Globalisation Flashcards
What is globalisation?
Rapid integration of the world’s economic systems in 1990s , opening up world trade to TNCs
The focus of globalisation has been primarily on economic relationships such as international trade, foreign direct investment, and international capital flows.
But also…
Globalisation has since been expanded to encompass a wider range of dimensions including cultural, social, technological, political, environmental and also health related factors
McPig- increasing transfer of money, culture, people, information and goods across the globe
Professor Giddens quote
Professor Giddens - globalisation is the intensification of worldwide social relations’
Aspects of globalisation process (econ, social etc..)
Economic- e.g. trade and aid, TNCS, capital flows etc
Social – exchange of ideas, migration, social networks, growing uniformity
Political- global institutions , trading groups, NGOs, action of climate change or COVID
Health – medical advances, pandemic control, pharmaceutical
Environmental – impacts/degradation, green campaigns, linked by global commons global governance – COPs
Technological – technology boosts productivity needed for important industries, communication, green technology
Cultural – spread/ exposure of different cultures, can lead to a global culture. Westernisation, cultural diffusion, globalisation
Marshall McLuhan
predicted ‘global village’ where free rein is given to economic and information flows, and the beginning of making planet wide decisions.
Time Space Convergence
This process concerns the changing relationship between time and space, and notably the impacts of transportation improvements on such a relationship.
It is closely related to the concept of speed, which indicates how much space can be traveled over a specific amount of time.
Friction of distance
as the distance from a place increases, the interactions with that place decrease, usually because the time and cost involved increase with distance.
Thomas Friedman
Thomas Friedman has said that today globalisation is ‘farther, faster, cheaper, and deeper’
o Farther- lengthened in distance over time – product sourced form faraway places.
o Deeper- sense of being globally connected e.g. social media, food
o Faster- internet, real time e.g. Zoom, messenger
He also said that ‘the world is flat’ in 2005- it was an apt metaphor for globalisation: goods, ideas and people sliding smoothly across borders.
Kofi Annan- former secretary - General of the UN
It has been said that arguing against globalisation is like arguing against the laws of gravity
Disadvantages of an integrated world economy
e.g. 2008 financial crisis started in USA but effected world trade, other setbacks such as trade wars, international conflicts and falling commodity prices
Brief timeline of globalisation
- Middle ages – the Silk Road
- 17th century took 30 years for French fashion to reach England
- 1944- world bank set up
- 1945- UN set up
- 1948- Empire Windrush
- 1953- took 5 days for news of Edmund Hillary reaching Mt Everest to reach London
- 1975- UK joins the EU
- 1996- internet available in homes
- 2000-UN launches Millenium development goals
- 2001- 9/11- attack on world trade centre
- 2004- Facebook starts
- Soon – with advanced supersonic aircraft- 80 minutes to go from NYC to London
when was the world bank set up?
1944
When internet becomes available in homes?
1996
in the 17th century, it took X years for french fashion to reach england
30
What are the dimensions of globalisation?
flows of capital, labour, products, services and information; global marketing; patterns of production, distribution and consumption.
What does capital mean?
All money transferred between countries- investment, FDI, trade or production
What increased flows of capital?
deregulation of the financial markets meant banks, insurance,investments companies were no longer confined within national boundaries (age of neoliberalism)- known as the BIG BANG in the UK - 1986 Thatcher
Big Bang
1986- Thatcher
- The Big Bang refers to the day the London Stock Exchange (LSE) was deregulated on October 27, 1986.
-After deregulation, the volume of shares traded on the LSE and its market capitalization increased.
-achievement of the Conservative government led by Margaret Thatcher.
- Deregulation eliminated fixed commissions, authorized firms to represent investors, opened the London Stock Exchange to foreign firms, and implemented an electronic platform.
Neoliberalism
a political approach that favours free-market capitalism, deregulation, and reduction in government spending
In 2022, value of trade in goods and services?
$31 trillion
Amount of transactions a day in 2022
- 6 trillion
Wallerstein model
1974->explains the emergence of a core, periphery and semi-periphery in terms of economic and political connections first established at the beginning of exploration in the late 15th century. Built upon the dependency theory
Frank’s Dependency theory
Dependency theory proposed that the poverty and backwardness of poor countries are caused by their peripheral position in the international division of Labour.
Core countries
strong economies with large economic productivity, and higher per capita GDP- HICS. Global power is concentrated here
Semi-periphery
NICs , median standards of living (Chile, Brazil, India, China etc..). Offer citizens diverse economic opportunities,s but extreme gaps between rich and poor
Periphery countries
low level economic productivity, low per capita GDP, low standards of living, Africa (not South Africa), part of S America and Asia- which have been exploited and have suffered from a lack of investment, leakages and out-migration.
