2.1 Globalisation Flashcards
Define globalisation
the increasing interdependence between countries through flows of capital, trade, goods and services as well as culture and ideas
Reasons for accelerating globalisation - economic (3)
- The volume and influence of TNCs has increased
- online shopping between countries has become more common
- Stocks are traded from across countries and countries invest in each other (Foreign Direct Investment).Some financial businesses (pension funds and investment banks) trade large amounts of currencies in order to make profit
Reasons for accelerating globalisation - political (3)
- Trade blocs (e.g. NAFTA, EU) have become more influential and have reduced tariffs and other protectionist measures.
- IGOs (e.g. IMF, WTO and the World Bank) work to harmonise economies, whilst promoting democratic ideology.
- Political views and ideology are expressed in worldwide media outlets (e.g. BBC, Fox, CNN.)
Reasons for accelerating globalisation - migration (2)
- International migration has led to extensive family networks living across the globe, leading to the spread of culture and finance (through remittances).
- International tourism has increased - more people can travel abroad for holidays due to lower transport costs.
Reasons for accelerating globalisation - cultural (1)
Americanisation and Westernisation of other (often developing) parts of the world.
Reasons for accelerating globalisation - flows of commodities (2)
- Goods can easily be imported, increasing countries interdependence on one another (some UK bottled water is imported from Fiji, which is 10,000 miles away)
- The volume of manufactured goods has increased rapidly due to low cost countries such as Bangladesh and Vietnam
Reasons for accelerating globalisation - technology (3)`
- The internet has rapidly allowed the spread of information and knowledge.
- Social networking sites have become very popular (Facebook had 1.5 billion users in 2015). Networks can allow the spread of culture, ideology and opportunities for migration and tourism.
- Enormous server farms exist currently (e.g. Microsoft’s data centre in Washington) which store substantial amounts of data
Describe lengthening of global connections
people can now travel further afield and goods are brought in further away.
Describe deepening of global connections
connections are penetrating more in depth into most aspects of life
Describe faster speed of global connections
people can now talk in real time from different parts of the world and you can travel much faster than previously between different countries etc.
Examples of global interdependence - political (2)
- international political issues require countries working together in order to solve them. Issues raised must have unanimous decisions from nations
- countries rely on others to intervene if there is political unrest
Examples of global interdependence - environmental (1)
- all nations are affected by other nations greenhouse gas emissions, nuclear waste emissions etc. meaning all countries rely on each other to protect the environment
Examples of global interdependence - economic (1)
- countries are dependent on the flows of labour, products, and services entering the country in order for the economy to grow. Labour provides a workforce; products and services mean countries can develop and make more money
Examples of global interdependence - social (2)
- migration has caused social interdependence as there are now diasporas all over the world that are dependent on the place they live in
- countries rely on each other for leisure activities (e.g. TV shows produced in other countries)
innovations in transport technology in the 19th and 20th centuries (3)
▪ Steam power – In the 1800s, Britain was leading the world in the use of steam technology. This allowed the British to move their goods and armies very quickly
▪ Jet aircraft – Newer and more efficient aircraft have allowed goods to be transported quickly between countries. Increasing competition between affordable airlines has led to more people being able to travel abroad.
▪ Containerisation – All sorts of goods are transported across the world, lower costs of transport is beneficial for both businesses and consumers.
Improvements in technology in the 19th and 20th centuries (1)
▪ Telegraph – The first telegraph cables were laid across the Atlantic in 1860s, which allowed for almost instantaneous communication and revolutionised how businesses operated.
Innovation in communications in the 21st century (4)
▪ Mobile phone usage
▪ Broadband and fibre optics – Since the 1990s, large amounts of data can be transferred very quickly via cables laid out along the ocean floor. The introduction of fibre optic cabling for domestic use has accelerated telephone, internet and television speeds for the home.
▪ GPS – Satellites have allowed companies and people to track goods across the world. GPS has become an essential feature of modern cars
▪ Internet – The internet is now extremely important - approximately 40% of the world’s population have access to it. Social media is extremely influential and, due to their large numbers of users, has led to the rapid spread of news, knowledge and opinions.
define flow
- When countries share things with one another, it’s known as a flow. This is because things are flowing (moving) from one country to another.
