Globalisation

Question 1

Define globalisation

Answer 1

process by which national economies, societies and cultures have become increasingly integrated and strongly connected to each other though the global network of trade, communication, transportation and immigration.

Question 2

What are the 3 main forms of globalisation?

Answer 2

Economic: long distance flows of goods, capital and services. Largely caused by growth of TNCs and international trade.
Social: Spread of ideas, information, images and people. Impact of western culture, art, media, sport and leisure pursuits in the world.
Political: diffusion of government policies.
Growth of western democracies and their influence on poor countries and the decline of centralised economies.

Question 3

How globalised are some countries?

Answer 3

Most globalised: Many European, Canada, Australia, New Zealand
Not as globalised: larger economies such as USA, China and Russia.
Least globalised: many from sub-Saharan Africa, countries in conflict eg) Afghanistan and some low income countries such as Nepal and Myanmar.

Question 4

What are global systems?

Answer 4

Refers to any organisations, groupings or activities that link different parts of the world, TNCs for example operate in 2 or more countries therefore linking their economies.

Question 5

What is happening as the world becomes more globalised?

Answer 5

Countries are becoming more interdependent - this has led to global-scale attempts to manage a range of international issues.

Question 6

Globalisation is made up of many interconnected dimensions what are these?

Answer 6

Flows of capital, labour, products, services and information

Question 7

What is the flows of information dimension?

Answer 7

Information such as financial data or news of current events can be spread across the world very quickly and easily.

Question 8

How / why is flows of information changing?

Answer 8

Development and rapid spread of email, internet and social media mean large amounts of information can be exchanged instantly across the globe.
allows people living in different countries to communicate and work together.

Question 9

What is the direction of flows of information?

Answer 9

Moves to all countries especially HICs who have the technology to access it.

Question 10

Give an example of how flows of information makes the world more interconnected

Answer 10

people can learn a lot about different countries and cultures without leaving their own country.

Question 11

What is the flows of capital dimension?

Answer 11

Money that is invested - spent on something to produce an income or increased profit from it.

Question 12

How / why is capital changing?

Answer 12

Historically it was just mostly within a country.
Amount of capital invested in foreign countries increasing overtime - foreign direct investment (FDI)
Improvements in information and communications and technology have encouraged flows of capital around the world.

Question 13

What is the direction of flow of capital?

Answer 13

From more developed to less developed countries although no longer clear cut.

Question 14

Give an example of how capital makes the world more interconnected?

Answer 14

most countries’ economies are now dependent of flows of investment to and from other countries.

Question 15

What is the products (manufactured and raw materials) dimension?

Answer 15

Historically, manufacturing industries were located in more developed countries.
The products being produced were sold in the country they were made eg) Dyson, Apple

Question 16

How / why is the products dimension changing?

Answer 16

In recent decades, manufacturing has decreased in more developed countries. E.g. UK employment in manufacturing fell from over 5 million people in 1985 to about 2.6 million in 2014.

Lower labour costs overseas have caused many companies to relocate the production side of their
business abroad – they then import the products to the countries where they are sold
As a result of these changes, international trade in manufactured goods is increasing.

Question 17

What is the direction of flow of products?

Answer 17

Raw materials flows - less developed to more developed countries.
Low value goods - less developed to more developed countries
High value goods - more developed to less developed countries

Question 18

Give an example of how products makes the world more interconnected?

Answer 18

Many manufactured products bought in the UK have been produced in other countries then imported

Question 19

What is the services dimension?

Answer 19

Economic activities that aren’t based around producing any material goods eg) banking and insurance that depend on communication and transfer of info

Question 20

How / why is services changing?

Answer 20

Deregulation in 1970s and 80s. (Removal of rules to increase competition)
Meant it was easier for banks and other financial institutions to do business in other countries.
Services depend on ICT and can locate anywhere in the world.

Question 21

What is the direction of flow of services?

Answer 21

Low level (customer service) and high level (financial services)
High level traditionally in more developed
Increasingly relocating low level to less developed (cheaper labour)

Question 22

Give an example of how services makes the world more interconnected

Answer 22

People are connected to other countries just through having a bank account - many banks are huge international organisations

Question 23

What is the labour dimension?

Answer 23

Movements of people who participate in the work force from one country to another.

Question 24

How / why is labour changing?

Answer 24

International migration increased by over 40% between 2000 and 2015 . Some people move because they have to, but many chose to for work. Some migrants are highly skilled workers eg) medical workers and ICT

Question 25

What is the direction of flow of labour?

Answer 25

High skilled workers move to more developed (better working conditions and wages) eg ) medical workers or ICT Low, unskilled workers move to more developed due to poor wages and unemployment in their own country.

Question 26

Give an example of how labour makes the world more interconnected?

Answer 26

People bring aspects of their culture with them People have family all over the world

Question 27

What is global marketing?

Answer 27

The process of promoting and selling products or services. many products and services are sold all over the world rather than just in the country where they are produced. Meaning marketing has become global. involves treating the world as one single market and using one marketing strategy to advertise a product to customers all over the world. Global marketing gives economies of scale – cheaper to have one marketing campaign for the whole world, rather than having a different campaign for each country. Can create global brand awareness Marketing needs to be adapted to regional markets though as different populations still have different laws and cultural attitudes

Question 28

What are the patterns of production, distribution and consumption?

