unit 3 - globalisation Flashcards
Define Globalisation
The exchange of goods, ideas, tech, people and services which led to the interconnection and interdependence between nations.
\when did globalisation start
\20th century
Globalisation is different from other trades in history because:
- Technological innovations
- International Cooperation
- Happened at a much bigger scale
- Speed of spread of globalisation (due to advancements in tech)
- Easier international and regional communication which was cheap and fast
How did interdependence grow between countries?
Interdependence grew between countries because they were required to maintain a healthy relationship with other nations for exchange and trade.
Patterns/types of global interactions
Trade networks
Communication Networks
Migration Patterns
Cultural Exchange
Why does outsourcing happen
- The host country does not have the required resources
- Cheaper labour in the LEDC country
Benefits of trade in general
Lower prices
Flow of new ideas
Economic development and growth
Increased efficiency
Access to resources
International cooperation
Greater choice for consumers
Need leads to Tech advancement espacially in feilds of communication and transporation
Costs of Trade in general
Unemployment
Over specialization (country’s GDP is dependent on one commodity)
Loss of sovereignty (easily influenced by dominating trade partners)
External shocks (impact on one economy affects the other)
Types of Trade agreements and brief meanings
Pereferential Trade Agreement (PTA) - Between nations to provide better Terms and conditions for trade betweeen memebr coutnrys
Bilateral Trade agreement - A PTA between only 2 countries
Multilateral trade agreeement - A legally binded PTA between more than 2 coutnrys and is overlooked by the World Trade Union
Regional trade agreeement - A PTA between more than 2 countries but within the same geographical location and not overssen by anyone
Eastern African Community
A mix of Multilateral and Regional Trade agreement formed bewteen 7 African states in 2005 to promote economic, social and political copperation and integration amongst its members
what are TNC and its definition? with example
Trans-national corporations. They operate in substantial facilities and does business in more than one country. They dont have a home country. Decentrilised.
eg - Unilever
what are MNCs and their definitions?
Multi-National corporations. businesses that control production in multiple countries besides their home country. They have a centralized headquarters but operate on a global scale with assets in multiple countries
eg - microsoft
Which is more common in the daily products we use, TNC or MNC
MNCs
Which countries would support globalisation?
Outsourcing countriy’s government and the countries doing the manufacturing part would support globalisation
Which community would be against globalisation?
The host country or the outsourcing country’s people would be against globalisation as their people are losing jobs with products being manufactured outside their country.
MNCs and TNCs have an impact on LEDCs governance and politics how?
Using investments, campaigning, and exploitation of resources to influence governmentand politics, with the potential for both positive (jobs) and negative (corruption, inequality) effects.
WTO and its agreements
World Trade organization.
created an international trade legal framework for 164 economies around the world. These Agreements cover goods, services, intellectual property, investment and other issues that impact the flow of trade
Glocalisation
global companies adapt their products, services, and marketing strategies to cater to specific local tastes and preferences. This allows companies to build local acceptance while still retaining their main principles.
Example of glocalisation
McDonalds adapting to local cuisines with their burgers. Eg - Mc Lobster in Canada is not avaliable in India, same way, Maharaja Mac isnt avaliable in other parts of the world
What are the three main policies of countries regarding trade?
Free Trade, Fair Trade and Protectionism
Free Trade
Less tariffs are needed to pay when outside companies trade something with your country. This encourages imports and allows for the relocation of goods and services. Both countries gain profit from this type of trade and Globalisation is also based on the idea of free trade.
Why would a country accept free trade?
With the idea that it is cheaper and easier to buy rather than make
free trade pros and cons
cons:
1. local industries can collapse due to lower prices of foreign companies
2. displace jobs and exploit workers in developing countries using lax regulations
pros:
1. consumers have more options to choose from for their needs product/service
2. Consumers get products at lower costs due to high competition.
Example of free trade agreements
North American Free Trade Agreement (NAFTA) signed to allow free trade between US, Canada and Mexico
Protectionism
This is the opposite of free trade where there are high import tariffs which discourage relocation and restrict international trade. This is because these countries want to be independent and produce everything internally and help grow domestic industries rather than seeking help from others
Pros and Cons of protectionism
Pros:
Stabilizes economy
reduces competition
prioritizes local industries
Cons:
High production costs
fewer consumer choice
Why would protectionism not work?
No country can do well in a particular field without the help of others, especially during this modern era of globalisation.
Fair Trade
Many producers in LEDCs don’t get the wages they deserve and this is where Fair Trade comes in. It is a worldwide movement which aims to help the producers of LEDCs and help mitigate the negative impacts of globalisation. This is done using the Fair Trade premium and Fair Trade minimum
Fair Trade premium
A type of fund which uses some of the profit gained to help the laborers. It is given back to the workers in the LEDCs which made the product in the form of investing in welfare programs like developing schools, access to clean water and food, electricity, etc.