- Flows can be physical like people or products, but they can also be ideas and concepts such as money (capital), services, or `information
Different flows in globalisation (5)
- capital
- labour
- products
- services
- information
Define capital flows
Capital flows are the movement of money for the purpose of investment, trade or business production.
Define flows of labour
Flows of labour are the movement of people who move to work in another country.
Define flows of products
Flows of physical goods from one country to another
Define flows of services
- Services are ‘footloose’ industries, meaning they can locate anywhere without constraints from resources or other obstacles.
- Services flow as they can be produced in a different country to where they are received (e.g. international call centres).
Define flows of information
Any type of information can flow from one place to another via the internet, SMS, phone calls etc. For example, international news.
What are ‘switched-off’ places?
Switched-off areas are usually excluded from global flows of trade, capital, labour and information and these countries are generally left behind whilst other countries prosper and benefit from globalisation.
Examples of switched-off places (2)
- Sahel region
- North Korea
Reason for being switched-off - environmental (3)
- Landlocked countries cannot be independent in trade (they must rely on its neighbours to travel through before participating in trade)
- Poor fertility of land, mountainous or arid conditions, limited land space can all reduce a country’s ability to produce a commodity for trade
- Some countries are vulnerable to Climate Change, and so the natural environment could change to unfavourable conditions (sea level rise, desertification, etc)
Reason for being switched-off - political (3)
- The political agenda and governance of a country may limit flows of people or culture (anti-migration policies, censorship, etc)
- Terrorism or active conflict within a region can be hugely detrimental to their global connectivity.
- Corruption within the government means money is lost rather than invested.
Reason for being switched-off - economic (2)
- LEDCs, with little finance extra, cannot afford to invest in ports, infrastructure, incentives for TNCs nor education to improve the skills of its labour force.
- Countries with unstable markets or weak currencies will deter investment and businesses
Why might global flows be seen as a threat in some countries? (3)
- Importing raw materials and commodities could hurt domestic suppliers and industries
- Migrants from abroad could create tensions as they may not be wanted
- Foreign information could be seen as a threat (e.g. China’s Great Firewall)
Describe the IMF (3)
- The IMF is an organisation based in Washington that loans money to poorer developing nations.
- recipient nation must open up its markets and industries from government control, which in turn leads to privatisation.
- TNCs now have the opportunity to enter those markets more easily which would generate financial activity and tax, but mainly for their host country (which tends to be an MEDC)
Arguments against the IMF (2)
- LEDCs fall into debt with their industries privatised, which in turn could lead to profits leaving their country and potential environmental or workforce exploitation.
- Countries which struggle to pay their debt will have to cut back on funding in key areas such as education and healthcare, which further damages the country’s economy and welfare.
Describe the world bank
The World Bank, similar to the IMF, loans money to developing nations with the aim of improving development, and so enabling globalisation.
Arguments against the world bank
- critics say both the organisation doesn’t benefit developing countries.
- Instead, they promote LEDCs to increase their debts and limit the government’s sovereignty.
Describe the WTO
The WTO is headquartered in Geneva, Switzerland and aims to liberalise trade by removing tariffs, subsidies and quotas
Arguments against the WTO
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.
Government intervention to increase globalisation in the UK (4)
- free market liberalisation
- privatisation
- encouraging business start-ups
- foreign direct investment (FDI)
Describe free market liberalisation in the UK (2)
- 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.
Describe privatisation in the UK (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.
- critics believe that privatisation compromises the quality of services
Describe encouraging business start-ups in the UK
- 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
Types of FDI (4)
- offshoring
- foreign mergers
- foreign acquisitions
- transfer pricing
Define offshoring
TNCs set up production facilities in developing countries, which have large, cheap workforces (e.g. Bangladesh)
Define foreign mergers
– TNCs from different countries join to form one larger company
Define foreign acquistions
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)
Define transfer pricing
– TNCs sometimes channel their profits through subsidiaries in tax havens (e.g. Ireland)
Government intervention to limit globalisation (3)
- censorship
- limiting migration
- trade protectionism
Describe censorship (2)
- 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.
Describe limiting migration (2)
- Most countries have some sort of border control and migration monitoring.
- With the rise of right-wing, extremist views, more countries have adopted strict migration controls.
Describe trade protectionism
Trade protectionism involves subsidies, tariffs and quotas which help a country to protect domestic industries.
Describe free trade blocs (2)
- 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.
Benefits of trade blocs (3)
▪ 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).
