The Key Players In Globalisation Flashcards
Who are the players that are accelerating globalisation?
IMF World bank WTO TNCs Individual government policies Trade blocs
What are the global organisations to aid economic development?
The world bank
The International Monetary Fund (IMF)
The WTO
What is the world bank?
Lends money on a global scale and is headquartered in Washington D.C.
Provides loans for developing countries for economic development.
What are the characteristics of the world bank?
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.
How does the world bank help?
Helps to eliminate poverty
Promotes better education
Economic and social development.
What are the problems of the world bank?
Richer countries have the most power - its governed
Poorer countries don’t have a say
What is the IMF?
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.
What are the characteristics of the IMF?
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
What are the problems with the IMF?
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…
What is the WTO?
World trade organisation
Advocates free trade without tariffs and quotas - has drawn up the rules for international trade.
What is trade liberalisation?
Removing barriers
What does the WTO do?
Advocates free trade without tariffs and quotas
Has drawn up the rules for international trade.
What are tariffs?
Taxes imposed on imports
What are subsidies?
Financial assistance to a business by government to make it competitive or prevent collapse
What are quotas?
A limit on the quantity of a good a country allows into the country
What is protectionism?
Policies to protect businesses and workers in a country by restricting/regulating trade with foreign nations.
What is a free market economy?
A market economy based on supply and demand with little or no government control
What is free trade?
A policy where a government does not interfere with imports or exports by applying tariffs, subsidies or quotas
What is privatisation?
Transferring ownership of a public service/agency/property into private ownership run for profit
What is neoliberalism?
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.
How does the WTO help?
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
What are the problems with the WTO?
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.
What’s an example of the world bank?
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.
What’s an example of the IMF?
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.
What is foreign direct investment?
Investment made by an overseas company or organisation into a company or organisation which is based in another country.
What did the UK do to aid growth?
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.
How did tax breaks help?
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.
How did grants and subsidies help?
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.
What’s an example of FDI?
Building a factory in another country
What did china do to aid growth?
After decades of economic and political isolation, the Chinese government declared an ‘open door’ policy to international business in 1978.
Why did China declare an open door policy?
It needed western technology and investment to develop its economy - and from then on its government welcomed foreign businesses setting up in china.
What happened after China declared an open door policy?
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
What are special economic zones (SEZ)?
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’.
How have SEZ helped?
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.
What has happened to FDI since chinas rapid economic growth?
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.
