and Egypt. Many of these emerging nations share the characteristic of the demographic dividend. They have youthful populations today, but fertility levels are falling. They have a window of opportunity when their workforce is large, but does not have to support either a large young or old population.

Question 33

Tell me some figures for China’s global importance

Answer 33

China is expanding into the rest of the world. It has over US$1.2 trillion to invest overseas. China also owns US$1.3 trillion of US debt. This investment is going into a lot of places.

Question 34

Where is china’s investment going to

Answer 34

It has over US$1.2 trillion to invest overseas.

USA: into the energy sector and finance industries
Brazil: into development of its natural resources, both agricultural and mineral
Australia: into the resources of iron ore, coal and gas.
Nigeria: investment in oil, mostly through engineering and construction.
UK: buying on the property market and in shares on the London stock exchange.
Saudi Arabia: currently linked to infrastructural construction
Iran: infrastructural construction and energy related.

Question 35

Tell me about china’s investment in and relationship with China in general

Answer 35

China is also investing heavily in sub Saharan Africa, often in infrastructure projects. Furthermore, over 1 million Chinese live in Africa, some for the long term or even permanently, having bought land and started businesses. Chinese trade with Africa is currently US$200 billion a year, and most of this is in the export of oil and minerals from Africa to China.

Question 36

Tell me some examples of china’s investment in Africa

Answer 36

In Angola, China has helped to reconstruct the country after its long civil war. Loans, secured by access to Angolan oil reserves, have been used to build roads, railways, water systems, hospitals and schools.

Nigeria took out similar oil backed loans to finance gas fired electricity generating stations.

Chinese technicians have been an HEP plant in the Congo (to be repaid in oil) and another in Ghana (to be paid for with cocoa beans)

Question 37

What is ‘just in time’ production

Answer 37

‘Just-in-time’ production is a system designed to minimise the costs of holding stocks of raw materials and components by carefully planned scheduling and flow of these materials and components through the production process. It requires a very efficient ordering system and reliability of delivery. It has given rise to a new term in the transportation of goods: logistics.

Question 38

Summarise the main causes of economic growth in India

Answer 38

India has become one of the most attractive locations for the outsourcing of services, and in particular, the state of Karnataka, which houses Bangalore - often known as India’s ‘Silicon city’. Much of this outsourcing has involved call centre work and software development. Labour costs are much lower, but the workforce is both highly educated and has good use of the English language. India is the second largest English speaking human resource in the world and has the worlds third largest ‘brain bank’, with around 2.5 million technical professionals. There is also a burgeoning ‘middle class’ of some 250-350 million people with increasing purchasing power.

Question 39

What’s 3 arguments for a country staying within the EU

Answer 39

6

Question 40

What’s 3 arguments against a country staying in the EU

Answer 40

6