Globalisation Flashcards
(96 cards)
What are different definitions to describe globalisation?
-process of linking together countries from all around the world so that they are interdependent
-integration of economic activity across borders through movement of goods, services and money
-process enabling financial and investment markets to operate internationally
-integration of cultures between different countries (Indian restaurants in Britain)
What are 3 ways that help globalisation?
-movement of people from one country to another (migration)
-better international relations with other countries
-TNC’s investing in the country or moving facilities (offices) to that country - can make links between places with raw materials, factories and consumers.
What does time - space compression mean?
Different places around the world have started to feel much closer in recent times due to the advancements in communication (facetime) and transport (jetplanes)
How has transport developments in the 19/20th century help boost globalisation?
-innovations in railways, steamships and the jet aircraft all lead to a shrinking world where distant places start to feel closer and take less time to reach
-reduces time to transport goods and people, meaning more efficient trade.
-improvements have meant that larger loads of goods can be transported (containerisation) - reduced cost per unit for country importing -this reduces costs so products are more affordable for customers in a distant market setting up a new flow of goods.
How has developments in communication boosted globalisation?
-advancements in telecommunications like the telegraph, telephone, satellite imagery and fibre optic cables under the sea mean information is shared very quickly across the world, making flow of trade more efficient
-the development of the internet meant that businesses could coordinate in different countries (TNC’s)
-decreased cost of ICT has made communication devices more affordable to those in developing countries - leapfrogging to mobile phones
How has the IGO IMF accelerated globalisation?
-members pay money into fund which is used to provide loans to countries facing economic difficulties -consequently, the country will open up the economy to FDI from wealthy foreign TNC’s or free trade -try to force country to privatise their assets
How has the World Bank (IGO) accelerated globalisation?
-members pay into fund which is invested in developing countries to fund economic development and tackle poverty
-focuses on humanitarian emergencies / natural disasters.
-countries have to open economy up to FDI
How has the IGO WTO accelerated globalisation?
-works to reduce tariffs and trade barriers, discourage subsidies and establish free trade links between all countries
What are 3 governmental policies which encourage globalisation?
-free market liberalisation - when the national government removes restrictive rules allowing entry for new international suppliers, therefore maintaining a market/industry in that country.
-privatisation - government sells off assets owned by them to sometimes international companies - more FDI
-encourage business start ups - government provide subsidies to attract businesses to start up in a certain country - contributing to the national economy and increasing competition (ICT industry)
What is the EU and how does it boost globalisation?
-a trade bloc with agreements on trade between different countries and common tariffs on goods from outside the bloc - means globalisation can happen at cheaper cost
-this increases political and economic interactions within the bloc between members which makes international relations stronger
-free movement of goods, services and people within the EU countries meaning trade/migration is much more common
What is ASEAN and how does it boost globalisation?
-agreement between 10 South East Asian countries to link their production and markets, creating equal economic development and a competitive region integrated within the global economy.
-part of the agreement is for easy flows of people, goods and finance between the countries
What are Special Economic Zones and how do they boost globalisation?
-SEZ’s are large areas of land reserved for economic purposes usually on the coast so they are near sea ports for trade
-National government exempts businesses within these zones from taxes attracting lots of FDI from TNC’s
-When TNC’s outsource new facilities in a SEZ, they boost the local economy by employing people and providing them with skills that can let them achieve high salaries.
How do government use subsidies to boost globalisation?
-governments may subsidise the costs of wealthy TNC’s to attract them to move there
-examples include: tax incentives, tax exemptions and no tariffs on import/exports which greatly reduce cost for TNC and increase profit - this does not just benefit the TNC but also the government as it creates economic development for them.
CASE STUDY: What was China’s ‘open door policy’ and how did it accelerate globalisation?
-avg income?
-FDI?
-China was suffering with widespread poverty and lacked economic development
-After the death of the Chinese leader: Mao Zedong, his successor introduced the open door policy
-SEZ was set up in Shenzhen, a small fishing village, next to Hong Kong- economically thriving and owned by British
-China created a bridge between western businesses and communist China where TNC’s could outsource there for little tax.
-Shenzhen exploded into a huge city with over 10 million people living there.
-Average income went from $1 a day to over $30,000 a year
-in 2017, China is the third largest recipient of FDI in the world with over $135 bn received
What is the KOF and how does it measure globalisation?
-KOF index - measures rate of globalisation through:
-social globalisation (tourist flows, international phone calls)
-economic globalisation (FDI, tariff rates)
-political globalisation (foreign embassies in country, membership of international groups)
-country is annually given a score between 0 to 100 with 100 being fully globalised.
What are advantages and disadvantages for the KOF index?
advantages:
-as countries become ‘switched on’ to globalisation, there is fewer missing bits of data which increases the index’s accuracy and comparability
disadvantages:
-doesn’t measure internal trade flows so BRICS/US have low values
-small European countries have very high values due to short distances to neighbouring countries- means smaller domestic market and encourages interaction with other countries (also EU)
What is the AT Kearney index and how does it measure globalisation?
-measures globalisation by looking at:
-economic globalisation (flows of trade and FDI)
-personal and technological globalisation (no of internet users)
-political globalisation (international tourism)
-highest value is 1, lowest is 0
What are the advantages and disadvantages of the AT Kearney index?
advantages:
-its 62 countries includes 84% of worlds population and 96% of global GDP
disadvantages:
-small European countries dominating highest values
-USA has high value even though political engagement is low - heavy weighting on ICT
What is glocalisation?
-process where a TNC adapts global products to suit local market (Mcdonalds changing menu depending on country)
What is a global production network (GPN)?
-an international chain of connected suppliers of materials that contribute to the manufacturing of consumer goods.
-eg- extraction of raw materials, refinement, making components and assembling the product could occur in all different countries.
What is the difference between offshoring and outsourcing?
-offshoring is where a TNC move parts of their production process to another country
-outsourcing is when a TNC contract another company to produce the goods or services they need for them.
-both utilise economic liberalisation
CASE STUDY: Apple - global production networks
-research and development happens in US whilst components are purchased from around the world then gets shipped to the assembling point in China
-from China, products are shipped worldwide
-China contributed 42% to annual production
-however there are 30 other countries where different parts are manufactured such as Japan (16%), the US (9%), Taiwan (6%), South Korea (5%), and Vietnam (4%)
Why is China used as Apple’s manufacturing and distribution hub?
· the country’s massive industrial infrastructure,
· the availability of a large, affordable, and skilled labour force
· the low cost of production compared to most other countries
· the ability of Chinese manufacturers to automate production lines.
CASE STUDY: Mcdonalds - glocalisation
-TNC now has nearly 40,000 restaurants spread across 119 countries.
-this means they have to adjust their menu to meet local taste- this could include Israel - kosher meat, Japan- smaller portion sizes
