Global Systems: The Globalisation Of Services And Security Flashcards
What is a service?
An intangible system that provides economic benefit for involved parties via the flow of wealth and activity
What is a High level service?
Services to businesses: concentrated in more developed cities (i.e London, New York…)
What is a Low level service?
Services to consumers: Decentralised to developing counties e.g call centres for 20% lower costs
How do we benefit from information flows?
- Easier communication – E.g family, third space»_space;> interests, protests
- Increased awareness of global events
- Scientific development/knowledge»_space;> technologies, medical, green energy
- Business efficiency and e-commerce (can lead to high Street decline)
- Military intelligence
What are the drawbacks of easy information flow?
- False information
- Varying development = digital divide
- Privacy concerns
- Exposed to ‘skew’ of viewpoints, i.e. alternative interpretations
- Cyberspace: global common»_space;> difficult to police
- Can be used as propaganda
- Can be overwhelming
- Can replace jobs/revolutionise employment
Facebook statistics:
2 billion users in 2018, worldwide sharing of views and concerns. Can destabilise democracies and stimulate local resistance to globalisation. 2023: 2.94 billion users
The overthrow of President Mubarak in 2011 was organised almost entirely by online.
Digital divide examples and statistics
- In 2018, 100 million people were living in parts of Africa with no mobile phone service at all and 60% lacked access to the Internet
- Digital exclusion can be caused by: government control; lack of investment; lack of education; location; traditional/cultural barriers; censorship; age demographic; poverty
- The Internet began life as part of a scheme funded by the US Defence Department during the Cold War
- Management, information and security systems increasingly rely on AI forms of intelligence and learning shown by computers. 15,000 Kiva robots are in use, pioneer by Amazon, at Amazon
The history of the Internet
- 1860s»_space;> first telegraph cables across the Atlantic
- 1970s»_space;> first GPS satellite launched. 24 situated 10,000 km above earth
- 1971»_space;> the microprocessor created, Silicon Valley
- 1980s, 1990s»_space;> broadband development. Ocean-floor fibre-optic cables owned by government and TNCs (1 million km)
What challenges are presented by increasing Internet development?
Rapid rates of innovation outstrip the speed by which lawmakers can develop an adequate regulatory framework. In some countries, data flows are blocked or censored
What is the splinternet?
Refers to the potential or current fragmentation of the global internet into separate, isolated networks.
- Facebook, Twitter (X) and YouTube are unavailable to Chinese users as part of the ‘Great firewall of China’
- Only 34 foreign films per year are allowed in cinemas in China
- 800 million Chinese citizens use local blog sites like Youku
- Google withdrew from China in 2010 due to search engines being censored
How many disconnected citizens are there in North Korea?
25 million North Koreans. In the past, Saudi Arabia has restricted messaging using blackberry because they could not crack the encryptions.
What are some positive influences the Internet has on growth?
- Mitigation and remittances: $500 billion in remittances sent home: enables internal rural to urban movement i.e in China 20% lived in urban locations in 1978, currently 55% live in urban locations
- Communications technology: 440 million in Africa had mobile phone subscriptions in 2017 (44%) compared to a global average of 66%
Examples of data flows
- Bengaluru tech hub
- GPNs
- Crowdfunding
- information transfers
- Disaster appeals (i.e. Haiti in 2010 – in 15 days, $29 million in pledges)
- Remote healthcare: US company Zipline using drones to deliver vaccines, blood and medicines to remote areas in Rwanda
- Distance learning: 70 million people in poorer countries in 2016 using mobile phones to purchase ‘pay as you go’ credit for off-grid solar panels
Why are low tax regimes beneficial for host countries?
Low tax regimes can benefit host countries by attracting investment, boosting economic activity, and potentially increasing tax revenue in certain cases. However, there are also potential drawbacks, such as revenue loss and the possibility of tax avoidance, especially if regulations are lax»_space;> Apple paid the US gov. $16 billion in 2017
What are the advantages of low tax regimes for TNCs?
Multinational corporations often use these countries for profit-shifting strategies, such as creating subsidiaries in low-tax jurisdictions and routing profits through these entities to minimize their global tax obligations.
Why don’t all TNCs and firms operate in low tax countries?
- Practical reasons: brand authenticity, corporate responsibility, public perception and security
- Oil company, Repsol, sought support from country of origin, Spain, when Argentina’s gov. seized control of Repsol’s Argentinian investments in 2012.
- During the global financial crisis of 2008-9, General motors and Chrysler looked to the US gov. for support, while RBS was bailed out by the UK Treasury
What is transfer pricing?
A division of a TNC based in one country charges a division of the same firm based in another country for a product or service»_space;> less corporation tax. The subsidiaries are based in a low-tax state or an off-shore tax haven
What is a tax haven?
A country or territory with a nil or low rate of corporation tax»_space;> around 40 exist such as Monaco and the Cayman Islands
What are free trade zones?
Designated geographic areas where goods can be imported, stored, manipulated, manufactured, and re-exported without paying customs duties or facing certain other trade restrictions. Essentially, a special economic zone within a country that aims to facilitate trade and attract investment by offering favorable business conditions
History of free trade zones
- 1965: India recognised roles of developing exports to promote growth. Today there are nearly 200 Indian Special Economic Zones (S.E.Zs)
- 1970s: Opening up of some regions outside Europe and North America to global markets
- 1978: Deng Xiaoping in China began the radical ‘open door’ reforms. Coastal S.E.Zs were crucial: by 1990s, 50% of China’s GDP was generated in S.E.Zs
Bengaluru is classed as a S.E.Z
What was the global financial crisis?
In 2008, world GDP fell for the first time since 1945: term coined the ‘global credit crunch.’ World trade fell at twice the rate experienced during the Great Depression in the 1930s. It originated in the US and EU financial markets, where sales of high risk services and products triggered bankruptcy
What was the route to the crisis?
- People began to default on their mortgages, the house prices fell»_space;> bond values shrank and bank assets are worth less
- September 2008: Lehman brothers filled for bankruptcy. It had loaned 35 x more than it had in assets
- Asian Development Bank estimated that financial assets worldwide shed more than $50 trillion in value. 90 million people were pushed back into poverty
What was the global impact of the 2008 housing crisis?
- 50% of Eastern European migrants went home
- FDI fell from $1.7 trillion to $1.2 trillion
- Half of the UAE’s construction projects totalling $580 billion cancelled
- Visitor numbers to Thailand fell by 20%
Migration and Interdependence statistics:
- 2 million + Indian migrants live in UAE: 30% of the total population»_space;> $15 billion returned to India as remittances
- 1.5 million migrants from the Philippines have arrived in Saudi Arabia since 1973»_space;> $7 billion in remittances
- 50% of US tech companies were founded by migrants
- Citigroup research suggests that 2/3 of US growth since 2011 is directly attributable to migration
Strict legislation:
- Japan: less than 2% foreign or foreign born; citizenship is difficult to obtain (1% admittance test pass rate), ageing pop.
- Australia: Migration program is points based, 2017 - only 245,000 economic migrants granted access