Foreign Direct Investment
is an ownership stake in a foreign company or project made by an investor, company, or government from another country. (via share, merger or joint venture or subsidiary company)
Who gets the most FDI? (2020)
USA- 4626 billion
Repatriation of profits/ economic leakage
o TNCs investing in overseas production will normally take any profit made from that investment back to their home-country. This is known as an economic leakage as the income is ‘leaked’ from the country that received the investment. The majority of these flows return to companies based in richer countries
Repatriation example?
Aid
Multilateral (Official development assistance) or bilateral – often comes with conditions
- important source of support for poor countries
Migration
Poorer to richer countries
Can exaggerate disparities by sending away skilled labourers who pay taxes and spend earnings in rich country
Yet do pay remittances
Remittances and Stats on them
These are transfers of money made by foreign workers to family in their home country
-India is the top recipient in 2023- $125 billion – update
- USA largest source of remittances
- Nepal relies on remittances for more than 25% of GDP
Benefits
* Stable and increasing as a source of income
* Goes directly to families so it alleviates poverty
Disadvantages
* High transfer charges. can be as high as 15-18%. SDG goal is to make it 3% by 20230
Beginning to encourage works to invest in diaspora bonds to finance development
Remittances example?
Now? Can you apply core and periphery?
- Now difficult to distinguish between core and periphery due to BRICSs and MINTs
-The rapid growth of large and medium emerging economies such as the BRIC and, more recently, MINT countries means there is now more of a continuum of development - China now a core country
- Most countries’ economies are still dependent on flows of investment to and from other countries.
BRIC
BRIC – An acronym used to identify a group of four countries – Brazil, Russia, India and China – whose economies have advanced rapidly since the 1990s. Sometimes South Africa is added to this list so the acronym becomes BRICS
MINT
MINT – An acronym referring to the more recently emerging economies of Mexico, Indonesia, Nigeria and Turkey are all important manufacturing hubs.
o Nigeria is additionally a major exporter of oil and also trades globally in low-budget films (the “Nollywood” film industry
Tiger economy
A tiger economy is the economy of a country which undergoes rapid economic growth, usually accompanied by an increase in the standard of living.
Flow of labour
Flows of labour are the movement of people who move to work in another
country (Migration)
This includes specialised workers, for example, who move between different units/ companies of a TNC on a short term basis and unskilled migrant workers using a range of transport modes
Migration stats - LEARN A COUPLE
- Europe and Asia each hosted around 87 and 86 million international migrants respectively (61% of all international migrants)
- 3-4% of the population are international migrants
- 14.1% of high income countries made up of international migrants
- 1.6% of LIC populations are made up of migrants
o Germany and Luxembourg have the largest number of total immigrants and the highest rate of immigration in 2021 in Europe
Trend? Flows of Labour
- Increasing to due increase in transport (high-speed rail; airports and containerisation)
- Yet not as free flowing as flows of capital
o Restrictions on immigration - Overall trend
o S Asia, Africa, Latin America to North America and Europe and Gulf countries
o Latin America and Caribbean to North America is the largest flow from one continent to another
EXAMPLE- labour
Example- Nepal relies on remittances for more than 25% of GDP (in 2014, 16 000 left each month) to gulf/middle east
Types of labourers
- Skilled and unskilled – both go to higher-income countries searching for better job prospects
- Many countries rely on the flow of highly skilled workers as they utilise their skills – interdependence – e.g. NHS, only 63.4% of the doctors are trained here – many migrated
- Unskilled usually work in lower economic-value jobs that reduces the shortage of workers in the UK- but are often unpaid
Europe and Asia each hosted X million and Y million integration migrants respectively (Z% of al migrants)
87,86,61
Flow of products and globalisation
- Product flows are the movement of produced goods from area of production to area of consumption.
- Increased globalisation has caused product flows to become international, meaning products are produced by a country and then transported to another country.
Past - flow of products
PAST
- Manufacturing in HICs due to access to resources (factories) and ability to buy materials and products sold where they were made
Recently- flow of products
- GLOBAL SHIFT
- Now international trade has created major product flows- ¼ of all products are exported , between LICs and HICs
- Production now in LICS (better transport and communication) – low labour costs , offshoring- then transported to HICs to be sol
- Cause a decline in manufacturing industry in HICs
- EMPLOYMENT IN THE MANUFACTURING BUSINESS IN THE UK HAS DECREASED BY OVER 3.4 MILLION JOBS SINCE 1985
Post 2010
Post 2010?
- Between 1950 and 2010, world trade grew exponentially, but since 2010 it has decreased and plateaued (despite increasing population)
- It was in 2010, when China surpassed US as the largest manufacturing country in the world ( and has been ever since)
COVID
Limitations
- COVID decreased global trade by 20% and exposed the risks of supply chain
2024
- China is the largest manufacturing country (31.6% share of Global Manufacturing), with the US second (15.87%)
Future ?
- Product flows are changing due to emerging economies and growing middle class and increasing demand for materials and manufactured prdycts – growing ocnusmerism
o E.g. apple shop first opened in China in 2008, now 40 stoes