Topic 1: Globalisation Flashcards
1
Q
Globalisation definition:
A
- the process in which people, culture, finance, services and goods transfer between countries with few barriers.
2
Q
What are the types of globalisation?
A
- economic/financial globalisation
- political globalisation
- social globalisation
- cultural globalisation
3
Q
What is financial globalisation?
A
- global capitalism is spread by TNCs - some with higher incomes than the GDP of some countries.
- cheaper labour in developing countries helps to supply consumers in wealthier nations
- trillions of dollars are exchanged globally by electronic mean every day.
4
Q
What is political globalisation?
A
- international political organisations have expanded to promote economic growth, e.g. the EU, G8/G20.
- TNCs and international political organisations can influence national governments
- many trade barriers (e.g. quotas/tariffs) have been reduced or removed to liberalise world trade.
5
Q
What is social globalisation?
A
- those with skills in management, finance and IT move around the world to where they are most in demand.
- economic migrant labour flows to areas with higher incomes and higher rewards.
6
Q
What is cultural globalisation?
A
- lower transport costs allow increasing long-distance tourism
- cheaper global phone networks, increasing mobile phone usage, and fast fibre-optic connections allow exchanges of information and ideas by email, social media and online news websites.
7
Q
Deepening and lengthening of globalisation:
A
▪ The lengthening of connections - people can now travel further afield and goods are
brought in further away.
▪ The deepening of connections where connections are penetrating more in depth into
most aspects of life.
▪ Faster speed of connections - people can now talk in real time from different parts of
the world and you can travel much faster than previously between different countries etc.
8
Q
What are the flows of movement:
A
- Capital – money flows through the world’s stock markets
- Commodities – valuable raw materials (e.g., fossil fuels, food and minerals) are traded
Information – the internet allows real-time communication between countries globally - Migrants – the permanent movement of people still face challenges due to border controls and immigration laws
- Tourists – Budget airlines have made it possible for people to travel further more easily
9
Q
Political interdependence:
A
- international political issues require countries working together in order to solve them. Issues must have a unanimous decision from nations.
- countries rely on others to intervene if there is political unrest. For example, many countries intervened when there was Serbian State sponsored ethnic cleansing of Kosovo’s independence.
10
Q
Economic interdependence:
A
- countries are dependent on the flows of labour, products, services entering the country in order for the economy to grow.
- labour provides a workforce; products and services mean countries can develop and make more money.
11
Q
Social interdependence:
A
- migration has caused social interdependence as there are now diasporas all over the world that are dependent on the place they live.
- countries rely on each other for leisure activities, e.g. TV programmes produced in other countries.
12
Q
Environmental interdependence:
A
- all nations are affected by other nations, greenhouse gas emissions, nuclear waste emissions etc, meaning all countries rely on each other to protect the environment.
13
Q
Developments in transport and trade - 19th century:
A
- steam power
- railways
- jet aircraft
- containerisation
- telegraph
14
Q
Developments in transport and trade (19th century) - steam power:
A
- in the 1800s, Britain was leading the world in use of steam technology.
- This allows the British to move their goods and armies very quickly into key areas, such as Asia and Africa.
15
Q
Developments in transport and trade (19th century)- railways:
A
- railway networks expanded globally in the 1800s and remains important for governments globally. E.g. HS2 Railway linking London to northern England.
16
Q
Developments in transport and trade (19th century) - jet aircraft:
A
- newer and more efficient aircraft have allowed goods to be transported quickly between countries. Increasing competition between affordable airlines has led to more people being able to travel abroad.
- arrival of the intercontinental Boeing 474 in the 1960s
17
Q
Developments in transport and trade (19th century) - containerisation:
A
- more than 200 million container movements every year and is extremely important to the global economy.
- lower costs of transport are beneficial for both businesses and consumers.
- today, the largest container ships carry 24,000 containers.
18
Q
Developments in transport and trade (19th century) - telegraph:
A
- first telegraph cables were laid across the Atlantic in 1860s, which allowed foe almost instantaneous communication and revolutionised how businesses operated.
19
Q
What is the ‘shrinking world effect’?
A
- when places around the world take less time to reach, due to developments in technology and therefore start to feel closer.
- can also be referred to as time-space compression.
- 1840: best average speed of horse-drawn coaches and sailing ships was 10mph.
