topic 3: globalisation Flashcards

Question

The World Bank

Answer 1

The World Bank, similar to the IMF, loans money to developing nations with the aim of improving development, and so enabling globalisation. Like the IMF, The World Bank is also seen as controversial and many critics say both these organisations don’t benefit developing countries. Instead, they promote LEDCs to increase their debts and limit the government’s sovereignty.

Answer 2

The WTO is headquartered in Geneva, Switzerland which aims to liberalise trade by removing tariffs, subsidies and quotas. The WTO has been criticised because it has failed to prevent the EU and USA from implementing protectionist measures like subsidies, and so it has been unsuccessful from creating equal opportunities for all countries to trade

Answer 3

This is governance model strongly associated with the policies implemented by Ronald Reagan in the US and Thatcher in the UK. It is the belief that government interventions in markets would hinder economic growth and development in the long term. As a result of market liberalisation, the banking and finance sectors were deregulated in the UK which led to London becoming one of world’s major financial centres

Answer 4

Until the 1980s, important assets in the UK, such as railways and utilities, were owned and run by the government. Thatcher privatised these state-owned industries; private companies bought and ran these services, which has continued to the present day. Privatisation allowed the government at the time to raise a lot of money. However, some critics believe that privatisation compromises the quality of services (such is the case for northern rail, despite raising prices for consumers there are increasing strikes which are negatively affecting commuters).

Answer 5

Around the world, incentives (grants, tax breaks, infrastructure constructed) are provided by governments in order to attract businesses. After Sunday trading began in the UK, many foreign businesses (e.g. Disney) were attracted to establish shops here to profit from this lucrative opportunity.

Answer 6

Offshoring – TNCs set up production facilities in developing countries, which have large, cheap workforces (e.g. Bangladesh) ▪ Foreign Mergers – TNCs from different countries join to form one larger company ▪ Foreign Acquisitions – A TNC acquires another company from abroad, often in a hostile way (may involve local job loss, lack of interest in the local environment, etc) ▪ Transfer Pricing – TNCs sometimes channel their profits through subsidiaries in tax havens (e.g. Ireland)

Answer 7

The government restricts the flow of information and knowledge through state-controlled media outlets and internet restrictions. Censorship can be used to limit a population’s knowledge of foreign culture and ideas (such as democracy) which could undermine a dictatorship government.

Answer 8

Most countries have some sort of border control and migration monitoring. With the rise of right-wing, extremist views, (as discussed later in the notes) more countries have adopted strict migration controls.

Answer 9

Trade protectionism involves subsidies, tariffs and quotas which help a country to protect domestic industries. For example, in 2016 Chinese steel flooded global markets at very low prices - “dumping” - due to Chinese government subsidies. This caused major problems for steel industries around the world including the UK Tata Steel Works, which closed and sold all of its plants as it lost £1 million every day.

Answer 10

In order to trade more freely between nations, governments may sign agreements with each other in order to reduce restrictions of the flow of capital and goods. Free trade may also encourage the movement of people, culture and knowledge.

Answer 11

Businesses have a larger potential market to sell to, and so larger potential revenue to make. ▪ As businesses cater for more demand by increasing their volume of production, many other businesses can benefit by providing raw materials, skilled workers or providing outsourcing opportunities. Hence increased business for one may in turn benefit many in a positive feedback loop. ▪ Trade of essential materials or services become more reliable within a trade bloc. There may be less economic risk and better pathways for essential imports (food, energy, etc).

Answer 12

The interests of countries within major trade blocs are focussed upon themselves. Outside trading countries become excluded and find it very difficult to join in trading. Foreign industries and suppliers can be directly damaged as a result of competition or lack of opportunities due to trade blocs forming. ▪ Trade Blocs still don’t guarantee fair treatment within, for example the relationship between Mexico and USA has not strengthened through trade bloc NAFTA.

Answer 13

- tariffs (a tax for importing and exporting goods); -non-tariff barriers (NTBs), such as quotas (a limit/fixed number of goods) or requirements; - and outright bans on products or country import/exports.

Answer 14

lower the costs of trade, certain restrictions can be removed or lessened in return for another country doing the same. All trade agreements are overlooked by the World Trade Organisation (WTO) to ensure they are fair. An example of a trade agreement is the North American Free Trade Agreement (NAFTA). This agreement has lowered and removed tariffs on imports and exports between Canada, the USA, and Mexico. NAFTA has been criticised for its effectiveness.

