Power, Places, and Networks

Question 1

What is globalization?

Answer 1

Systems whose processes and impacts occur at a global scale
Economic: growth of TNCs
Physical: western culture, art, media, sports
Social: growth of western democracies

Question 2

What are globalization indices?

Answer 2

KOF index of globalization
Index value overall for each country + sub-categories
Economic dimension: long-distance flow of goods, capital, services, information
Social dimension: spread of ideas, info, images, people
Political dimension: diffusion of govt policies

EY globalization index
60 largest countries by GDP according to their globalization
Looks at openness to trade, capital flow, exchange of tech and ideas, cultural integration

New globalization index
Finance, trade and politics, social factors
Uses distance that goods travel, counts refugees

Small HICs at top, rich large in middle, very large HICs and LICs at bottom

Some say it’s slowing down: protectionism since 2008, Trump, Brexit, trade barriers

Question 3

What is a global superpower?

Answer 3

Able to influence policy worldwide, different regions simultaneously
Cultural, economic, military, geographical influence

Soft power - change individuals, communities, countries without force or coercion
Distribution of American media when visiting

Question 4

Which countries were / are superpowers?

Answer 4

Post WW2: USA, Britain, Russia
Britain lost colonies
1942 - 1991: USA & USSR Cold War (communism vs democracy), wanted more influence
Similar in size / power → USSR broke up
After 1991: just USA, but maybe declining

EU, BRICs, OPEC states also hold superpower-y qualities

US’s insane military budget and influence allow it to pressure other nations (~800 billion)

Question 5

Describe case study: China – a rising superpower

Answer 5

Since 1978, standard of living generally improving
China’s economic growth impacts global trade
GDP growing 8% per year
Demand for raw materials impacts world oil, metal, machinery markets
Still has characteristics of developing country bc a lot of manufacturing and agriculture

Question 6

What is the G7 & G8?

Answer 6

G7: USA, France, Germany, Italy, UK, Japan, Canada
Advisory capacity meeting annually to discuss global issues, initially about oil
Added Russia (G8), but too much disagreement → reps smaller group
Limited actual follow-through

Question 7

What is the G20?

Answer 7

Governments and bank governors from 20 major economies
Discuss global economics, but branch to energy depletion, ageing population, etc
173 countries not represented

Question 8

What is the organization for economic cooperation and development (OECD)?

Answer 8

35 countries that analyze, discuss, and find policies for problems
Also works with other global institutions (UN, IMF, G20)
Aim to help countries:
Restore confidence in markets
Re-establish healthy public finances
Foster and support green growth
All ages can have skills to work productively

Question 9

What is OPEC?

Answer 9

Organization of petroleum exporting countries (1960)
Counter oil price cuts by USA and Europe companies
Concerns about pumping capacity, but revenues allow generation of wealth anyway

Western countries must be in good relationship with Middle Eastern countries

Question 10

What is the World Bank?

Answer 10

1944 – aid and assistance to developing countries, fight parents
Until 1967: reconstruction of post-war Europe
1968 - 1980: developing worId, more loans
1980 - 1989: lending to third world debt
1989 on: sustainable development goals in MICs

Critics:
Free-market reform harms economies
Assumes LICs cannot modernize without advice from abroad
Represents many countries but run by rich few

Question 11

What is the International Monetary Fund (IMF)?

Answer 11

International organization overseeing global financial system
Members use funding pool to pay imbalances, usually must launch a SAP (structural adjustment program)
186 members now

Critics:
Unconcerned with democracy, human rights
SAP condition to sell national assets to western corporations
Delay in responding to problems
Controlled by major western nations

Question 12

What is the New Development Bank?

Answer 12

Developed by BRICS (Brazil, Russia, India, China, South Africa) to support public or private projects through loans + financing tools
Mainly focusing on sustainable development
Not enough money to meet structural development of emerging economies

Question 13

Describe growth trends in global trade

Answer 13

Doubled 2005 to 2015; slowdown in 2015
Merchandise trade increasing in emerging economics, highest in N America, Europe, Asia
Smaller amount of service trade is emerging economies
In 2015 China was lead exporter, USA und importer
Developing countries’ share in commercial services rose (esp travel and tourism)

Question 14

What are top-down and bottom-up development?

Answer 14

Top-down: large scale, by govt / intl orgs, done by people from outside, imposed, often well-funded and quick to respond, doesn’t involve locals
Emergency relief

Bottom-up: small scale, labor intensive, for locals by locals, limited funding
Earthen dams, cottage industries

Most aid orgs say bottom-up is most effective

Question 15

What is development aid?

Answer 15

Main donors are HICs, main recipients are in sub-Saharan Africa, Eastern Europe, Russia, SE Asia

Largest donor by $: USA + Japan
Largest relative donor (% of GNI): Norway, Denmark, Sweden

Question 16

What are loans?

Answer 16

Transfer of money or skills that require repayment over a set time
Main pattern is transfer from rich to poor countries
In 1970 OECD target for donors to spend .7% of GNI on overseas development assistance (ODA), only 5 by 2012
ODA is largest intl resource flow for 40+ countries

Question 17

What is debt relief?

Answer 17

Most heavily indebted countries in sub-Saharan Africa
Many developing countries borrowed in 70s/80s bc Western lenders but:
Low growth in industrialized economies
High interest rates 1975 - 1985
Oil price rises
Falling commodity prices

Heavily indebted poor countries (HIPC) initiative by IMF and World Bank
Relieve unsustainable debt, promote reform for growth, human dev, poverty reduction
2 steps: service relief (repay interest over period) after IMF program + dev of national poverty strategy, stock relief (cancel specific debts) of 90%+ of debt after IMF and world bank approval

Question 18

What are structural adjustment plans (SAPs)?