Answer 28

TNCs dictate where products are made - generally where labour costs are lower in LICs Products are distributed around the world to meet the demands of consumers in HICs

Question 29

Factors in globalisation - systems

Answer 29

Since the 1940s, many new systems have been introduced to make it easier for flows of information, capital, products, services and labour to cross national boundaries.

Question 30

Factors in globalisation - technology

Answer 30

The technology used for information, communications and transport has advanced rapidly. E.g) Internet allows people from all over the world to access information. Planes allow people and goods to be transported across the world quickly and efficiently.

Question 31

Factors in globalisation- relationships

Answer 31

Before WW2, most relationships between countries involved one country losing and another gaining. Nowadays, relationships are based on trade and common rules – allow everyone involved to gain.

Question 32

What does the global financial system do?

Answer 32

Governs the flows of capital between countries based on companies called investment banks.

Question 33

What happened in 1980s to make the financial system more global? And what were it’s features?

Answer 33

Governments financial deregulation - relaxed rules about what banks were allowed to do. banks able to charge people more for their services, and invest in greater range of businesses. barriers to capital coming in and out of a country were removed, so it became easier for investment banks to buy and sell shares and other products across the world. changes led to a greater range of companies getting involved in finance – e.g. commercial banks began selling shares. enabled investment banks to take on more services e.g. exchanging currencies between countries to allow them to trade across national borders. Today, investors, banks and other companies all over the world are part of the global financial system. Decisions of banks or investors in one part of the world affect others.

Question 34

How do governments in countries regulate and control trade?

Answer 34

Tarrifs - taxes on products entering Non-tariff barriers - rules on quality of products coming in Banning products - eg) illegal drugs Controls make it more expensive for companies to sell their products abroad, as well as for consumers to buy them

Question 35

What are trade agreements?

Answer 35

To make it cheaper, countries can enter into a trade agreement. These are formed by countries joining together to form a trade bloc that encourages trade between themselves and promotes economic co-operation. They act like contracts – one country agrees to remove controls in exchange for another country doing so. This benefits both countries’ companies and consumers. An example is the North American Free Trade Agreement (NAFTA).

Question 36

What are bilateral trade agreements?

Answer 36

Trade agreements between 2 countries

Question 37

What are multilateral trade agreements?

Answer 37

Multilateral trade agreements are trade agreements between several countries. Multilateral and bilateral agreements make up the global trade system

Question 38

What is foreign direct investment (FDI)?

Answer 38

When a person, company or other group spends money in another country.

Question 39

What are global systems?

Answer 39

organisations, groupings or activities that link different parts of the world. TNCs, for example, operate in 2 or more countries, therefore linking their economies. Global - scale economic, social and political structures that are created when humans interact with one another across natural borders at a global scale.

Question 40

How have transport and communication systems improved global business?

Answer 40

Improved transport allowed people and products to get to places around the world more easily than ever before. Communications satellites allow cheap wireless communication between 2 devices meaning people / companies in rural or remote areas can access the Internet and communicate with others. Optic fibre cables - allow fast communication between 2 devices, almost instant communication between 2 people / companies. Over past 20 years there has been significant growth in software that allows free communication e.g. text messaging services and video messaging services. Management and information systems have increased companies’ efficiency

Question 41

How have management and information systems increased companies’ efficiency?

Answer 41

New ways of working made companies more efficient – can make same products more cheaply. Companies supply chains have become global – a company’s supplier, factory, research and development department may all be in different countries. Large companies can benefit from economies of scale. The average cost to a firm of making an item is high if they don’t make many of them. Large companies can reduce the average cost per item - purchasing specialised equipment and using production lines. may be able to buy raw materials at lower price - able to buy in bulk - gives large companies advantage over smaller companies. Outsourcing - Cheap labour costs mean many companies choose to outsource abroad. Companies’ working practices have changed. E.g. casual and temporary contracts allow companies to take on workers as they are required – not having to pay fixed yearly wages saves money.

Question 42

How do countries work together to prevent security threats?

Answer 42

Globalisation creates new trading relationships between countries. By forming trade agreements countries become interdependent - If countries need to trade it would not be in their interests to be at war. This means trade makes war less likely. By working together, countries improve security. E.g. the North Atlantic Treaty Organisation (NATO) founded by several countries in 1949 with the aim of providing security during the Cold War – by grouping together they were able to deter common threats. EU was set-up to bring greater levels of peace to Europe - encouraged globalisation as threat of conflict is reduced and greater flows of goods and services across the EU as a result.

Question 43

What is capital?

Answer 43

Money that is invested – it is spent on something to produce an income or increased profit from it.

Question 44

What is a non-governmental organisation (NGO)?

Answer 44

Organisation that operates independently of any government and with a common interest.

Question 45

What is an institution?

Answer 45

Political and legal organisations. They pass and enforce laws. 3 examples: United Nations, World Trade Organisation and Intergovernmental Panel on Climate Change.

Question 46

What is the United Nations?

Answer 46

An international organisation founded in 1945 made up of 193 member states whose aim is to promote international peace and co-operation