Section A.1 - Globalisation Flashcards
Define globalisation
Process by which people, culture, finance, goods and information transfer between countries with few barriers
Define manufacturing
Production of products for use or sale using labour and machines
Define commodities
Products / goods that we all buy in shops, many of which were made in a different place
Define capital
Financial resources that businesses can use to fund their operations like cash,
machinery etc
Define GDP
Total value of goods produced and services provided in a country during one year
Define interdependency
State of being dependant on one another
Connections between countries are known as global flows: what are the 5 flows?
- Capital
Money between people - Commodities
Goods we purchase - Information
Data transferred between businesses - People
Tourists, migrants from one place to another - Migrants
Permanent movement of people from one country to another
What are the 4 strands of globalisation?
- Economic globalisation
- growth of TNC’s
- information and communication tech
- e-commerce and m-commerce - Social globalisation
- international immigration
- global improvements in education healthcare
- social interconnectivity - Political globalisation
- growth of trade blocs i.e EU, NAFTA
- global concerns i.e credit crunch
- organisations i.e IMF, WTO, World Bank - Cultural globalisation
- successful western traits dominate
- glocalisation and hybridisation
- circulation of ideas and info
Define interdependence
Success of one country is dependant on the success of anotjer
What is time-space-compression?
Messages can be obtained much quicker now. Things feels much closer as we can access them much faster
Advantages and disadvantages of globalisation
Advantages:
- free markets have spread
- capitalism spread into once communist states
- fair trade has mobilised against global food corporations
- faster transactions due to submarine cables
- migrant workers can have more than 1 vote in the EU
Disadvantages:
- worlds rich tend to employ worlds poor
- TNC’s more powerful than governments
- cultural erosion
What has accelerated globalisation in the past and led to a ‘shrinking world’?
- Steam power: 1800’s
Britain became leading world power in 1800s using steam technology - Railways: 1800’s
By 1904, 9000km trans-Siberian railway connected China with Japan
HS2 will halve journey times - Jet aircraft: 1960’s
Boeing 747 in 1960’s made international travel easier
Expansion of cheap flights industry - Container shipping: 1950’s
200 million individual container movements take place each year
These have contributed to a ‘shrinking world’
What is containerisation
Shipping methods which a large amount of material I.e merchandise is packaged into larger standardised containers
Life before containerisation: cargo loaded manually in crates — slow
Modern day:
- containers loaded / unloaded by crane
- containers are intermodal
- 9500 container ships in the world, carrying 18000 containers each
Why is trade key to globalisation?
As transport and communications have improved, government and firms have been able to extend their reach into other countries
Trading of imports and exports earns countries income; firms become competitive and innovative — provides jobs, stimulates economy
How technology aids the 4 global strands for globalisation
- Economic globalisation
- ICT allows managers to keep in touch more easily from remote locations - Social globalisation
- Maintaining long distance relationships through ICT use - Cultural globalisation
- cultural traits I.e language or music are adopted, imitated, hybridised faster than before - Political globalisation
- social networks used to raise awareness for fighting to change political issues on a global scale
Mobile phone Revolution?
Mobile phones have changed lives for the better:
In 2005 6% Africans owned a mobile phone
In 2015 it had risen to over 70%
I.e M-Pesa launched in 2007: mobile phone service allowing credit to be transferred between phone users
Define tariff
Tax imposed on imports
Define subsidy
Financial assistance to a business by government go make it competitive or prevent collapse
Define quota
Limit on quantity of a good allowed into a country
Define protectionism
Policies to protect businesses and workers in a country by restricting / regulating trade with foreign countries
Define free market economy
Market economy based on supply and demand with little Gov control
Define free trade
Gov policy where there is no interference with exports or imports by applying tariffs, subsidies or quotas
Define privatisation
Transferring ownership of a public service / agency / property into private ownership run for profit
Define neoliberalism
Political philosophy of free markets, free trades, privatisation and increasing the role of business in society (while decreasing the influence of government, more wealth, less poverty
Do all countries have same ability to attract investment?
No!
- landlocked countries have more difficult access (ports — can’t import or export)
- countries with lower labour costs are good for TNC’s to outsource from
- political agenda of country: corruption, terrorism; money lost rather than invested
Name of 3 key global players who advocate trade, financial stability, protectionism and to end poverty?
