Superpowers EQ2 - Superpowers impacts Flashcards
How do superpowers have a significant influence over the global economic system?
- global economy via promotion of free trade and capitalism via a variety of IGOs
- TNCs which are dominant economic forces (cultural and economic globalisation)
- global cultural influence, namely Westernisation
What is free trade?
The exchange of goods and services free of import/export taxes and tariffs or quotas on trade volume
What is an IGO?
Regional or global organisation whose members are nation states. Uphold treaties and international law and allow cooperation on issues such as trade
Why has free market capitalism become increasingly dominant?
Alternative economic systems have weakened e.g.
- collapse of socialist economies/communism in USSR and Eastern Europe following 1990
- China’s movement away from socialist economy towards ‘state capitalism’
What are the key differences between free market capitalism and centrally planned economy?
Free market - private ownership of properties and businesses, right to make profit, competitive market with limited restrictions
Centrally planned - government ownership of property and land, most businesses state owned, profits taken by governments, prices controlled by government
What are the 4 key IGOs and their roles?
World Bank - makes development loans to developing countries but within a ‘free market’ model (benefits TNCs)
IMF - promotes global economic security and stability, assists in reformation of economics (open to TNCs)
World Economic Forum - Swiss non profit organisation promoting globalisation and free trade
WTO - regulates global trade, promotes open trade and reduction of protectionism
What are the 2 types of TNCs?
- publicly traded TNCs, shares owned by numerous stakeholders
- state owned TNCs, majority or wholly owned by government
How do TNCs influence the global economy?
- free trade
- technology developments - patents
- cultural influence
Why are TNCs dominant in the global economy?
- economies of scale means they can outcompete smaller companies and take them over
- can take advantage of globalisation by investing in new technology
- move towards free market capitalism and free trade has opened up many new markets for them
What is brand value/equity?
The value of a brand measured using metrics such as market share, customer opinion of the brand and brand loyalty
What is global cultural influence and why is it an important aspect of power?
Global cultural influence is the worldwide pattern of an emerging system of shared beliefs, values and traditions (Westernisation) involving food, the arts and the media.
It is an important aspect of ‘soft’ power and is liked to economic influence and spread of new technology
What are the common characteristics of Westernisation?
- culture of consumerism
- culture of capitalism and importance of attaining wealth
- white, Anglo-Saxon culture with English as dominant language
What are some examples against Westernisation?
Despite ubiquity of global brands like McDonalds, there is some local adaptation and hybridisation e.g. adapt menu to suit local tastes and religion
Some aspects of American culture e.g. American football and baseball have had a hard time being exported to the rest of the world
How do TNCs protect their newly developed products?
Through intellectual property law e.g. patents, copyright and trademarks
Where do royalty payments go globally?
Over 85% go to USA, EU and Japan