Topic 1 - Globalisation + global governance Flashcards
Dimensions of globalisation
Flows of information + tech
Reliable/fast communication between all areas of the world enables info to be shared at unprecedented levels
Technology ignores politics when connecting people, and it runs on systems controlled by a few companies, like google/apple
Dimensions of globalisation
Flows of services
Services follow flows of capital, info,
people and products
Most services originate in HDEs as they move away from manufacturing
Dimensions of globalisation
Global marketing
Globalised markets use international strategies to deliver inter-continental imagery/messages
Global products rely on global brand identities
Dimensions of globalisation
Flows of capital
Refers to the movement of money for investment, trade or business production
HDEs invest in LDEs to take advantage of their cheap labour costs
Capital flows have started increasing ever since 1990 when LDEs began to invest
Dimensions of globalisation
Flows of products
HDEs: High skilled manufactured goods
NEEs: Low skilled manufactured goods
LDE: Cheap low skill raw materials
Freer trade encouraged growth of product flows
Increased transport created efficiency in product movement
Dimensions of globalisation
Flows of labour
Tend to be from rural to urban areas in a country, and from HDEs to LDEs on a global scale
People tend to move for employment reasons, eg economic migrants and TNCs moving between offices
Factors of globalisation
New technology
Rapid increase in technology, eg phones, laptops and IT systems
Phones are essential in LDEs, helping connect people markets and trade
Factors of globalisation
Global finance systems
Systems that consist of banks and transfers of wealth between regions as well as internationally
Some argue the financial crisis was caused by collapse in US house prices, a negative of globalisation in finance
Factors of globalisation
Transport systems
Systems that consists of sources, modes of transport and destinations
Allows the movement of people and goods across vast distances
Things like disease (corona) can equally be moved rapidly
Factors of globalisation
Security
The protection of companies, governments and regions
In 2016 11 million legal documents were leaked exposing wrong doing on a global scale
Factors of globalisation
Trade agreements
Global trade systems prevent countries favouring one country’s imports over another
WTO regulates 97% of world trade, providing a platform for negotiations
Social factors affected by globalisation
Positives
Globalisation has helped bring people together
More availability in technology helped connect people and places globally
Migration led to a spread of cultures globally
Social factors affected by globalisation
Negatives
TNC factory workers are mistreated and poorly paid leading to physical and mental illnesses
LDEs cannot afford most tech, which is the main way people are more socially connected
Political factors affected by globalisation
Positives
Helped create peace, greater political incorporation reduces likelihood of war
Trade blocs increase foreign competition, reducing prices for its own population
Political factors affected by globalisation
Negatives
Globalisation takes advantage of LDEs as they cannot access trade markets due to high tariffs set by blocs
EU and MF can control laws as part of their political interdependence
Economic factors affected by globalisation
Positives
Rapid development in NEEs like China helped increase standard of living in relatively short periods of time
TNCs provide vast amounts of jobs improving many economies
Economic factors affected by globalisation
Negatives
Bad pay from TNCs, some Apple workers receive less than £1 a day, unjust as they cannot support themselves
Cultural factors affected by globalisation
Positives
Increased transport makes travel easier, easier to experience new culture
Media allows cultures to be expressed globally, preventing them from dying out.
Cultural factors affected by globalisation
Negatives
Led to erosion of culture and increase in Americanism
Countries like America and the UK dominate with their culture on media, leaving little room for LDEs to express theirs
Define interdependence
Where two or more countries rely on each other through economic, political and environmental methods.
Unequal flows of people
3 causes, explain two
Family reunification, economic migration..)
Family reunification: family joining member who has moved away for work after a period of time.
Economic migration: moving to countries with few jobs to a country abundant with jobs.
Refugees from conflict/natural disaster
Unequal flows of people
3 benefits to the world
(LDE growth, job gaps, migrant well-being)
Migrants send back remittances back home, helping LDEs grow.
Migrants work for low wage jobs native citizens do not want to do.
Migrants can escape war, disaster increasing chances of better quality of life.
Unequal flows of people
Inequalities
Brain drain: an exodus of highly educated people from one country to another looking for better quality work.
Helps host country as workers pay tax and can additionally introduce new cultures.
Creates inequality between origin and host country, origin country’s economy may suffer at the expense of the host country’s economy growing.
Unequal flows of people
Conflicr
Can lead to social conflict. As migrants work for less. companies may depress wages for entire workforce including locals. Creating conflict between migrants and locals
Unequal flows of people
Injustice
Migrants are often exploited and mistreated
Eg kafala system
Unequal flows of capital
How have they changed
After 2008 crisis flows remained primarily between HDES.
China began investing into LDEs, slightly manipulating the flow.
