4.1.1 - Globalisation Flashcards
Define globalisation
The deepening of relationships between countries of the world reflected in an increasing level of cross-border trade and investment and migration
OR
process in which national economies have becomes increasingly integrated and interdependent
Containerisation
A system of freight transport for use in sea shipping that has reduced the transport costs of shipping many thousands of different goods across the globe
Define FDI
FDI is the acquisition of a controlling interest in productive operations abroad by businesses resident in the home economy. May involve the creation of new productive capacity such as a new factory or building of infrastructure.
Define MNC
A MNC has facilities and other assets in at least one country other than its home country
Define TNC
TNCs base their manufacturing, assembly, research and retail operations in a number of countries.
What does globalisation result in
- world economy becoming more like a single economy because it
increases the interdependence of economies around the globe. - Changes in economic conditions in one country consequently have a larger impact on other economies in a highly globalised world. (highlighted by GFC)
What are the factors contributing to globalisation over the past 50 years
- Trade liberalisation
- Transport (helps mobility of labour and capital)
- Comms technology
- Economic and political transitions (trading blocs)
- Global TNC and growth of MNCs
4 types of Trade liberalisation
Bilateral: involving two parties, especially countries.
Consensus: a general agreement.
Multilateral: involving several parties, especially countries.
Orthodoxy: authorized or generally accepted theory, doctrine, or practice.
Define trade liberalisation
Trade liberalisation is the removal (or reduction) of restrictions on the free exchange of goods and services between nations.
Trade liberalisation
-The EU single market is an example of
trade liberalisation.
- Firms can sell products anywhere within the EU single market without any restrictions on trade (other than transport costs) e
Examples of trade liberalisation
Trade liberalisation has also occurred on a bilateral or multilateral
basis e.g. the Chile-United States Free Trade Agreement or the European Single Market
Transport
- e,g aviation reduced travel times so productive operations can happens
- The cost of transport has declined over the past 50 years due to technological advancements in aerospace and shipping. Firms can more easily sell goods and services on a
global basis as a result. - Furthermore, with the rise of commercial aviation, workers can now crisscross the globe making business deals, working in foreign locations, etc.
Comms technology
- The quality of communications has improved immensely e.g. the ability to make video calls using affordable, portable technology.
- Additionally, the cost of communications has fallen significantly too.
Economics and Political Transitions
- In December 1978, the People’s Republic of China, under Deng Xiaoping, began a period of economic reform (referred to as the ‘Opening of China’ in the West).
- Reforms included the opening of the country to foreign investment, and permission for entrepreneurs to start
businesses. - From 1978 until 2013, due to China’s ongoing adoption of authoritarian capitalism, the Chinese economy grew by a huge amount ($155 to $7081 per capita).
- China is now the second largest economy in the world.
Global TNCs
- global companies grown in size and number over last 50 years thanks to trade liberalisation and modern day comms
- use global supply chains