Answer 15

The KOF index measures globalisation of countries for political, economic and social indicators. It’s measured on a scale from 1 to 100, where 100 is the most globalised nation. ▪ Political (39% weighting on overall score) -Membership of international organisations and trade blocs like EU, WTO, IMF, NAFTA -Number of foreign embassies located in the country -Participation in international treaties ▪ Economic (37% weighting on overall score) -Long distance flow of goods and services and capital -Flows of FDI ▪ Social (24% weighting on overall score) -Personal contact through international phone calls and tourist numbers -Information flow through the number of internet users per 1000 people -Cultural proximity through things like the number of McDonalds

Answer 16

AT Kearney Index is a measure of globalised cities, by a London business. It considers political, communication, technology and political factors. ▪ Economic integration -Imports and exports -FDI ▪ Personal contact -Telephone traffic -Travel and tourism -Remittances ▪ Technological activity -Internet users -Internet hosts -Secure servers ▪ Political engagement -Membership of international organisation -Signatories to international treaties -Number of embassies

Answer 17

● GNI (Gross National Income) is the value of goods and services by a country; similar to GDP, but GNI also takes into account overseas earnings. ● PPP (Purchasing Power Parity) is the expenditure of a country’s population and reflects the cost of living. ● Income per capita is the mean average income per person (income of the country by population size). This average can easily hide inequality; the few high earners have a larger influence of GDP than a majority of low earners. ● GDP (Gross Domestic Product) measures the total value of goods and services produced in a country. Using GDP as a simple economic measure may be inaccurate as GDP doesn’t include any informal earnings or black market economies. Furthermore, GDP is measured in US Dollars, therefore can vary as exchange rates vary daily.

Answer 18

➔ Economic Sector Balance considers all four main economic sectors - Primary, Secondary, Tertiary, Quaternary - and describes the composition of a country’s industry (often displayed as a bar chart). As a country develops, primary industries usually decline and their earning reduce whilst secondary and tertiary become more important (according to the Clarke-Fisher Model). ➔ Gender Inequality Index (GII) measures female participation and treatment within society and considers: ● Reproductive health – Maternal mortality ratio, adolescent birth rates ● Empowerment – Proportion of parliamentary seats held by women, ● Employment – Labour force participation rates of women ➔ Human Development Index (HDI) is a measure of social development and considers: ● Life expectancy ● Wealth (GDP per capita) ● Education (Literacy levels and average number of years in education)

Answer 19

TNCs usually work by having their headquarters, production, and sales all in different countries across the globe , meaning they are a crucial aspect of globalisation. These corporations can provide raw products, manufactured goods, services, or information - they exist in different industries (sectors). However, TNCs are not entirely beneficial, as some exploit the environment and population in favour of maximising profits and manufacturing efficiency. The Headquarters of TNCs are usually located in high income countries . HQ is responsible for the big decisions, such as investments, meetings with global organisations etc. This map shows the Headquarters of Fortune 500’s largest companies. The majority of headquarters are heavily concentrated within the USA, Europe, Japan, as well as many in the emerging economy of China. Products that are made for consumer audiences, such as smartphones, use global supply chains as a way to spend less money on manufacturing . TNCs may often invest in the source of raw materials also in order to save money in the supply chain. E.g. many TNCs that provide food (like fruit) invest in plantations to lower the cost and remove the ‘middle man’.

Answer 20

Overall, TNCs make products, produce jobs, invest in countries, and sometimes contribute to cultures. Some TNCs are very powerful, and can even have political influence, e.g. the pressuring of some countries to reduce taxes and create SEZs so that the TNC will invest there. TNCs are very influential to a country’s level of globalisation and interconnectivity; some TNCs have larger revenues than entire countries’ GDPs. Furthermore, in 2016, the top 200 TNCs accounted for 25% of the world’s economic activity but only employed 1% of the world’s population. TNCs create links between countries and with other companies. Linkages are created in order to benefit the TNC, and often includes expanding the company.

Answer 21

TNCs create links with other countries by investing in them , which benefits the country as this creates jobs and contributes to the economy. TNCs can be investments into a factory, for example, but they may also take the form of mergers and acquisitions.

