Week 1: Globalisation Flashcards

Question

Hyper-globalisation

Answer 1

(The sources do not explicitly define hyper-globalisation. You may want to research this term independently). Hyperglobalization refers to an extreme and accelerated form of globalization where the integration of national economies, markets, and cultures reaches an unprecedented level. It is characterized by rapid growth in international trade, investment, capital flows, and technological exchange, making the world economy increasingly interconnected. Key Features of Hyperglobalization Intensified Trade and Investment Flows Global trade volume increases dramatically, often outpacing global economic growth. Investment flows between countries become more fluid, with companies moving capital and assets easily across borders. Global Supply Chains Production processes are spread across the globe, and companies source materials, labor, and products from multiple countries to reduce costs and increase efficiency. Complex just-in-time supply chains connect regions and economies in ways that make disruptions in one part of the world have ripple effects across the entire system (e.g., the COVID-19 pandemic highlighted these vulnerabilities). Financial Integration There is an explosion in cross-border financial transactions, including direct foreign investment, portfolio investments, and banking services. Global financial markets are more interconnected, with investors and corporations moving money and capital across borders with minimal restrictions. Technological and Digital Revolution The internet and digital technologies drive hyperglobalization by enabling instantaneous communication, e-commerce, and the global flow of information. Companies like Amazon, Google, and Alibaba are prime examples of digital businesses that are part of the hyperglobalized world economy, with customers and operations spanning the globe. Global Labor Mobility There is an increasing movement of people across borders for work, education, and business, particularly skilled labor. Countries with more open immigration policies may see an influx of talent, contributing to a brain gain, while others may experience a brain drain. Cultural Exchange Hyperglobalization also leads to cultural exchange and global influence in entertainment, fashion, food, and media. Brands like Coca-Cola, McDonald’s, and Nike are examples of cultural products that have gained massive global followings. Drivers of Hyperglobalization Trade Liberalization The lowering of tariffs and trade barriers through agreements like WTO (World Trade Organization), NAFTA (North American Free Trade Agreement), and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) has significantly boosted cross-border trade. Technological Advancements Innovations in transportation (airlines, shipping) and information technology (high-speed internet, cloud computing) have made it easier for businesses to operate on a global scale and for individuals to communicate and trade. Global Financialization The growth of global financial markets and the increasing importance of capital mobility have led to greater integration. Financial institutions, such as global banks, hedge funds, and investment firms, play a significant role in shaping the global economy. Geopolitical Changes The fall of the Soviet Union and the opening of China’s economy in the late 20th century were major catalysts for hyperglobalization, as these events opened up new markets and opportunities for global trade and investment. Multinational Corporations (MNCs) MNCs are key players in hyperglobalization as they expand their operations, production, and distribution networks across borders. Companies like Apple, Samsung, and Toyota integrate the world’s economies by sourcing parts from different countries and selling products globally. Benefits of Hyperglobalization Economic Growth: Increased trade and investment can lead to higher productivity, better access to resources, and growth in GDP. Developing countries can benefit from foreign direct investment (FDI), technology transfer, and knowledge-sharing. Lower Consumer Prices: More competition from international businesses tends to drive down prices and improve the quality of goods and services. Consumers gain access to a wider variety of products from around the world, often at more affordable prices. Cultural Exchange: People can experience products, ideas, and innovations from other cultures, leading to a richer, more diverse world. Cultural globalization can lead to greater understanding and tolerance across different societies. Innovation and Knowledge Sharing: The global flow of information, talent, and capital leads to faster innovation in technology, science, and business. Collaboration between countries and companies can create solutions to global challenges, like climate change and healthcare. The Future of Hyperglobalization In recent years, there has been a backlash against hyperglobalization, driven by concerns over national sovereignty, protectionism, and the negative consequences of economic inequality and environmental damage. Trade wars, like the U.S.-China trade war, and the rise of populism in several countries (e.g., Brexit in the UK) have led to a reconsideration of the extent of global integration. However, technological advancements continue to push for greater interconnectedness, and multilateral trade agreements remain a key tool for furthering globalization. The next phase of globalization may be more regionalized, with an emphasis on sustainability and inclusive growth. De-globalization refers to the process of reducing interdependence and integration between countries, economies, and cultures. It represents a reversal or slowing down of the trends associated with globalization, where countries become more inward-looking and less reliant on international trade, investment, and cultural exchange.

