unit 4 content

Question 1

outline the main components of the KOF index

Answer 1

The KOF Index covers the social, economic, and political dimensions of the globalisation
- economic dimension includes long-distance flows of goods, capital and services, as well as foreign investment (36% of index)
- social dimension includes spread of ideas, information, images and people, international tourism and cultural proximity (n° of McDs + IKEA per capita)//(38% of index)
- political dimension includes number of embassies in a country and membership of international organisations (26% of index)

Question 2

three main forms of globalisation

Answer 2

• economic: accelerated by the growth of transnational corporations (TNC’s)
• social: the impact of Western art, culture, media, sport and leisure activities around the world
• political: the growth of western democracies and their influence on poor countries, and the opening up of centralised economies

Question 3

EY Globalisation Index

Question 4

superpowers

Answer 4

Countries hat influence policy on an international scale, and often in different world regions at the same time ; superpowers have economic cultural, military, and geographical influences on a large scale (ex USA and the former USSR and more recently in China and Russia)

Question 5

softpower

Answer 5

refers to the ability to change individuals, communities and nations without using force or coercion
Many countries achieve soft power their culture, political values and foreign policies such as aid and investment

Question 6

rising superpowers after 1991

Answer 6

post USSR–> USA was only superpower
however post US military involvement in Iraq and Afghanistan following 9/11 some argued USA was losing superpower status
since 2008 financial crisis, US has lost economic status and other nations are gaining ascendency
Trump introduced more inwards looking government policy and a potential decline in US overseas commitment

Question 7

usa’s military industrial complex

Answer 7

• has the world’s largest and most technologically advanced fleet of airplanes, ships, tanks, d artillery systems, giving them dominance over land, sea and air
• their global military presence includes overseas sea, ships, and aircrafts hat allow the US to apply force to many parts of the world and supply weapons and military training to wide range of countries
• US defence industry employs over 2 mill ppl
• 1/6 households have sm employed in military-industrial complex
• +100bill a year spent of defence
• 40bill a year spent funding for military research

Question 8

the G7 and G8

Answer 8

group of powerful HIC’s
USA, France, Germany, Italy, UK, Japan, Canada
meets annually to discuss matters such as global economy, global governance, energy policy and international security
joined by Russia in 1998 to make G8, only to be suspended due to Ukraine

Question 9

G20

Answer 9

international grouping for the Govs of 20 major economies, established in 1999 to discuss policy issues related to global financial stability
G20 countries account for 85% of Gross WorldProduct, 80% of world trade, and 65% of the world’s population
main interest is global economic governance,

Question 10

OEECD Organisation for Economic Cooperation and Development

Answer 10

• 35 members
• its state aim is to countries around the world to:
• restore confidence in markets
• re-establish public health finances
• foster and support new sources of growth through innovation, environmentally friendly “green growth” strategies
• ensure that people of all ages can develop the skills to work productively

Question 11

OPEC Organisation of Petroleum Exporting Countries

Answer 11

• established in 1960 to tackle oil price cuts by American and European oil companies
• founder nations included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela
• by 1709 OPEC countries produced 65% of the worlds petroleum but only 36% by 2007
• as the OPEC controlled the price of the oil and much of the production during the 70s and 80s, Middle Eastern countries gained economical and political power
• the importance of oil means that countries need to maintain favourable relationships with OPEC countries and that the Middle East will be involved in economic cooperation and development with industrialised countries

Question 12

The World Bank

Answer 12

• established in 1944
• a source of financial and technical assistance to LICs and NICs
• mission is to fight poverty by providing resources, sharing knowledge and building capacity
• current focus is achieving SDGs lending mainly to MICs –> mission is to aid these countries and their inhabitants to achieve development and reduce poverty

Question 13

Critics of the World Bank

Answer 13

• free-market reform policies are harmful to economic development
• assumption that LICs cannot modernise without money and advice from abroad
• although the World Bank represent 186 countries, it is run by a small number of rich countries

Question 14

The International Monetary Fund (IMF)

Answer 14

• international organisation that oversees the global financial system
• member states with balance payment problems may request loans to help fill gaps between what they earn and/or are able to borrow from other official lenders and what they must spend to operate
• in return countries must launch certain reforms certain reforms such as structural adjustment programmes (SAPs)

Question 15

Critics of the IMF

Answer 15

• one fo the main SAPs condition placed on borrowers is that the governments sell as much of their national assets as they can, normally to western corps at heavily discounted prices
• IMF sometimes advoctes “austerity programmes” –> increasing taxes/reducing social spending even when the economy is weak, to generate government revenue/reduce spending
• IMF is for most part controlled by the major western nations

