HA Global Systems & Global Governance Flashcards
What is globalisation?
The growing interdependence of countries, economies and people worldwide through the increasing volume and variety or cross-boarder transactions in goods, service and intellectual capital flows, and through the more rapid and widespread diffusion of technology.
What factors affect globalisation?
New technologies, communication and information systems:
- Information can now be shared more easily and cheaper to a larger number of people.
- Mobile phones are important technologies in LICs as they connect people and markets allowing for better trade.
Global financial systems:
- Banks are linked by virtual transmission systems allowing for lending and flows of money.
Transport systems:
- A global transport network allows for the movement of people and goods worldwide.
- This brings new opportunities as well as threats (spread of disease etc).
Security:
- National boundaries have become less of a barrier to populations and traditional security measures have reduced in relative significance.
- Cybersecurity has become increasingly important due to the increasing reliance on the internet. The average cost of the most server cybercrimes for large corporation is now £1.5 million
Trade agreements:
- The World Trade Organisation (WTO)(1994) oversees over 97% of world trade. It provides a forum for negotiations and ensures trade agreements are followed.
What are the different dimensions of globalisation?
Flows of information, technology and capital:
- Cheap, reliable and near instantaneous communication with the majority of the world –> Allows information and capital to be shared easily.
- Money flows electronically around the world.
- Technology such as the internet and mobile technologies, largely ignore political boundaries.
Flows of products and labour:
- Global transport systems allow for the cheap and easy transport of both people and goods.
- High speed rail networks and international airport hubs have revolutionised travel and enabled increased migration.
Flows of services and global marketing:
- Marketing is now globalised and uses international strategies to deliver messages.
- TNCs use the same adverts all over the world to make a common brand with the same identity globally.
Patterns of production, distribution and consumption:
- TNCs dictate where their products are made (generally where labour is cheaper e.g. LICs).
- Products are distributed globally to meet the demands of consumers (generally in HICs).
What is a single product economy?
A country which relies on one, or a very small number, of products (usually raw materials) for its export earnings.
What are some advantages of international trade?
Comparative advantage –> Countries produce goods which can be produced efficiently and cheap.
Economies of scale –> A narrower range of goods and services enables production in higher volumes and cheaper costs.
Purchasing power –> Increasing trade lowers prices allowing consumers to be able to buy more for their money.
Fewer domestic monopolies –> Domestic prices may be kept high due to monopolies. Imports from overseas competitors help to lessen this effect.
Transfer of technologies –> New technologies leads to design improvements, cost savings and supports innovation/enterprise.
Increased employment –> Increased production for export results in the multiplier effect creating new jobs.
What are some disadvantages of international trade?
Over-specialisation –> Demand can fall or products can be produced cheaper elsewhere resulting in the less flexible businesses losing money.
‘Product dumping’ –> Exporting at a price that is lower in the foreign market than the price charged domestically.
Stunted growth –> New ‘home grown’ companies may find it hard to grow when competing against foreign competition where costs are lower.
Protectionism and tariffs –> A country can protect domestic industries by imposing additional taxes and tariffs on imported goods.
De-skilling –> Traditional skills and crafts may be lost when production technology replaces manpower.
Labour-intensive industries –> Labour is the biggest cost for most industries, therefore lowering this cost by placing workers in poorer working conditions can maximise profits.
What are the 5 main trade blocs?
- ASEAN (Association of Southeast Asian Nations)
- OPEC (Organisation of the Petroleum Exporting Countries)
- NAFTA (North American Free Trade Agreement)
- MERCOSUR (Mercado Común del Sur)
- EU (European Union)
What is a trade bloc?
Where a set of countries trade freely with each other with few, if any, barriers such as tariffs. Countries outside this area that wish to trade anywhere within the trade bloc have to trade an agreed tariff.
What are the 7 different trading organisation?
- WTO (World Trade Organisation)
- OECD (Organisation for Economic Cooperation and Development)
- OPEC (Organisation of the Petroleum Exporting Countries)
- G8 (The group of 8/Canada, France, Germany, Italy, Japan, Russia, UK, USA) (G8+5 adds China, India, Brazil, Mexico & South Africa)
- G20 (G8+5 countries & South Korea, Australia, Turkey, Saudi Arabia, Argentina, Indonesia & the EU leader)
- World Bank
- IMF (International Monetary Fund)
What is the Transatlantic Trade and Investment Partnership?
The TTIP was a trade deal being negotiated between the EU and US.
This deal had the potential to boost the EU economy by 120 billion euros, US economy by 90 billion euros and the world economy by 100 billion euros.
The deal was never passed.
What is a transnational company?
A TNC is a corporation or company that operates in at least two countries.
What is vertical and horizontal integration?
Vertical –> An industry where one company either owns or controls multiple stages in the production and distribution chain.
Horizontal –> Improving links between different firms in the same stage of production or distribution.
What does the term fairtrade mean?
A value-based organisation and trademark that aims to tackle injustices of the globalised economy. Fairtrade aims to pay farmers a guaranteed minimum price, offer fair terms of trade and make payment of an additional development premium for reinvestment.
What are the reasons for the growth of TNCs?
- Cheap labour
- Mergers and takeovers
- Flexible workforce
- Funding for expansion
- Fewer environmental restrictions
- Globalised transport network
- Technological developments
- Governmental encouragement
- Cheap land
What is the RSPO?
The Roundtable on Sustainable Palm Oil is an organisation that has developed a set of environmental and social criteria that companies must comply with in order to produce and purchase certified sustainable palm oil.
