The Key Players In Globalisation

Question 1

Who are the players that are accelerating globalisation?

Answer 1

IMF 
World bank 
WTO 
TNCs 
Individual government policies 
Trade blocs

Question 2

What are the global organisations to aid economic development?

Answer 2

The world bank
The International Monetary Fund (IMF)
The WTO

Question 3

What is the world bank?

Answer 3

Lends money on a global scale and is headquartered in Washington D.C.

Provides loans for developing countries for economic development.

Question 4

What are the characteristics of the world bank?

Answer 4

Was formed to finance economic development.

It uses bank deposits placed by the worlds wealthiest countries to provide loans for development in countries that agree to certain conditions concerning repayment and economic growth.

Its first loan was to France for post-war reconstruction.
It also focuses on natural disasters and humanitarian emergencies.

Question 5

How does the world bank help?

Answer 5

Helps to eliminate poverty
Promotes better education
Economic and social development.

Question 6

What are the problems of the world bank?

Answer 6

Richer countries have the most power - its governed

Poorer countries don’t have a say

Question 7

What is the IMF?

Answer 7

It channels loans from rich nations to countries that apply for help.

In return, the recipients must agree to run free market economies that are open to outside investment.
As a result, TNCs can enter these countries more easily.

Question 8

What are the characteristics of the IMF?

Answer 8

In return, the recipients must agree to run free market economies that are open to outside investment.
As a result, TNCs can enter these countries more easily.

Lend money for development purposes.
Its primary role is to maintain international financial stability

Question 9

What are the problems with the IMF?

Answer 9

In return for loans, it tries to force countries to privatise (or sell off) government assets in order to increase the size of the private sector and generate wealth.

Many observers believe that this policy has forced poorer countries to sell off their assets to wealthy TNCs.

Don’t have money to spend on education, health…

Question 12

What is the WTO?

Answer 12

World trade organisation

Advocates free trade without tariffs and quotas - has drawn up the rules for international trade.

Question 13

What is trade liberalisation?

Answer 13

Removing barriers

Question 14

What does the WTO do?

Answer 14

Advocates free trade without tariffs and quotas

Has drawn up the rules for international trade.

Question 15

What are tariffs?

Answer 15

Taxes imposed on imports

Question 16

What are subsidies?

Answer 16

Financial assistance to a business by government to make it competitive or prevent collapse

Question 17

What are quotas?

Answer 17

A limit on the quantity of a good a country allows into the country

Question 18

What is protectionism?

Answer 18

Policies to protect businesses and workers in a country by restricting/regulating trade with foreign nations.

Question 19

What is a free market economy?

Answer 19

A market economy based on supply and demand with little or no government control

Question 20

What is free trade?

Answer 20

A policy where a government does not interfere with imports or exports by applying tariffs, subsidies or quotas

Question 21

What is privatisation?

Answer 21

Transferring ownership of a public service/agency/property into private ownership run for profit

Question 22

What is neoliberalism?

Answer 22

A political philosophy of free markets, free trade, privatisation and increasing the role of business in society (while decreasing the influence of government).

It is thought that by making trade easier, there will be more of it, meaning wealth and reduction in poverty.

Question 23

How does the WTO help?

Answer 23

Makes it easier to trade, especially for poorer countries

Helps cut the costs of living because trade raises income, and its free

Trade stimulates economic growth

Question 24

What are the problems with the WTO?

Answer 24

Still unfavourable towards developing countries
Primarily benefit richer countries

International trade exposes home grown products to foreign competition. If foreign goods are cheaper and are of higher quality, local firms go out of business.

Question 25

What’s an example of the world bank?

Answer 25

In 2014 it gave a US $470 million loan to the Philippines for a poverty reduction programme.
And a $70 million grant to the Democratic Republic of Congo for the Inga 3 mega-dam HEP project.

Question 26

What’s an example of the IMF?

Answer 26

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.

Question 27

What is foreign direct investment?

Answer 27

Investment made by an overseas company or organisation into a company or organisation which is based in another country.

Question 28

What did the UK do to aid growth?

Answer 28

They gave tax breaks - i.e. subsidies - to companies investing in areas such as London Docklands.

Also gave grants and subsidies to encourage foreign companies to locate to new manufacturing plants in the UK.

Question 29

How did tax breaks help?

Answer 29

Almost all companies establishing themselves in London’s Canary Wharf development since the late 1990s have been given life-long tax breaks.

This is a highly attractive benefit, which has encouraged a number of large overseas financial institutions to relocate to London.

Question 30

How did grants and subsidies help?

Answer 30

Nissans Washington, Tyne and Wear, factory and Toyota’s factory in Burnaston, Derbyshire, were each subsided in order to attract investment from their Japanese parent companies - FDI.

By 2015, the UK was the 4th largest recipient on FDI.

Question 31

What’s an example of FDI?

Answer 31

Building a factory in another country

Question 32

What did china do to aid growth?

Answer 32

After decades of economic and political isolation, the Chinese government declared an ‘open door’ policy to international business in 1978.

Question 33

Why did China declare an open door policy?

Answer 33

It needed western technology and investment to develop its economy - and from then on its government welcomed foreign businesses setting up in china.

Question 34

What happened after China declared an open door policy?

Answer 34

Companies from Europe and the USA quickly saw the advantages of out-sourcing and relocating into one of southern chinas four special economic zone (later export processing zones).

SEZ - cheap labour, tax incentives

Question 35

What are special economic zones (SEZ)?

Answer 35

Set up by national governments to offer financial or tax incentives to attract FDI, which differ from those incentives normally offered by a country, China now uses the term ‘export processing zones’.

Question 36

How have SEZ helped?

Answer 36

Chinas economy has grown rapidly and (in 2001) it became a member of the WTO.
By 2005, around 50% of Chinese exports came from foreign companies with connections in these zones.

Question 37

What has happened to FDI since chinas rapid economic growth?

Answer 37

Has altered the flow of FDI
China is still the worlds largest recipient
As growth has shifted into Asia, traditional flows of FDI have changed.

Now, countries such as China and India control flows of FDI, together with governments and companies in Brazil, Russia and South Africa (BRICS countries).

These countries now invest heavily in the USA, EU, sub-Saharan Africa and South America.

Therefore, China is now a major player in both the inflow and outflow of FDI.