LDEs have little to invest, less control over the flow,
Capital from TNCs flow from LDE to HDE
Define FDI
Foreign direct investment: When a company invests in a LDE to increase its profit margin.
TNCs are the main users of FDI.
Unequal flows of capital
Inequalities
Foreign aid can create dependency within a country, their government has little incentive to develop its own country.
Inequality between HDEs and LDEs grows as LDE economy does not develop.
Unequal flows of capital
Conflict
Foreign aid can fund conflict if it finds its way to armed groups.
FDI can create conflict between local and foreign companies as local companies can’t compete with foreign price + efficiency.
Unequal flows of capital
Injustice
Companies may force LDE governments to pass laws making it cheaper for them to invest in.
Define neo-liberalism
Idea that economy should be run with little state intervention.
Includes privatisation of some industries, removing trade barriers and cutting government spending.
Unequal flows of ideas
Inequalities
Neo-liberalism started in HDEs
concentrates wealth in a few large wealthy businesses based in HDEs.
Unequal flows of ideas
Conflict
If privatisation/free trade is threatened by LDE government laws, HDE country may intervene leading to conflict
Unequal flows of ideas
Injustices
Governments/TNCs may argue privatisation is the best way to develop a country, justifying poor working conditions, reduced pensions.
(Chile case study)
Unequal flows of tech
Inequalities
HDEs can afford the latest tech, by having better access to info and services due to developed communication they have an advantage over LDEs
Unequal flows of tech
Conflict + injustice
Repressive have brought weapon tech from HDEs to stop protests from their own people
What is the IMF/what do they do
International monetary:
- Monitors global economy
- Advises governments on how to improve their economic situation
- Gives loans to countries with problems
What is the world bank/what do they do
- Provides loans to LDEs to improve their health, education and infrastructure
- All member countries pay in, only those who need it remove.
How do financial systems (IMF/World bank) reinforce unequal power relations between countries
= Based in HDE, US. Run by HDE members, LDEs have little influence over decisions made.
- Loans are condition, countries have to meet unjust/harsh conditions to receive them.
Two ways in which globalisation harms the environment
Increased transport/easier access to goods
- Global trade = more transportation resulting in more pollution.
- Easy global access to resources can lead to deforestation and over-farming of fish.
Single product economy
Nigeria
How has OPEC negatively impacted Nigeria
- Focus on oil alone led to a decline in agricultural and manufacturing industries
- Rural/urban migration increased resulting in rural poverty and over-crowding in cities like Lagos
Unequal flows of people
Case study: Albertville
(FLIP FOR FACTS)
- Influx of 6000 migrants into Albertville
- Within 20 years the population was 1/4 Latino
- Cause of migration were the plentiful poultry plant jobs
Unequal flows of ideas
Case study: Chile + neo-liberal ideas
(FLIP FOR FACTS)
- Neo-liberal ideas helped reduce poverty from 40% to 3%
- Minimum wage increased by £16
- Month of protests in oct 2019 creating conflict
- Gini index dropped from 56 to 50 showing inequality had increased
State the 4 main rules of trade
- There should be fair competition
- Countries should act predictively in their trade activity
- Unless in a bloc, countries cannot give special access to one country over another
- Countries should promote free trade
International trade
what does it mean for: foreign producers, consumers, imported goods and domestic goods.
- Foreign producer is able to sell more = increased profits
- Consumer gets access to more goods/better suited goods
- Imported goods usually cheaper due to competition
- Domestic goods more expensive, domestic sellers lose profit
How do patterns of world trade favour HDEs
- LDEs depend on low value goods meaning profit is limited
- Primary products often fluctuate in price, if HDEs have a recession primary product value falls
- LDEs often rely on 1 or 2 products
- HDEs manufacture goods increasing their profit, LDEs miss out as they cannot process goods themselves
How do global trends in investment mirror trade
- FDI into LDEs dropped by 14% in 2013
- Large increase in 1990-2000, then plateau/decrease after 2008
- In 2013 China became the largest receiver of FDI
- NEEs now invest in LDEs
Mirrors small shift in trade form HDEs to LDEs
Two disadvantages of international trade
Product-dumping/exploitive industries
Product-dumping: dumping refers to exporting at a price cheaper in foreign markets compared to the price charged domestically
Exploitive industries: Consumer industries exploit workers as a cheap way to maximise profits
Two advantages of international trade
Purchasing power/increased employment
Purchasing power: increased trade = increased competition, lowers prices for consumers, they can buy more for their money
Increased employment: increased production results in increased employment, as a multiplier affect more jobs open up across the economy
Define terms of trade
cost of goods a country has to import compared to the price of goods they export
Specific food commodity: coffee
Issues in coffee production
(Crop loss, climate change)
- Farmers can lose profit if their crops become infected or are destroyed by natural disaster
- Coffee requires specific conditions to be grown, climate change can pose a threat to yield.