Answer 22

TNCs often expand their company by creating linkages between other companies. There are two types of integration: ● Horizontal integration: taking ownership of part of the supply chain, e.g. buying a plantation ● Vertical integration: taking ownership of another company , often one that is in a similar industry. The food industry is a prime example of vertical integration. A lot of large companies control the majority of smaller companies,

Answer 23

Natural disasters (e.g. 2011 Tohoku Tsunami) can disrupt supply chains which in turn can affect production and hit profits. A TNC’s need for interdependence and global logistics can have major implications on global markets. Alternatively, the collapse of the Rana Plaza factory in Bangladesh in 2013 (1134 people were killed) impacted many garment TNCs. The TNCs relying on the garment factory lost profit and their production source, and the whole industry faced intense scrutiny over TNCs exploiting workers and providing unsafe working conditions.

Answer 24

TNCs that provide tertiary industry products (services) will often outsource tasks to other companies in order to save money and time. TNCs like Apple outsource their manufacturing process so that profits can be maximised.

Answer 25

Companies that make manufactured products will often have their factories in LICs due to lower labour costs, better taxes, weaker regulations for workers and weaker environmental regulations. This leads to much dispute about the ethical issues with TNCs exploiting poorer citizens in order to maximise their products.

Answer 26

The adaptation of goods or services by a TNC is to meet local needs or tastes, which would increase custom within a select region. There are many examples of glocalisation: - Grocery shops based in Bangladesh don’t wrap their vegetables, because customers judge their purchases on the feel of the food (called a wet market) - McDonalds have created a menu without any beef or pork burgers in India, due to the large population of Hindus and Muslims - Car makers must change the orientation of the car to suit which side of the road a person will drive on.

Answer 27

how manufacturing and industrial activity has shifted from different parts of the world. Prior to the 1960s, manufacturing industries were located in the west in Europe and the US. However after the 1960s, industries relocated to the East in countries like China and India, due to their large, unskilled workforce.

Answer 28

Many Indian citizens can speak fluent English (“the language of business”) and the Indian government have invested in infrastructure such as broadband capacity, which has attracted high tech companies.

Answer 29

Workers receive middle class wages which has meant that their disposable incomes have increased Other businesses have seen more customers and more spending, especially the likes of shopping malls and nightclubs - positive multiplier effect. People running the companies where services are outsourced to have seen increasing profits.

Answer 30

Many workers believe that they are exploited, with long shifts and still lower pay than MEDC workers. Employees have become demotivated due to the repetitiveness nature of their work. The inequality between the richest and poorest is increasing as the poorest are not well educated and cannot benefit from outsourcing jobs.

Answer 31

In the 1990s, cities such as Shenzhen and Dongguan offered investors a large pool of cheap labour for manufacturing and other secondary employment. Since then, the volume of TNCs outsourcing to China has vastly increased. Sweatshops - that previously have accelerated China’s globalised status - have now become less popular due to cheaper labour elsewhere and the bad reputation Chinese products have. Instead, sweatshops are moving to Bangladesh and Vietnam, whilst new technological outsourcing opportunities move into China, offering higher wages.

Answer 32

New production methods and techniques brought by TNCs have now been adopted by local companies, so causing local economic development. Locals, especially in rural areas who would otherwise be dependent on subsidence farming, now earn a wage.

Answer 33

Many employees have been exploited and their working conditions are dangerous - chemical contact, long hours, limited human rights, relaxed health & safety regulations. The environment has been degraded. Rivers and waterways become polluted with arsenic, lead and other dangerous chemicals. The air becomes polluted with particulates, that increase asthma suffers and pollution-related fatalities.

Answer 34

During the 1970s, many factory workers in Europe and America lost their jobs as TNCs relocated or outsourced their manufacturing to the East. This caused a variety of social and economic impacts, which can be seen in cities such as Detroit and Glasgow: ▪ Dereliction and Contamination - Many textile companies located in UK Northern cities closed and so the building they previously occupied became abandoned and derelict. Other areas suffered from abandoned chemical and industrial waste, which has infiltrated the soil and local waterways. ▪ As a direct consequence of companies moving away, rates of unemployment will increase. This can lead to depopulation, as residents migrate away to find alternative employment. Furthermore, deprivation of inner city areas especially will increase and crime rates may increase.