Answer 18

Loans requiring cut to govt expenditure, reduce state intervention in economy, promote liberalization and intl trade; promote long-term economic growth
Requirements:
Greater use of resource base
Increase economy’s efficiency
Generate foreign income via economy diversification + trade
Reduce active state role

Stabilization measures: short-term to limit harm (wage freeze)
Adjustment measures: long-term to boost competitiveness (tax reduction)

Question 19

What are remittances?

Answer 19

Money given without commercial use
Most given to South Asia
Africa and Caribbean name relatively small amount → not typical rich/poor divide
Some countrys’ incomes / GDPs reliant on remittances
Benefit as they go directly to migrants’ households

Question 20

What are some forms of illegal flows?

Answer 20

Trafficked people: 70% international but usually within region, often victims from poor countries exploited in rich ones, mainly women + girls

Counterfeit goods: >$250 bil each year, labour exploitation, env damage, linked to corruption/ drugs/laundering, trade reduces tax revenues bc raises policing costs

Fraudulent medicines: 1% in HICs and 30% in LICs fraudulent

Counterfeit food and drink: passing food off as something else, mislabeling (wild vs. farmed), contamination

Flow of drugs: >$300 bil worldwide, associated with violence and murder

Question 21

What is forgein direct investment?

Answer 21

Investment by a company into structures, equipment, orgs of foreign countries
Fell after 2008, improved by 2015 → mainly to HICs but some others in Asia

Positives to global shift:
HICs: cheaper imports, industrial efficiency
NICs+ LICs: higher income from exports, employment growth

Negatives to global shift:
HICs: rising unemployment, gaps between skilled and unskilled workers
NICs+ LICs: reduced food supplies, over dependence on narrow economic base

Question 22

What are transnational companies (TNCs)?

Answer 22

Organization operating in large number of countries
HQs in HICs, assembly in LICs and NICs
Up to 1/3 of all trade is internal transfers of TNCs
TNCs typically unsustainable bc worker exploitation

Question 23

Describe case study: the Tata Group

Answer 23

Over 100 companies (cars, consulting, software, power, hotels, coffee, etc)
80+ countries and 600K employees, 60% of revenue outside India
Economic liberalization allowed them to globalize → bought many foreign companies
Created institutions for science, research, Tata memorial hospital
Culture: loyalty, dignity, corporate social responsibility → funds worthy projects
Focusing on product not philanthropy?

Question 24

Describe case study: Apple Inc. and its supply chain

Answer 24

One of the richest corporations
Criticism of human rights, env, ethical issues in China, though it requires safe working conditions
Main supplier Foxconn has poor conditions → 13 successful sulfides in 2010
Apple is “reactive” but Chinese labor laws don’t protect workers

Question 25

What are multi-government organizations?

Answer 25

Operate across many states
International (IMF, UN) or regional (NAFTA, EU)

Question 26

What is a trading bloc?

Answer 26

Arrangement between member nations to allow free trade but charge tariffs on other countries
Free trade area: free trade between but restrict external imports (NAFTA)
Custom union: free trade between and common external tariff
Custom market: custom union with free movement of people and capital
Economic union: common markets with common policies in agro, industry, etc (EU)

Many established after WW2

Question 27

What are export processing zones and free trade zones?

Answer 27

Export processing zones (EPZs): offer incentives to foreign companies to develop exports
Free trade zones (FTZs): goods stored, manufactured, reexported without duties
Part of intl division of labor + path to industrialization

Factors linking LICs and HICs:
Problems in LICs with debt and foreign exchange
Economic incentives for open economics, foreign investments, exports
TNC search for cost-saving locations

Question 28

What are trends in rules about economic migration?

Answer 28

Migration is becoming more global
Migration is accelerating
Migration is becoming more diversified
Migration increasing for women

More hostility toward migrants but none difficult to restrict

Question 29

Describe case study: migration control in the USA

Answer 29

Illegal immigration: foreigners voluntarily residing in US while violating immigration laws
Overstay visas / green cards, cross without inspection

Many people snugged into US → trafficking for some women

More protection in large cities → remote wilderness crossings

Question 30

Describe trends in data flow patterns

Answer 30

Digital globalization → decreased cost
More small countries and companies competing in global market, companies have larger market
USA, Europe, Singapore at center of digital networks → more connected

Question 31

What is the frictional effect of distance?

Answer 31

Areas close are more likely to interact → less effect currently

Question 32

What is the space-time convergence?

Answer 32

For TNCs and intl trade to operate, need to overcome frictional effect of distance
Developments in transport and comms allow this

Satellite allows for global data transmission, optical fiber cables competing with it

Only very large corporations and govts can use this

Question 33

What is the jet engine?

Answer 33

Significant innovation for long-distance transportation
Safer, easier to maintain, better for distance then propeller
Used for just-in-time production (agriculture + horticulture)

Question 34

What are containers?

Answer 34

Backbone of modern global economy; 90% of non-bulk cargo
Boxes keep getting larger → limited by physical geography (Panama canal)

Question 35

Describe trends in technology infrastructure

Answer 35

Expansion of new technology is getting faster
Est 3 bil more mobile internet users in 2025 → biggest rise in phones
Can improve access to financial tools, healthcare, education
Not available for poor, certain disabilities, areas without service

Question 36

How does natural resource availability effect global interactions?

Answer 36

Raw materials (oil, food, wood, fish) have trading opportunities
Use natural resource to enter global economy, then diversify economy
Places with single product (Ghana, cocoa) vulnerable to climate, disease

Question 37

How does geographic isolation effect global interactions?

Answer 37

Increased transportation cost/time = reduced access
Very landlocked → tariffs to export + air space (South Sudan pays Sudan or Kenya to get oil to coast)