Topic 7: EQ2 Flashcards
What are Inter-governmental organisations?
These are regional or global organisations whose members are nation states. They uphold treaties and international law, as well as allowing cooperation on issues such as trade, economic policy, human rights, conservation and military operations.
Why has neo-liberalism become significant?
• After WW2, the USA and the weakened Western European countries felt threatened by Communism. The accepted view was that the best way to combat this was economic development. We know that the USA helped Europe to get back on its feet after the war and that it also supported Japan (and others in this region) economically, therefore enabling the growth of the Asian Tigers. This view dominated USA foreign policy for the next half a century.
• To achieve this, three global organisations were established to promote it, through maintaining financial stability. Each organisation still remains fundamental to global decision making today.
What 4 IGOs have a large level of significance on neoliberalism?
-World Bank
-IMF
-World Trade Organisation
-World Economic Forum
What is the role of the IMF in promoting capitalism/neo-liberalism?
-It’s job was to stabilise global currencies after the 1930s depression and devastation caused by WW2.
-They gave loans to countries facing heavy debts, allowing them to form stable economies, and hopefully prevent communism.
• In returns for loans it tries to force countries to privatise government assets to increase the size of the private sector and generate wealth
-189 members in 2016, but the top 10 member countries controls over 60% of voting rights.
-However, it often imposed conditions on those who borrowed and this often resulted in gov cuts on health and education in order to increase the free market’s role in economic decision making. (E.g in Greece following their 2008 debt crisis)
What was the World Bank’s role in economic decision making?
-It’s role was to finance developments to allow capitalism to function, but also had a focus on natural disasters, humanitarian crises.
-Loaned US$65billion in 2014
-1st loan was given to France for post war reconstruction.
-Gained a bad rep in the 1970s for financing projects which were damaging to the environment, or costly to borrowing countries so loans couldn’t be repaid.
-Now aim to eliminate poverty and implement sustainable goals.
-Largest 8 contributors control 40% of votes, 17.5% of which are from the USA.
How does the world trade organisation promote capitalism/neoliberalism?
-It has a focus on trade and it’s rules.
-Aims to free up global trade and reduce trade barriers.
-Despite a fair 1 vote per country system, no WTO votes have ever taken place, but decision making favours wants of the EU and USA.
-Currently are focused of poverty reduction, but removing subsidies to farmers in developed countries.
-Removed export bans on raw earth materials in China in 2014
What is the role of the World Economic Forum?
-The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.
-It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests.
-The Forum’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas
What are the two main types of TNCs?
-Publicly traded TNCs who’s shares are owned by numerous shareholders (usually other TNCs, banks and large financial institutions such as pension funds) around the world,
-State-owned TNCs that are majority or wholly owned by government.
What has allowed TNCs to be able to dominate in a global market?
-Their economies of scale allow them to outcompete smaller companies and, in many cases, take them over.
-Their bank balances and ability to borrow money to invest has allowed them to take advantage of globalisation by investing in new technology.
-The move towards free-market capitalism and free trade has opened up new markets, allowing them to expand.
Why are TNCs key players in allowing superpower nations to maintain power?
-The size, global reach and wealth of TNCs make them key players in maintaining power and wealth. Although they’re economic entities at heart, their influence also gives them political and cultural influence.
-They can be so crucial through FDI to host-countries development that tax breaks and deals will often be given my a government. This allows these TNCs to spread the ideology and culture from their origin (often western) country.
What is brand value?
This is the value of a brand measured using metrics such as market share, customer opinion of the brand and brand loyalty.
This allows TNCs to bring influence to the countries they originate from, but more importantly also a cultural impact on global consumers.
What are the three biggest brands by brand value?
1) Apple (US$170,276bn)
2) Google
3)Coca-cola
What is significant about brand value in terms of western nations holding super-power status?
-12 of the top 16 companies are from the USA, and 1 is from South Korea and 1 Japanese, 2 German.
-10 of the top sixteen are involved in ICT and communications.
-The top Chinese company (Lenovo) was only 100th in 2015.
What is westernisation?
Since the USA’s dominance post 1990 and EUs economic significance, many now refer to the increased cultural globalisation as ‘westernisation’. This hold characteristics including:
-A culture of consumerism
-A culture of capitalism and the importance of attaining wealth
-A white culture with English as the dominant language
-A culture that adapts selective parts of other world culture and adapts them (food, tv, clothing etc).
What is an example of glocalisation?