Answer 35

- Migrants are attracted to the city for: ▪ Employment Opportunities Large businesses and TNCs provide a wide range of jobs, with the opportunity to be promoted to better roles and so higher wages. ▪ Services There is a better access to services in urban cities, as the distance needed to travel is reduced and there is more likely to be specialised facilities in the city than in rural areas. This can include education, healthcare, government embassies and offices, etc. ▪ Infrastructure Transport links - roads, railways, bus routes, etc - are faster and more reliable in urban areas. There may be less congestion (if you are moving from a honeypot village, congested due to tourists, to the suburbs). Also, there is better internet and broadband connection in urban areas, due to the ease of installation here rather than in the countryside. There are usually street lights which makes people feel safer to go out at night.

Answer 36

- Migrants are deterred from rural living by... ▪ Poverty People may not able to earn enough (decreasing earning of farming, seasonal tourist employment) and there are very few job opportunities, therefore there can be high poverty and deprivation in rural regions. ▪ Conflict (e.g. Darfur, Sudan) There may be a scarcity of resources which can cause conflict between different groups, as they fight for resources (such as water, land for agriculture or natural resources) and wealth. ▪ Land Reform In some regions, locals are unable to prove that they own the land they claim to own, thus TNCs (with government support) claim the land instead. This is very common with native, indigenous communities, who have little voice against powerful TNCs. ▪ Agricultural Modernisation An increase and advancement of agricultural machinery has meant that less people are required on farms, causing rising unemployment and so forcing economic migration of the unemployed. ▪ Climate and Natural Disasters A rare circumstance, but the occurrence of droughts or crop failures can force migration in search of food or water. Alternatively, for regions regularly affected by earthquakes, storm surges, landslides, etc. families may feel pressured to move elsewhere to avoid economic loss or fatalities.

Answer 37

▪ Strain on services like education and healthcare ▪ Overcrowding and the development of “slums” ▪ Rising crime rates ▪ Poor sanitation due to open sewers and defecating outdoors ▪ Lack of green space ▪ High levels of congestion, which causes air pollution

Answer 38

Generally skilled or very wealthy people, with the ability to move to global hubs (e.g. London, Paris, New York). An example of elite migrants would be Russian Oligarchs, who pay Investors Visas and purchase properties in Mayfair, Kensington and Belgrave. (It is thought that Oligarchs purchasing elite property in London has caused UK house prices to escallate, which questions the ‘trickle down’ theory that they’re money would eventually improve other UK citizens, through business and tax)

Answer 39

Many cities like Riyadh, Dubai, London and New York attract workers who work for very little and are skilled in a particular profession (often construction). Economic migration can fill skills gaps and advance a country’s development. However, unless carefully monitored, could lead to escalating urban populations and a rise in illegal migrants.

Answer 40

- Can help fill skills gaps. - Working migrants contribute to the economy through paying taxes and buying goods & services. - Increase in cultural and demographic diversity. - Young migrants can help to balance an ageing population, or increase a dwindling population over time. - Businesses have a larger pool of potential employees or customers.

Answer 41

▪ Migrants send back remittances which can aid in development and reduce poverty without government intervention. ▪ Migrants become skilled and can come back to set up their own businesses, encouraging local economic growth and employment opportunities. ▪ Reduced service spending for the government as population declines

Answer 42

Rise of far right organisations, hate crime and racial tensions IF lack of understanding between migrants and original population. ▪ There could be strains on services (e.g. healthcare, education) due to an increasing population ▪ House price inflation due to higher demand

Answer 43

- Brain drain due to skilled workers leaving - Migrants tend to be young, so elderly family are left behind and can become isolated - Decline in services due to low customer numbers, which can lead to the negative multiplier effect, in turn reducing other businesses and services - Agricultural land not taken care of, with potential dereliction

Answer 44

▪ Language – National languages as well as different dialects and accents. ▪ Traditions – Everyday behaviour and manners that have been passed down through generations. ▪ Religion – There are major religions across the world. ▪ Food – National dishes and diet reflect animals, crops, spices that are found locally

Answer 45

Traditional Asian diets, for example, are low in meat. However, as China develops, the middle class population is growing and so people are starting to adapt their diets to western influences (introduced by Western TNCs). From 1990s till 2015, meat consumption per capita rose from 5kg to 50kg. This change to Chinese diet has had various impacts: ● Obesity has increased, especially within this growing middle class population. ● A rise in cattle rearing has led to a rise in methane emissions which in turn is increasing Global Warming. Alternatively, changes to culture aren’t always for the worst. In China, research conducted showed that only 25% of disabled people were employed which suggested stigma against disabled individuals. However, in the 2012 Paralympics, the Chinese came first with their team. The Paralympics could show how global attitudes towards disabilities positively.