Question 16

The New Development Bank

Answer 16

• established by Brazil, Russia, India, China and South Africa in 2014
• formerly the BRICS Development Bank, the NDB supports private or public projects through loans, guarantees, equity participation and other financial instruments
• main focus for lending will be infrastructure and sustainable development projects, such as clean energy
• BRICS initially contributed $10bill to the fund

Question 17

growth of world trade

Answer 17

• the value of world trade in materials, manufactured goods, d services roughly doubled between 2005 and 2015
• growth reduced between 2012 and 2014
• Asia Europe + North America continue to account for the bulk of trade although the share in merchandise exports form NICs increased from 33% in 2005 to to over 40% in 2015
• merchandise trade between emerging economies increased from just over 40% to over 50% of their global trade between 2005 and 2015
• merchandise trade was worth over $16 trillion in 2015, dominated by China and USA
• the top 10 trading nations accounted for over half of the world’s trade in merchandise in 2015, and emerging economies accounted for over 40% of it
• in 2015 China remained the world’s largest exporter and the USA the largest importer
• Chinas exports in 2015 were valued over $2 trillion followed by the USA at $1.5 trillion
• the USAs imports were valued at over $2.3 trillion followed by China’s at around $1.7trillion

Question 18

developing countries shares in commercial services

Answer 18

account for nearly one third of global exports

Question 19

development aid

Answer 19

• main donors in development aid are HICs
• main recipients are NICs and LICs
• highest levels of aid go to much of sub Saharan Africa, Eastern Europe/Russia and and South east Asia
• largest donors are uSA and Japan although as a percentage of their GNP each donates less than 0.5 per cent o-f their GNI
• largest donors in relation to their GNI are Scandinavian countries

Question 20

structural adjustment programmes (SAPs)

Answer 20

• are loans from the IMF requiring the borrowing country to cut its government expenditure, reduce state intervention in its economy, and promote liberalization and international trade
• SAPs encourage international trade and long term economic growth, having four main requirements: greater use of a countries resources, social and economic reforms to increase economic efficiency, diversification of the economy and increased trade to earn foreign exchange
• a reduction in the active role of the state in the economy

Question 21

loans

Answer 21

transfer of money or skills that require repayment over a period of time
- main pattern of loans is a transfer from rich countries to poor countries
-

Question 22

debt relief

Answer 22

• sub-Saharan Africa includes most of the countries classified heavily indebted poor countries (HIPCs) nd 25 of the 32 countries rated as severely indebted
• in 1962 sub-Saharan Africa wed $3billion
• in 2017 its debt s about $230 million
• the most heavily indebted country is Nigeria (around $35 billion)
• as a result of debt relief Tanzania introduced free schooling, built more schools and employed more teachers
• critics of debt relief state that it does not help the poor, that it does not help countries that go into debt and encourages countries to overspend

Question 23

remittances

Answer 23

• many of the world’s migrants travel from poorer to richer countries but ppl from countries slo migrate, to oil-rich countries for example
• largest regional migrations re from south east Asia to Middle East lured by employment from oil economy, the boom in construction industry and the demand for domestic servants
• largest flow between two countries is Mexico and USA
• the region receiving the most in remittances is south asia, particularly India, Pakistan and Bangladesh, it is said that these coheres receive more through remittances than through international aid
• in contrast the carribean and most of Africa receive a relatively small amount of remittances
• nearly one quarter of Haitis GDP comes from remittances and in Jordan it is over one fifth
• the great advantage of remittances over other forms of financial assistance is that they go directly to the migrants family/household

Question 24

illegal flows

Answer 24

trafficked ppl, counterfeit goods, fraudulent medicines, counterfeit food and drink and drugs

Question 25

trafficked ppl

Answer 25

• between 2012 and 2014 over 63,251 victims of trafficking
• about 60% are international although fewer than 30% are inter-regional
• Women accounted for 51% of those trafficked, men 21% and children 28% (girls made up 20% and boys 8%)
• most trafficking occurs within the same sub-region
• frequently victims come from relatively poorer countries and are exploited in relatively richer countries
• the Middle East has the highest share of inbound trafficked ppl from other regions

Question 26

counterfeit goods

Answer 26

• generate more than $250 billion each year and are responsible for labour exploitation, environmental damage and health implications for consumers

Question 27

fraudulent medicines

Answer 27

• the trade in fraudulent medicines from East Asia and the Pacific to South East Asia and Africa is worth about $5 billion a year
• WHO claims about 1% of of medicines in HICs andd up to 30% in LICs are fraudulent

Question 28

counterfeit food and drink

Answer 28

• up to 10% of the food bought in the UK is fraudulent

Question 29

flow of drugs

Answer 29

• drug trafficking is a major global trade involving the cultivation, manufacture, distribution and and sales of substances that are prohibited by the law
• the global drug trade is worth more than $300 billion or 1% of global trade