Answer 2

(The sources discuss the idea of deglobalisation being a myth challenged by Williamson. A direct definition isn't provided, but it implies a reversal of increasing global interconnectedness). Key Features of De-globalization Protectionism Countries begin to impose tariffs, trade barriers, and other protectionist measures to shield domestic industries from international competition. Governments may prioritize domestic production, local industries, and self-sufficiency, often at the expense of open markets and international cooperation. Reshoring and Localization of Supply Chains Companies move their manufacturing and production facilities back to their home countries or closer to home markets, in contrast to the trend of outsourcing and offshoring that characterized globalization. The focus shifts to local sourcing and reducing dependence on global supply chains for key products and materials. Reduction in Cross-Border Capital Flows Financial flows between countries slow down as investors become more cautious, driven by uncertainty, political risk, or trade tensions. Foreign direct investment (FDI) may decline, and cross-border mergers and acquisitions may decrease as a result of nationalist policies or regulatory restrictions. Cultural Retreat Countries become more focused on preserving their national identity and culture, leading to a slowdown in cultural exchange and international influence. Global brands and ideas might be replaced by local or national alternatives, and the influence of global media, entertainment, and fashion decreases. Anti-Globalization Sentiments Rising populism, nationalism, and anti-globalization movements reflect a growing discontent with the negative impacts of globalization, such as inequality, job displacement, and cultural homogenization. Political leaders may promote agendas that focus on national sovereignty, local jobs, and independence from global institutions. Drivers of De-globalization Economic Nationalism Many countries are adopting economic nationalism, aiming to protect local industries, create jobs, and prioritize the welfare of their citizens over global concerns. The rise of populist political leaders around the world, who promise to "bring jobs back" and reduce reliance on foreign trade, has been a key driver of this trend. Global Economic Uncertainty Events like the 2008 global financial crisis, the COVID-19 pandemic, and ongoing trade wars have highlighted the vulnerabilities of highly interconnected global systems. Economic disruptions, such as global supply chain issues, can lead countries to question the wisdom of depending on international markets for essential goods. Technological Advances Advances in automation and artificial intelligence (AI) have made it more feasible for businesses to reshore production or rely on local labor rather than outsourcing to low-wage countries. 3D printing, blockchain, and advanced robotics allow for more localized production, making global supply chains less critical. Environmental Concerns Sustainability and climate change issues are leading to calls for reducing the environmental footprint of globalization. Long global supply chains contribute to carbon emissions, and there is a growing push for more sustainable production and local consumption. Geopolitical Tensions The rise of nationalism, the trade war between the U.S. and China, Brexit, and increasing tensions between major powers (such as the U.S., China, and Russia) are contributing to de-globalization. Countries are less inclined to cooperate on multilateral agreements or allow foreign influence in domestic affairs, leading to a more fragmented global system. Manifestations of De-globalization Trade Wars and Tariffs Countries impose tariffs and trade restrictions in response to perceived unfair trade practices, as seen in the U.S.-China trade war. Brexit is another example where the UK sought to reduce its trade ties with the European Union and establish its own set of rules. Decoupling of Economies The U.S. and China are increasingly decoupling their economies, particularly in areas like technology, trade, and investment. This could lead to the development of regional blocs rather than a truly globalized economy, as countries turn towards closer regional trade agreements rather than global ones. Supply Chain Disruptions Events like the COVID-19 pandemic have exposed the vulnerabilities of global supply chains, especially in sectors like medical supplies, electronics, and consumer goods. There is a growing trend to reshore critical industries, such as pharmaceuticals, and bring production back home or closer to home. Financial Protectionism Countries are imposing stricter capital controls, limiting the flow of money across borders. Currency wars and efforts to manipulate exchange rates also contribute to financial fragmentation. Cultural Protectionism Countries may impose restrictions on foreign media, films, music, and brands to protect their own cultural industries. This could also include restrictions on social media platforms or content filtering to limit the influence of foreign ideas. Impact of De-globalization Economic Growth Slowdown A slowdown in global trade and investment can lead to slower economic growth, especially for countries that are heavily dependent on international commerce. Reduced access to foreign markets and investments may constrain economic opportunities, especially for developing nations. Increased Costs for Consumers As countries produce more locally and rely less on imports, the cost of goods may increase due to higher production costs and limited supply. This could lead to inflation and higher prices for consumers, especially in sectors dependent on global trade. Job Displacement While some jobs are brought back home (e.g., in manufacturing), others may still be lost in industries that are no longer competitive. Transitioning industries and workers may face difficulty retraining and adapting to new, localized production processes. Geopolitical Fragmentation The world may experience greater geopolitical fragmentation, with countries forming regional blocs (e.g., Asia-Pacific, Europe, Americas) rather than cooperating on global issues. This fragmentation can make it harder to tackle global challenges like climate change, pandemics, and nuclear proliferation. Cultural Isolation There could be a rise in cultural isolation, where countries focus inward and become less open to foreign influences. Global cooperation in areas like education, arts, and scientific research could diminish, leading to a loss of opportunities for cross-cultural exchange. Conclusion: Is De-globalization Inevitable? De-globalization reflects growing concerns over the negative impacts of globalization, including inequality, environmental damage, and cultural erosion. While de-globalization trends are evident, complete de-globalization is unlikely, given the deep interdependence of economies, the benefits of global trade, and technological advances that continue to drive cross-border collaboration. The future may lie in a new form of globalization that is more sustainable, equitable, and regionally focused, with an emphasis on local production, environmental sustainability, and protection of national interests. However, the path forward remains uncertain, and countries must balance the benefits of openness with the risks of over-dependence on external forces.