Specific food commodity: coffee
Where is it grown
- Equatorial regions, Africa, Asia and Latin America dominate the coffee trade
- Coffee is produced in LDEs by farmers, flows to HDEs where it is consumed.
Specific food commodity: coffee
How are TNCs “winners” in the trade?
- TNCs choose where they buy coffee from, choose the cheapest producers
- 40% of global coffee is controlled by 4 companies
- TNCs increase value of beans by processing them
Specific food commodity: coffee
How are farmers “losers” in the trade?
- Farmers cannot decide their own prices as TNCs can simply choose somewhere else
- Max of 10% of profit made goes back to farmers
- Farmers are over-reliant on this single product, to feed their family for example
Specific food commodity: coffee
How do consumers benefit from the trade?
- Increased competition makes product cheaper for consumers
- They are protected from price fluctuations as TNCs control farmers
Trade blocs
USMCA
(FLIP FOR FACTS)
Canada, USA and Mexico
- Created to remove trade/investment barriers
- Removed 1/2 tariffs from Canada exports to USA + 1/3 tariffs from US exports to Mexico
Trade blocs
OPEC
(FLIP FOR FACTS)
6 countries in Africa, 6 in the Middle East and 2 in South America
- Stabilises oil market in order to efficiently supply petroleum to consumers
- Only works together on prices
Trade blocs
EU
(FLIP FOR FACTS
28 countries located in Europe
- Promotes balance of economy and social justice
- Free trade area within a single market
- Customs/currency/political union
Trade blocs
ASEAN
(FLIO FOR FACTS)
11 countries in SE Asia
- Accelerates economic, social and cultural growth
- Free trade agreements on intellectual property + environment
Define free trade areas
Countries abolish tariffs and quotas between themselves but maintain restrictions on products from outside the area
Define custom unions
Members put tariffs on products outside the group
Define common markets
Like custom unions but also allows free movement of labour and capital
Define economic unions
Like custom unions but also share common policies on agriculture and transport
TNCs
Ben and Jerry’s
Spatial location, 1 economic + 1 environmental impact
HQ = Vermont, USA
Factories in US, Canada and Israel
$18/hour wage for Vermont factory workers
Began offsetting their carbon emissions by joining Native Energy in 2002
TNCs
H&M
Spatial location, 1 economic + 1 social impact
Operates in 74 countries, over 5000 stores
During pandemic sales dropped by 25% resulting in wage cuts
Several reports of underage children working in factories
TNCs
Cadbury
Spatial location, 1 environmental + 1 social impact
Manufacturing plants in US, UK, Canada and India
Cocoa sourced from Cocoa Life - sustainable cocoa sourcing project
Helped 55.000 farmers in Ghana partake in farming training
TNCs
Sony
Spatial location, 1 economic + 1 environmental impact
HQ in Tokyo, 49 offices mainly located in Japan
$9-20/hour wage for workers
Road To Zero aims to reduce environmental footprint to 0 by 2050
Fair trade
2 aims
(minimum price, environmental standards)
Setting up a minimum price the buyer has to cover for the producer’s goods
Maintaining environmental standards for example educating farmers on how to max yield without using fertilisers
Fair trade
2 ways in which trade can be made more fair
(Product caps, unification between farmers)
Product capping allows supply and demand to be balanced to farmers don’t waste crops and therefor lose profit
Unification between farmers can allow a fixed price, TNCs have no choice but to pay fair price
Fair trade
Why wont product caps and farmer unification work?
Farmers are desperate for profit to support their families, the fastest way is to maximise yield, even if demand falls they can sell it for something at least
Farmers are spread out over vast locations, geographically unification is not possible. They may not understand the benefits of this concept, would refuse to join
Fair trade
Café Direct
(FLIP FOR FACTS)
Coffee TNC that supports fair trade
- They only buy through traders off a fair-trade register
- Represent 280 thousand small holders
Fair trade
How has the coffee campaign grown?
- 175 producer organisations in 2001 to 330 in 2013
- Minimum cost for coffee increased by 20% helping livelihoods of farmers
2 Pros of fair trade
- Gives farmers fairer price for their goods
- Farmers are strained in the best farming methods, helping the environment
- Social premiums go towards paying for healthcare + education
- Consumers get better quality products
2 Cons of fair trade
- Consumers have to pay more for goods
- Most fair trade products sold in specialised stores, less frequent sales
- Not all farmers can join fair trade as their products are not in demand
- Most products are not online, cannot compete with non-fair trade products