Question 30

foreign direct investment (FDI)

Answer 30

is the investment by a company into the structures, equipment or organisations of a foreign country
- it does not include investment in shares of companies of other countries
- FDI fell after the financial crisis in 2008-2009 but by 2015 had improved
- much of the growth was due to investment in HICs, especially Europe and HICs

Question 31

transnational companies

Answer 31

is an organisation that operates in a number of countries
- generally, TNC headquarters are in HIC cities with research and development and decision making concentrated in growth areas of HICs, and assembly and production located in LICs and NICs, and depressed parts of HICs

Question 32

multi government organisations

Answer 32

operate across a number of different states
- some are international, such as the world bank, IMF and the UN whereas others are regional, such as the North American free trade agreement or the European Union
- most MGOs cos on economic matters in an attempt to increase trade and interactions, although there is increasing nationalism and calls for protectionism in many countries

Question 33

trading blocs

Answer 33

• is an agreement between countries to allow free trade between member countries but to impose tariffs on external countries that wish to trade with them

Question 34

free trade areas

Answer 34

are where member abolish tariffs and quotas between member nations but restrict imports from non member countries (ex: NAFTA)

Question 35

custom unions

Answer 35

are a closer form of economic cooperation, such as Mercosur with South America
as well as having free trade between members, all members operate a common external tariff on imports from abroad

Question 36

common markets

Answer 36

are custom unions which, in addition the free trade in goods and services, allow free movement of people and capital

Question 37

economic unions

Answer 37

groups of nations that not only allow free trade and free movement of people and capital, but also require members to have common policies n such sectors as agriculture, industry and regional development, for example the European Union

Question 38

export processing zones and free trade zones

Answer 38

are areas that offer incentives to foreign companies to develop export orientated industries
- FTZs are areas where goods can be stored, manufactured and re exported without custom duties
- by the end of the 20th century more than 90 countries had established EPZs and FTZs as part of their economic strategies
- their popularity is due to three factors hat link the economies of of LICs and NICs with HICs:
–> problems of indebtness and foreign exchange shortages in LICs since the 1980s
–> economic incentives that encourage pen economies, foreign investment and non-traditional export
–> the search by TNCs for cost-saving locations, particularly in terms of wage costs, to shift manufacturing, assembly and component production from locations in HICs to LICs and NICs (global shift)

Question 39

economic migration controls and rules

Answer 39

four main trends in international migration:
- migration is becoming more global nd the diversity of areas of. origin is increasing
- migration is accelerating - the number of migrants s growing in all major regions
- migration is becoming more diversified - migrants include combinations of permanent settlers, refugees, skilled labour, economic migrants, trafficked people, forced migrants, retirees, arranged marriages and so on
- migration is increasing among women, who are playing much fuller part in their own right, notably as economic migrants
- migration is important o the growth of an economy
- in the us economic prosperity is associated with e countries ability to attract labour - both skilled and unskilled; due to the ageing population migrants are needed to increase the size of working population however nevertheless many people still want to control migration

Question 40

portion of the global goods trade carried out by e commerce

Answer 40

one eighth

Question 41

option of the worlds traded services that are already digitised

Answer 41

about one half

Question 42

frictional effect of distance / distance decay

Answer 42

suggest that areas that are close together re usually more likely to interact with one another whereas areas that are far apart are less likely to interact with one another. however there has been reduction in the frictional effect of distance as improvements in transport have allowed people to travel greater distances in less time. in addition,, improvements in ICT bring places in different parts of the world together almost instantly

Question 43

information communications technologies

Answer 43

are they key technology in all economic activities
one of the most important technologies enhance global communications is satellite technology
satellite technology has made possible remarkable levels of global communication and the transmission of data
another technology is optical fibre cables which are now challenging satellite communications as these systems have huge carrying capacity and transmit information at a very high speed and with high signal strength

Question 44

containers

Answer 44

• backbone of the modern global economy
• about 90% non-bulk worldwide is transported in containers

Question 45

jet engines

Answer 45

• most significant innovation in long distance transport
• much higher power to weight ratio enabling longer range, faster travel and bigger payloads

Question 46

new users of internet by 2025

Answer 46

3bill and half of growth is predicted to be in LICs and NICs

Question 47

sales of mobile handsets since 2005

Answer 47

increased 20% per year in Africa and by 15% per year in Asia

Question 48

mobile phone in china and India

Answer 48

over 1 billion each

Question 49

geographic isolation

Answer 49

• major hindrance to development
• increased transport costs and times may reduce access to markets and profitability
• countries that are landlocked may also have to pay substantial tariffs to export their goods, and the use of another country’s air space