Answer 3

(The sources discuss decoupling in the context of US-China relations as reducing dependence. A precise definition isn't given, but it suggests a separation or reduction of linkages). Decoupling refers to the process where two or more economies, industries, or markets that were once closely integrated begin to move apart or become less interdependent. In the context of global economics, decoupling usually refers to the decoupling of major economies, such as the United States and China, and it can also apply to the disconnection of supply chains, trade relationships, or financial systems between countries or regions. Key Aspects of Decoupling Economic Decoupling: Decoupling of Growth: This refers to the phenomenon where economies, such as the U.S. and China, experience different growth patterns, often due to trade wars, political tensions, or divergent policies. Countries may seek to reduce their reliance on one another by increasing domestic production, seeking new markets, or pursuing self-sufficiency in critical sectors. Trade and Supply Chain Decoupling: Global Supply Chains: As companies increasingly rely on international supply chains, decoupling would involve a reduction in cross-border trade, often in highly sensitive areas like technology, energy, and rare earth materials. Reshoring and Nearshoring are part of this trend, where businesses bring production closer to home or back to their original country to reduce dependence on foreign suppliers, especially in countries with geopolitical risks or tariffs. Financial Decoupling: In financial decoupling, countries may seek to reduce their exposure to foreign capital flows and investments. This can involve restricting foreign direct investment (FDI), capital controls, and the separation of financial markets. A shift away from the U.S. dollar as the global reserve currency is another example of potential financial decoupling, with countries like China and Russia working to create alternatives to dollar-dominated trade and finance. Technological Decoupling: This occurs when countries limit technology transfers and collaborations due to concerns over national security, economic dominance, or intellectual property protection. Tech war between the U.S. and China is a prime example, where both countries have placed restrictions on the export of semiconductors, 5G technology, and other high-tech products. Countries might also develop domestic technology ecosystems to reduce reliance on foreign tech firms and avoid vulnerabilities. Cultural Decoupling: Cultural decoupling refers to a reduction in the flow of cultural products, media, and ideas between countries. Populist movements and nationalism may lead to cultural protectionism, with countries seeking to limit foreign media influence, preserve national languages, and strengthen local cultural industries. Examples include the ban of Western social media platforms or restrictions on foreign films in certain countries. Drivers of Decoupling Geopolitical Tensions: Trade wars, like the U.S.-China trade war, have accelerated decoupling by raising tariffs, imposing sanctions, and creating barriers to trade between countries. Geopolitical tensions in regions like Taiwan or the South China Sea have made countries wary of economic entanglements with rivals. Nationalism and Protectionism: The rise of populist and nationalist political movements, such as Brexit and the America First policies, has led to a focus on self-sufficiency, local jobs, and economic independence. Countries are increasingly concerned about their national interests, including economic security, energy independence, and technological sovereignty. Technological Rivalry: Technological advancements, such as artificial intelligence (AI), 5G, and cybersecurity, have become central to national power. Countries like the U.S. and China are vying for technological supremacy, leading to the decoupling of their tech industries. Restrictions on technology transfer and intellectual property protection have increased in an effort to limit the spread of sensitive technology. Pandemics and Global Crises: The COVID-19 pandemic revealed vulnerabilities in global supply chains, leading countries to reassess their dependence on others for essential goods like personal protective equipment (PPE), medications, and electronics. Global crises push countries to become more self-reliant, especially in sectors critical to public health, national security, and economic stability. Environmental and Sustainability Concerns: Sustainability and environmental protection are becoming increasingly important in global trade and production. Countries may decouple from global supply chains if those chains involve significant environmental harm or unsustainable practices. The desire to reduce carbon footprints could lead countries to focus on local sourcing and green technologies. Examples of Decoupling U.S.-China Trade War: In recent years, the trade war between the U.S. and China has been a clear example of decoupling. Both countries have imposed tariffs on each other’s goods, and there have been efforts to reduce interdependence. China's push for technological independence, including its Made in China 2025 plan, aims to reduce reliance on U.S. technology, especially in fields like semiconductors and artificial intelligence. Brexit: Brexit represents the decoupling of the United Kingdom from the European Union. By leaving the EU, the UK reduced its economic, political, and legal integration with the continent, focusing instead on securing independent trade agreements with countries around the world. Decoupling of Tech Industries: The U.S. and China have decoupled in the technology sector, with the U.S. imposing sanctions on Chinese companies like Huawei and restricting access to semiconductor chips. China, in response, is pushing for technological self-reliance and has made major investments in domestic tech firms, AI, and 5G networks. Pandemic Supply Chain Disruptions: The COVID-19 pandemic revealed the vulnerabilities of global supply chains, especially in critical sectors like healthcare. Many countries, including the U.S. and India, have decided to reshore the production of essential goods to avoid future disruptions. Countries are working on diversifying and localizing their supply chains to be less dependent on foreign suppliers, especially in cases of health crises or natural disasters.