- WTO (world trade organisation):
162 countries involved in 2016
- aims for free trade between members without subsidies / tariffs (barriers)
- trade liberalisation - IMF (international monetary fund):
188 members pay money into it — gives loans to countries
Holds $755 billion - World Bank:
189 countries
- aims to end extreme poverty by decreasing 1% of people living on $1.25 per day
- advocates trade liberalism
-promote shared prosperity
Define subsidies
Grants given by governments to increase the profitability of meg industries
What is FDI?
Foreign Direct Investment:
Investment made by overseas company
What is SEZ
Special Economic Zone:
Set up by national governments to offer financial or tax incentives to attract FDI
What does EPZ stand for?
Export Processing Zone
Advantages of trade blocs?
- improves foreign relations
- no tariffs or subsidies — more profits
- redistribution of wealth
- larger market
- less outside competition
Define what a switched on place is
Region strongly connected to other places through production and consumption of goods and services
Define what a switched off place is
Poorly connected place
Define privatisation
Transfer of assets from the public to private sector
Process towards moving away from a state-owned economy -> mixed economy
What is a business startup?
Grants and loans are often made available to new companies
What does SAP (SAP’s) stand for?
Structural adjustment programmes
Economic policies for developing countries such that have been promoted by the World Bank and IMF since the early 1980’s by the provision of loans conditional on the adoption of policies
What are the 4 barriers to trade?
- Tariffs
- quota
- embargo
- subsidies
What does SEZ’s offer?
- huge skilled workforce
- tax incentives
- factories
- technology / machinery
Define offshoring
Process of moving part of a companies own production process to another country
Define outsourcing
Process where a firm contracts with another company to obtain goods or services
— more flexible than offshoring
— TNC can quickly switch supplier if cheaper alternative is available
In what 2 ways can we measure globalisation?
- KOF Index
Measures globalisation along economic, social and political dimension for almost every country in the world since 1970
— economic globalisation
Cross border transactions and volume of FDI: actual flows, restrictions
Weighting 37%
— social globalisation
Expressed as spread of ideas - cross border contacts: calls, emails, tourists (information flows: tv, news)
Weighting 39%
— political globalisation
Membership of international organisations
Number of foreign embassies
Participation in international treaties
Weighting 24%
- AT Kearney Index
Looks at FDI confidence and the economy of cities - defines 4 main indicators from which to calculate its index
- political engagement
- technological connectivity
- personal contact
- economic integration
How is it ranked / scored?
Rank 1-64
Score 0-1
AT Kearney Index criticisms?
Smaller countries tend to take top spaces in the index due to higher proportion / importance of FDI, therefore suggesting an over importance or the size of the country
Define TNC
Transnational Corporation:
Operates in more than one country at a time
Distribution of TNC’s?
Headquarters:
HIC’s I.e USA
Manufacturing for them:
LIC’s I.e SE Asia
What is the role of TNC’s
- import / export goods
- make significant investment
- develop new markets
- production networks
Why are TNC’s so important for globalisation?
- Investment:
- jobs
- infrastructure: transport, education, factories etc - Production networks:
- connections between countries / exploitation of natural resources: more stock - Contract manufacturing:
- Nike; outsourcing to LIC / NEE
- jobs / profit — reinvest in other countries
- less expensive for TNC’s — no factory costs
Positive and negative impacts of TNC’s?
Positive:
- raised living standards
- technology transfer
- political stability
Negative:
- tax avoidance
- growing global inequalities
- environmental degradation
What 3 factors have led to the expansion of TNC’s globally?
- Motive:
- Profits maximised so reduced costs - Means:
- banking free flow of money globally, unrestricted flows of finance connects businesses and countries - Mobility:
- Faster + cheaper transport
- rapid communication
- improved production + technology
Why may TNC’s decisions be controversial?
Have little regard for workers conditions; production can be pulled easily to find a cheaper alternative
Pollution
Define global production networks
Where interconnected nodes and links extend spatially across national boundaries
Define reverse colonialism
After centuries of Eurocentric cultures exploiting the rest of the world, the rest of the world is now colonising these first world countries back
What is economic liberalisation?
- ending the monopoly provision of some services
- promoting free markets
- created competition in once restricted markets
Advantages and disadvantages of outsourcing to India
Advantages:
- some workers earn middle class incomes
Disadvantages:
- workers lost limbs due to poor health and safety
- pollution damages