In India, McDonalds has to adapt its menu to suit local tastes as well as religious requirements. They have no pork or beef, and plenty of chicken and vegetarian options.
Does ‘cultural traffic’ always spread from the West to elsewhere?
No:
-In the UK curry is the most popular takeaway, not the burger
-Sushi is becoming increasingly popular in the west.
-Some American cultural traits such as baseball have had a hard time grasping a cultural following.
How do TNCs help nations maintain superpower status through media?
News, media, music and TV is all dominates by brands, which predominantly come from the USA. This allows the USA to constantly, but subtly, reinforce its cultural messages and ideologies.
Even IT companies and retailers are now making content, such as Amazon with Amazon Prime TV. The linkage to cultural content has proven a very powerful delivery system.
How do patents allows TNCs to maintain a global influence?
Any person or company that wants to use a technology another firm has a patent on must pay a royalty fee to the company. This causes:
-Western TNCs to have a market in many nations, as poorer firms cannot afford to pay the royalty fee.
-Developed nation TNCs have the patent technology to invest further into R&D, allowing them to create even more patents.
-Education and skills are higher in developed nations
-Copyright and trade markets allows westernisation to be extended further.
How is China attempting to rival the USA through patents?
-In 2012, Chinese innovators applied for 110,000 more patents than the USA did. However, there are questions over the application of these patents both in terms of quality and the extent to which they can generate royalty revenue for future Chinese companies.
-Despite this, the USA still filed the most patents in 2015, with a total of 57,000.
Why do TNCs in China and emerging nations struggle to gain a foothold globally?
All TNCs in China, and most in developing nations, are state owned. Due to this, they tend not to be as well known as their brands usually aren’t global, (e.g China National Petroleum).
Although their gov ownership allows for investment into long-term development and for China neo-colonial investment into Africa, state owned TNCs also are likely to suffer from corruption, inefficiency and a lack of incentive to innovate.
What is the global cultural impact of Apple?
-Apple has transformed how people work, relax and socialise.
-Was worth $274billion in 2015.
-By 2015, over 1 billion iOS devices had been sold.
-This culture transformation has been particularly string in China, because of the significant cultural differences between the communist and capitalist political structures.
-For the young Chinese population, the Apple logo has become a symbol of the freedom they desire.
What are TNCs?
Transnational Corporations (TNCs) - Also known as MNCs (Multinational Companies) these are large businesses that operate in a number of countries. They often separate their production between various locations, or have their different divisions – Head Office and Administration, Research and Development, Production, Assembly, Sales – separated around a continent or the globe.
How have TNCs increased global trade?
• Trade has increased by at least 46% per decade. In the 2000s global trade increased by over 85%.
• Part of the reason for this is the global shift in manufacturing to Asia by TNCs. Since the 1990s the shift has led to rapid increases in exports from developing countries. This has not only shifted economic power away from western economies into emerging economies but it has also made TNCs extremely powerful.
• Instead of trade occurring between different companies, much of the global trade is intra company.
•As a result the United Nations Conference on Trade and Development (UNCTAD) estimated in 2013 than TNCs account for 80% of all global trade.
What issues have patents caused for developing nations?
-Patents which have been developed by pharmaceutical companies make many medicines unaffordable to poorer countries. For example, many new HIV treatments are extremely expensive.
-As a result, there has been a widespread barrier to HIV treatment in sub-Saharan Africa, the worst affected area in the world for HIV/AIDs.
How is the geography of major TNCs changing?
-75% of the Forbes 2000 companies are based in just 10 countries.
-The geography of TNCs is changing; in 2006, 6 of the top 10 TNCs were American, in 2015 only 3 of the top 10 were American – now there are 2 Chinese.
When did the ‘world police’ concept originate?
-It dates back to the 4 powers on the winning side when WW2 came to a close (USA, UK, USSR and China).
-This then led to the setting up of the UN Security Council in 1946.
What is the UN Security Council?
-This is the primary global mechanism for maintaining international peace and security.
-There are 5 permeant states (UK, USA, Russia, France and China), and ten rotating non-permanent states which change every two years.
How does the UN Security Council maintain international law?
-Apply sanctions to countries that are deemed to be a security risk, harbour terrorism, threaten invasion or breach human rights.
-They can authorise the use of military force against a country.
-They can organise a UN peacekeeping force. This is where troops occupy a country or region under the UN flag to keep the peace on a conflict but do not take a side.