Answer 46

media, migration, TNCs and businesses and social media.

Answer 47

France – The French government has attempted to control globalisation by restricting foreign language media (40% of all broadcast must be French). China – ‘The Great Firewall of China’ prevents information unfavourable of the government or foreign media outlets. Within China, you cannot access the BBC, use Facebook or search for politically sensitive information (such as Tiananmen Square). Iran – In the early 2000s, the government banned Barbie dolls and confiscated them all from stores as they weren’t seen as appropriate for the Islamic State.

Answer 48

Average incomes have risen in all continents since the 1950s but the poorest parts of Africa have seen very little and slow growth. ▪ The increase in wealth of Europe and North America has resulted in the widening gap between the richest and poorest in the world. ▪ Absolute poverty has fallen across but still is high. Since the 1970s, income per capita in Asia has risen significantly due to Japan and South Korea’s modernisation (In 2010, income per capita in Asia stood at US$7000). Incomes in some African countries - especially sub-Saharan countries - has remained stagnant. However, within Africa there are big disparities and so Africa (like other continents) should not be viewed as a whole. In Northern Africa, countries like Algeria and Tunisia are much wealthier than Southern African countries due to natural oil wealth. The Gini Coefficient measures the inequality wealth shared across a population and scores a country from 0 to 100. 0 represents perfect equality, whereby everyone has the same income. 100 represents perfect inequality where one person has all the income.

Answer 49

Within Europe, far right parties and organisations have become more popular and support for them has increased. This has accelerated since the expansion of the EU in 2004 (eight Eastern European countries have been added) and so an increase in the flow of migrants. For example, Germany has accepted the largest number of migrants of any EU country but growing concern and tensions over such a large influx has lead to the rise of Pegida. In France, the National Front received 25% of the votes during a national election, which suggests the French’s views towards migrants and cultural diversity is becoming less accepting.

Answer 50

The Mekong River, for example, flows from China through Myanmar, Laos, Cambodia and Thailand. Since the 1990s, various dams have been constructed along the river, causing increasing political tensions between the countries. Increasing pressures for national governments (increasing population, desire to develop, etc) will increase conflicts between states for: fossil fuels, rivers, islands for naval bases, land for living or farming.

Answer 51

Despite cultural diffusion and erosion, some cultures and indeginous communites have strengthened their identity. Tourists are attracted to experience their culture or witness their traditional lifestyle (e.g. Papau New Guinea). Alternatively, indigeonous (live in one location) or nomadic (travelling between locations) have grouped together, to support each other and maintain their traditional lifestyles. Despite TNCs threat to drill for oil within their territories, indigenous communities continue to prosper in Canada (called the First Nations), Siberia and Alaska.

Answer 52

growing insecurity over energy, food and water. An increasing middle class and the growing global population will continue to increase demand. TNCs have developed global production networks through cheap labour and low transport costs, which has helped TNCs to minimise costs and maximise profits. However, many people criticise the environmental costs (e.g. high carbon emissions) associated with TNCs success and instead adopt “localism” as a way of life

Answer 53

the reduction of globally sourced goods instead purchasing locally-sourced, sustainable products to protect the environment and vulnerable individuals.

Answer 54

Local suppliers can generate more revenue and they can provide more jobs for locals. ▪ Lower carbon emissions are food transported over shorter distances. ▪ Deliveries can be much quicker and may cost less.

Answer 55

Foreign suppliers in developing countries may lose out and jobs may be lost abroad. ▪ Overall cost is higher, due to higher wages and manufacturing costs. ▪ Low income families may not have the financial ability to afford local produce.

Answer 56

Totnes, in Devon, is the world’s first transition town which has its own currency (the Totnes Pound). The Totnes Pound encourages spending in independent stores, therefore benefiting the local economy rather than chains or TNC stores.

Answer 57

aim to support local economies and they promote: ➔ Reducing consumption through reusing and recycling ➔ Reducing waste, pollution and environmental damage ➔ Meeting local needs through local production

Answer 58

Fairtrade aims to secure better pay to producers and growers and includes coffee, cocoa and bananas. The Fairtrade certification provides consumer confidence that suppliers are being paid a fair price for what they produce. However as the scheme continues to grow, it’s increasingly difficult to ensure profits are distributed properly to the growers and producers.