Answer 4

Some evidence suggests a stall due to non-agreement of the Doha Round, Brexit, Trump’s “America First” policy (withdrawal from TPP, renegotiation of NAFTA, criticism of WTO, trade sanctions). However, Williamson challenges the idea that deglobalisation is occurring, highlighting advantages of GVCs and comparative advantage. Indicators That Globalization Might Be Stalling Slower Growth in Global Trade: Since the 2008 financial crisis, global trade growth has been slower than in previous decades, even though trade volumes initially grew rapidly after the 1990s. The World Trade Organization (WTO) has noted that global trade growth has decelerated in recent years, especially in terms of goods. Protectionist measures, such as tariffs, trade wars (e.g., U.S.-China trade war), and Brexit, have disrupted global trade flows. These actions suggest that countries are becoming more inward-looking. Rise of Protectionism: Nationalism, populism, and protectionism are on the rise in many countries. For example, America First policies in the U.S. under Donald Trump and the Brexit referendum in the UK represent a retreat from global agreements and an effort to prioritize national interests over international cooperation. Countries are increasingly imposing tariffs, trade barriers, and subsidies to protect domestic industries, reducing the level of global market integration. Decoupling of Major Economies: The U.S.-China decoupling is a notable example where two of the world's largest economies are reducing their interdependence, particularly in areas like technology, trade, and investment. The global supply chain has been disrupted by both the pandemic and rising geopolitical tensions, forcing many countries and businesses to reconsider their reliance on distant markets and consider reshoring or nearshoring. Impact of the COVID-19 Pandemic: The pandemic highlighted vulnerabilities in global supply chains, especially in sectors like healthcare and pharmaceuticals, leading to calls for self-sufficiency and localization. Travel restrictions, the shift to remote work, and reduced cross-border movement of people and goods during lockdowns have hindered certain aspects of globalization. Global cooperation on issues like health and vaccine distribution was important, but it also revealed nationalist responses, where some countries focused on securing resources for their own populations. Declining Cross-Border Investments: Foreign direct investment (FDI) flows have also slowed down. According to the UNCTAD, global FDI flows fell sharply in 2020 due to the pandemic, and while they are recovering, the levels are still below the pre-pandemic trends. Political instability, trade restrictions, and growing uncertainty about global regulatory frameworks contribute to businesses being cautious about cross-border investments. Indicators That Globalization Is Still Evolving (Not Stalled) Continued Technological Integration: Technology continues to drive global integration, especially in fields like AI, big data, cloud computing, and 5G. The internet and digital platforms (e.g., Amazon, Alibaba, TikTok) have expanded cross-border connections, allowing businesses to sell globally and people to connect internationally. E-commerce and the digital economy are thriving, and the global gig economy is creating a new kind of interconnectedness between workers, employers, and consumers. Regional Trade Agreements and New Partnerships: While global multilateral agreements like those under the WTO may face difficulties, regional trade agreements (FTAs) are flourishing. Examples include the Regional Comprehensive Economic Partnership (RCEP) in East Asia and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements help maintain trade flows in specific regions, showing that while globalization may be slowing in some areas, it continues to expand in others. Supply Chain Resilience and Adaptation: The pandemic and geopolitical tensions have led to a shift in supply chain strategies, with companies adopting nearshoring, reshoring, or more diversified supply chains, but still maintaining global networks for other goods. While there’s a push for localization, global trade in high-tech products, automobiles, and luxury goods continues to thrive. Companies are diversifying their supply chains and exploring new markets, which means globalization is adapting rather than stalling. International Migration (Slowing but Still Significant): While global mobility slowed during the pandemic, migration is still a key element of globalization. International migration of workers continues in many regions, particularly in high-skill sectors (e.g., tech, medicine). The world is seeing ongoing movement of refugees and economic migrants, driven by factors like war, climate change, and labor market needs. Global Cooperation in Addressing Global Challenges: While nationalism and protectionism have risen, there are still instances of global cooperation on issues like climate change, public health, and nuclear disarmament. The Paris Agreement on climate change, for example, shows that countries can still come together to address global challenges despite differences in other areas. Emerging Markets and Economic Growth in Asia and Africa: Growth in emerging markets like India, Africa, and Southeast Asia indicates that the global economy is shifting in new directions, often bypassing traditional Western markets. Trade flows between China, India, and Africa are growing, even as Western countries may see some decoupling in their trade relationships with China. Middle-income countries are increasing their economic power, contributing to a multipolar world economy, where globalization is evolving toward more regional and diverse connections. Is Globalization Stalled or Evolving? Rather than globalization having completely stalled, we can say that it is evolving. Key aspects of global trade and investment are indeed slowing down or being restructured due to the rise of protectionism, nationalism, and the COVID-19 pandemic. However, technology continues to drive global connections, and regional trade agreements remain a dominant force in the global economy. Globalization is also adapting, with countries and companies reshaping their strategies in response to challenges and vulnerabilities exposed by recent events. In essence, globalization is not stalling; it's undergoing a transformation into new forms driven by technology, regionalization, and sustainability concerns.