- 1930: steam trains averaged 65mph and stem ships averaged 36mph
- 1950s: propellor aircraft - 300-400 mph
- 1960s: jet passenger aircraft - 500-700 mph
- 1990s: cyberspace information in seconds
20
Q
Developments in transport and trade (21st century) - telephones:
A
- mobile phone use is very common with smartphones becoming more popular. This has allowed better global communication.
21
Q
Developments in transport and trade (21st century) - broadband and fibre optics:
A
- since the 1990s, ranges of data can be transferred very quickly via cables laid out along the ocean floor
- this also reduces the cost of communication
22
Q
-Developments in transport and trade (21st century) - GPS:
A
- allowed companies and people to track goods across the world.
23
Q
National governments attitudes and actions
A
- free-market liberalisation
- privatisation
- encouraging business start-ups
24
Q
What is free-market capitalism
A
- associated with the policies implemented by Thatcher in the UK and Ronald Reagan in the US.
- the belief that government interventions in markets would hinder economic growth and development in the long term.
- banking and finance sectors were deregulated in the UK which led to London becoming one of the world’s major financial sectors.
25
Q
What is privatisation
A
- until the 1980s, important assets in the UK (railways and utilities) were owned and run by the govt.
- Thatcher privatised these state-owned industries. Privatisation allowed the govt at the time to raise a lot of money.
- however some critics believe that privatisation comprises the quality of services.
26
Q
What is encouraging start-up businesses
A
- around the world, incentives are provided by govts in order to attract businesses.
- after Sunday trading began in the UK, many foreign businesses (e.g. Disney) began to establish shops to profit from lucrative opportunity.
27
Q
National governments as key players examples
A
- UK
- China
28
Q
UK National govt actions
A
- Margaret Thatcher’s Conservative government was first to fully embrace globalisation strategies.
- developed two strategies:
1) gave tax-breaks (subsidies) to companies investing in areas such as the London Docklands. Almost all companies establishing themselves in Canary Wharf were given life-long tax-breaks. This created highly attractive benefits and encouraged a number of large overseas financial institutions to relocate to London.
2) gave grants to encourage foreign companies to locate new manufacturing plants in the UK. E.g. Nissan and Toyota both received subsidies to attract further FDI. By 2015, the UK was the 4th largest recipient of FDI.
29
Q
Subsidies definition
A
- grants given by governments to increase profitability of key industries
30
Q
Foreign Direct Investment (FDI) definition
A
- investment made by an overseas company or organisation into a company or organisation which is based in another country
- richer countries invest in poorer ones, often financing infrastructure in return for access to raw materials or workers
- 2014: Asia received $492 billion in FDI and Latin America received $183 billion.
31
Q
Advantages of FDI:
A
- diversifies investor’s portfolios
- promotes stable long term lending
- provides financing to developing countries
- provides technology to developing countries
32
Q
Disadvantages of FDI:
A
- not suitable for strategically import industries
- unethical access to local markets
- investors may have less moral attachment
33
Q
What was China’s ‘open door’ policy
A
- 1978
- allowed economic liberalisation and introduction of FDI
- China needed western technology and investment to develop economy
- SEZs were introduced on the coast, e.g. Shanghai Economic Zone. This led to a rapid influx of FDI as foreign companies has tax incentives and access to huge pools of cheap labour.
34
Q
What were the benefits of the open door policy
A
- by 2005, approx. 50% of Chinese exports came from foreign companies in these zones
- exports increased by $2bn in 1980 to $200bn in 2000.
- China joined WTO in 2001, guaranteeing other countries while lower tariffs on exports from China.
- by 206, China was receiving $60bn per year in FDI
- 400 million people were lifted out of poverty
- FDI into China allows economic growth for China = more money = allows Chain to invest FDI elsewhere
35
Q
What are trade blocs?
A
- allow free trade within member states - no tariffs or changes can be applied
- encourage and entitle free trade
- examples include, EU, NAFTA, ASEA, APEC etc
36
Q
Advantages of trade blocs:
A
- businesses have a larger potential market to sell to, and so larger potential revenue to make
- trade of essential materials or services become more reliable within a trade bloc. May be less economic risk
- positive feedback loop, as businesses cater for more demands many other businesses can benefit.
37
Q
Disadvanages of trade blocs:
A
- trade blocs still don’t guarantee fair treatment within, for example the relationship between Mexico and USA has not strengthened through NAFTA
- interests of countries within major trade blocs are focused upon themselves. Outside trading countries become excluded and find it difficult to join in trading.
38
Q
What is the KOF Index?