Fair trade minimum price
the lowest price that a buyer must pay for a certified Fair trade product to ensure that the producer doesnt need to minimise his profits during times of reccessions
Fair Trade tackles the problems of…
- equal pay
- safe working conditions
- environmental sustainability
- gender equality
- community development
Fair Trade vs Free Trade
Free trade is focused more on economic efficiency and economic growth with little to no trading restrictions.
Fair Trade is more on the social and cultural aspects. It focuses on social justice, and environmental sustainability and promotes marginalised communities and small-scale producers.
Fair trades pros and cons
pros:
promotes sustainability and prioritizes equality
Better wages and working conditions for producers
Cons:
Limited market reach
consumers need to pay a more premium fund and hence limited avaliability
Countries which were forced to do Free Trade and why
The Caribbean, african and south american countries.
They were bullied to implement the free trade principle by other larger nations like the US and european countries with whom they have to desperately trade with. The also do this to appease the IMF
IMF what is it
International Monetary Fund
offers low interest loans to developing countries (LEDCs)
Foreign Aid
Foreign aid refers to the financial, technical, monetary and material assistance provided by one donor country or international organization voluntarily to another recieving country or region.
Types of foreign aid
Bilateral aid
Multilateral Aid
Humanitarian
Project Aid
Debt Relief
Bilateral Aid
Bilateral aid involves the direct transfer of resources from one country (donor) to another country (recipient) through government-to-government agreements or partnerships.
Humanitarian Aid
Humanitarian aid provides emergency assistance to populations affected by natural disasters, conflicts, and humanitarian crises. It includes food aid, medical supplies, shelter, water, sanitation, and other forms of relief assistance.
Project Aid
Project aid funds specific development projects aimed at addressing targeted areas of need, such as healthcare, education, agriculture, infrastructure development, environmental conservation, and poverty alleviation.
Multilateral Aid
Multilateral aid involves contributions from international organizations, such as the World Bank, International Monetary Fund (IMF), United Nations (UN), and regional development banks. These organizations use resources from multiple donor countries to fund development projects and initiatives in recipient countries.
Debt Relief
Debt relief refers to the donor country partially or fully ending all debt owed by the recipient country, in order to strengthen their international relations, influence in the recipient country, etc.
Intutions involved in Foreign Aid
- UN
- Redcross
- IMF
- WHO
- World Bank
Reasons for foreign aid
Moral and Ethical where countries feel obliged to improve QOL in the LEDCs
Economic where the donor country gives its fund to a receiving country and tells them to expand/grow their market in their notation for economic growth
political or self-interest reasons why countries want to establish a good relationship with a nation for trade or make an influence of them for security reasons.
Is foreign aid a product of globalisation?
Yes, foreign aid is a product of globalization. Globalisation allows for easier flow od goods and servcies which makes foreign aid even more accesible for receveing countries
Positive impacts of foreign aid
- Provides assistance in dire situations for receiving countries and helps empower individuals and communities in the receiving country
- Investments in infrastructure, technology, healthcare and agriculture can help, create jobs, and elevate quality of life.
Negative impacts of foreign aid
- Overreliance on aid can hinder local initiatives and lead to unsustainable development.
- Improper governance and transparency mechanisms can create opportunities for aid to be mismanaged or diverted from its intended goals.
Countries in which foreign aid was beneficial and why
After the Korean Warin the 1950s South Korea received significant bilateral and humanitarian aid from the United States,which helped infrastructure development,education,and industrialization, which helped them grow economically and transform into a devloping nation
Countries in which foreign aid didn’t work and why
Following the 2010 earthquake, Haiti received billions in foreign aid for reconstruction and development. However, corruption, political instability, and lack of long-term planning hampered progress, leading to criticisms of aid effectiveness.
case study on real life protectionism
U.S. Tariffs on Steel and Aluminum in 2018. The U.S. government imposed a 25% tariff on steel and a 10% tariff on aluminum imports, primarily targeting China, in an effort to protect American steel and aluminum industries.
Case Study - Marshall Plan
Multilateral economic Aid headed by the US and give to its alliances in Western Europe such as France, Italy in 1948 after WW2. The aid was managed through the Organization for European Economic Co-operation (OEEC). This helped create a market for American goods within Europe and helped restore political stability and milatry prowess again.
MEDC and LEDC country characteristics
MEDC:
High literacy rates
High GNP which allows access to resources such as healthcare
Low birth and death rate
Generally in Stage 4 of DTM
Stationary population pyramid
LEDC:
Low literacy rates
Low GNP making it dificult to escape the poverty cycle
High brith and death rate
Generally in Stage 2 or 3 in DTM
Expansive population pyramid