Answer 5

Removal of trade restrictions between member states. Example: ANZCERTA; USMCA. A Free Trade Area (FTA) is a type of trade agreement between two or more countries where the participating nations agree to eliminate or reduce trade barriers, such as tariffs, quotas, and import/export restrictions, to promote the free flow of goods and services between them. Unlike Customs Unions or Common Markets, FTAs primarily focus on the elimination of tariffs and trade barriers, but each country within an FTA can still maintain its own external trade policies (like tariffs with non-member countries).

Answer 6

Removal of trade restrictions between member states AND common external trade policy towards non-members. Example: ANCOM. A Customs Union is a type of trade agreement between two or more countries in which they agree to eliminate tariffs and other trade barriers on goods traded between them and establish a common external tariff (CET) for goods entering the union from non-member countries. Unlike a Free Trade Area (FTA), which allows each member country to set its own external tariffs, a customs union ensures that all member countries adopt the same tariffs and trade policies toward non-member countries. Key Features of a Customs Union: Elimination of Internal Tariffs: Member countries agree to remove tariffs and other trade restrictions on goods traded among themselves. This allows goods to flow freely within the union without any barriers, promoting regional integration and economic cooperation. Common External Tariff (CET): In a customs union, member countries adopt a common external tariff for goods imported from non-member countries. This means that all member countries apply the same tariff rates on imports from outside the union. The CET helps to prevent countries within the union from undermining each other by setting lower tariffs on external trade, which could encourage trade diversion. Shared Trade Policies: Member countries adopt common trade policies toward non-members, including trade negotiations, import/export regulations, and quota systems. This simplifies the trading environment and ensures harmonized policies across the union. Limited Policy Autonomy: Member countries in a customs union give up some of their sovereignty regarding trade policy since they must align their external tariffs and policies. This can limit a country's ability to negotiate independent trade agreements with non-member countries.

Answer 7

Removal of trade restrictions between member states, common external trade policy towards non-members AND free movement of factors of production between member states. Example: Mercosur; CARICOM.

Answer 8

Removal of trade restrictions between member states, common external trade policy towards non-members, free movement of factors of production between member states AND harmonization of economic policies under supra-national control. Example: EU.

Answer 9

Allows countries to specialize in products they produce efficiently; Stimulates economic growth in countries; Exploits gains beyond those attainable under the WTO.

Answer 10

Economic interdependence creates incentives for political cooperation; Grouping gives countries more political clout.

Answer 11

RTAs provide new opportunities for firms; RTAs can encourage and facilitate a supportive environment for foreign direct investment; Relaxation of regulations.

Answer 12

Certain groups may suffer; Can create discrimination against traders outside the region, resulting in a less efficient global economy; Formation of customs union can impact existing trade flows (example of UK, NZ, Denmark butter).

Answer 13

Compromises national sovereignty and security; Economic adjustments may be too painful politically.

Week 1: Globalisation Flashcards

Understand Globalisation in terms of Global and Regional Business (37 cards)