A
- produced by the Swiss Economic Institute
- scores on 24 factors across three main categories, political, social and economic aspects of globalisation.
- scores out of 100 with countries having higher scores being more globalised
- political = number of embassies
- social = cross border contacts
- economic - volume of FDI
39
Q
KOF Index - why do small countries score so well?
A
- KOF measures international interactions rather than internal flows within big countries.
- countries in Europe are smaller than USA and China and therefore every country has embassies. They also have shorter distances to neighbouring countries
- high European indicator value reflects large interactions within the EU. Suggests decision to join a trade bloc is effective in promoting globalisation
40
Q
What are the disadvantages of the KOF Index?
A
- technology developments mean that some indicators look dated, e.g. international mail given the rise of social media and email
- larger numbers of indicators incorporate wide range of international connections
- trade flows will not include informal economy flows. Will understate the degree of globalisation in developing and emerging countries.
41
Q
T Kearney Index?
A
- ranks both major global countries and cities
- uses 12 indicators spread across four categories:
42
Q
T Kearney Index?
A
- ranks both major global countries and cities
- uses 12 indicators spread across four categories:
+ economic integration
+technological connectivity
_ political engagement
+ personal contact - two most globalised cities are New York and London
43
Q
Disadvantages of AT Kearney Index?
A
- only include 62 countries, 84% of global population
- established in 2008 and therefore may appear to be outdated
- small European cities have higher scores as smaller countries have higher FDI indictaors due to smaller markets.
44
Q
Why are some countries ‘switched off’?
A
- political reasons
- geographical location - landlocked
- poor infrastructure
- poor education - lack of jobs
45
Q
What are examples of switched off countries?
A
- North Korea (politically)
- Zambia (landlocked)
- Tanzania (economic issues)
46
Q
Why is North Korea ‘switched off’?
A
- switched off from globalisation for political reasons
- no access to the internet or social media
- noy connected by any undersea cables
- radio and TV access only allows government regulated channels where propaganda is aired.
- press and broadcasters are under the control of the state
47
Q
Why is Zambia ‘switched off’?
A
- landlocked country: relies on good political relations with neighbours to access ports on the Tanzanian or Angolan coast by rail.
- heavily reliant on Chinese investment, e.g. Tanzam railway (1970s) a 1860km rail link was improved with Chinese investment and as a result copper exports have risen since 2008.
since 2000 privatisation and debt cancellation has reduced Zambia’s debt, and $20 bn of FDI has been invested in the copper industry which has increased the country’s income.
48
Q
Why is Tanzania ‘switched off’?
A
- until 2001 Tanzania had serious debt problems. The HIPC initiative led to the cancellation of many of its debts. Now income from the cotton and other export crops allows the country to invest in healthcare and education.
- also has growing investment links with India, China, Japan and UAE to export its farm produce and mineral resources.
- from 2006-2016 raw cotton fluctuated from $0.40 to $2 leading to global overproduction meaning cotton prices frequently fell then was less able to pay for imported manufactured goods.
49
Q
Why is Tanzania ‘switched off’?
A
- until 2001 Tanzania had serious debt problems. The HIPC initiative led to the cancellation of many of its debts. Now income from the cotton and other export crops allows the country to invest in healthcare and education.
- also has growing investment links with India, China, Japan and UAE to export its farm produce and mineral resources.
- from 2006-2016 raw cotton fluctuated from $0.40 to $2 leading to global overproduction meaning cotton prices frequently fell then was less able to pay for imported manufactured goods.`1
50
Q
Global shift over time:
A
- originally in China, however from 1860-1913 it seemed to shift towards Scandinavia and Europe.
- Although it has now returned to Asia, particularly China, due to the kl0oss of primary and secondary sectors.
51
Q
Global shift - China:
A
- world’s largest recipient of FDI since 2000 and its share of global revenue rose from 3% in 2001 and 10% in 2013.
- rapid urbanisation has accompanied rapid industrialisation. By 2015, China had 150 cities with a population of over 1 million, up from 30 cities in 2000.
52
Q
Global shift - benefits for China:
A
- investment in infrastructure
reduction in poverty - increase in urban income
- better training and education
53
Q
Investment in infrastructure:
A
By 2016:
- China had developed the world’s longest highway network
- its rail system reached 100km in length linking all cities and provinces
- its high speed rail system was world’s longest railway linking Beijing with Guangzhou, Shenzhen and Shanghai.
- 82 airports had been built
