Geography paper 2

globalisation = the process of becoming more globally connected on a variety of scales; the movement of people, knowledge, ideas, goods and money across national borders 

globalisation has accelerated and deepened due to different advancements globally, the development of technology, international relationships, and the implementation of systems have helped in creating a more globalised world 

the financial system is the relationship between those who borrow money, those who invest money and the institutions that hold, give out and take in this money

e.g the bank 

globalisation has caused this system to become a global process, incorporating thousands of institutions and banks - now the borrowing / investing relationships occur internationally as well as nationally

the global financial system accelerates globalisation as it makes the world more connected:

• banks are now large global institutions that work with millions of people's money
• multinational corporations invest their profits for more interest, meaning millions of dollars are put into the system 
• people buy and sell shares and stocks from global corporations, these purchases are done all over the world, and people from any nation can buy them
• entire countries invest and take loans from huge financial institutions such as the World Bank, which is a huge global flow of capital
• countries also borrow, lend and invest in other countries - developing the relationships between the countries 

financial technology has made financial information and money easily accessible for people across the world, deepening the connections between countries:

• informed decisions about investments, buying and selling, and other financial information is all available due to global communication technology e.g stock market trends are easily accessible
• global banks can operate due to their ability to communicate with their national and regional branches
• companies can operate even when they are relocated to other (usually low income) countries as money can be transferred to a country (for building factories, buying materials etc) and profits can be sent back to the company headquaters 
• the ability to transfer money thanks to the internet has revolutionalise global finance, allowing the world to be connected
  • people can buy and sell things globally without having to meet the buyer to pay
  • money sent back to home country can be sent home with speed and ease 
  • cryptocurrency has been developed, which has created a whole new market for online currency and trading 

innovations in transport have made it easier to transport goods faster and in larger quantities

high speed rail, and faster and bigger planes and boats have allowed the world to become more connected and globalised through these connections

larger and faster aircraft with increased capacity have reduced travelling times, meaning products can be sold over a larger distance in a shorter space of time 

planes are built for the purpose of transporting goods, known as cargo aircraft - these large planes have accelerated globalisation

containerisation has also changed how freight can be transported internationally

containerisation is the process of using large shipping containers to transport goods - since the production of the large metal containers in the 50s, huge amounts of products have been loaded onto trains, planes and boats and transported

containerisation makes global transportation cheaper as less trips are needed to transportation cheaper as less trips are needed to transport the same amount of product 

new innovations in transport have also allowed for more flows of labour, people are able to move to different countries quicker and cheaper than ever before 

high speed rail is an example of new transport technology that has increased global flows of labour, it provides important transport between neighbouring countries - it links rural and urban areas in China and has accelerated rural-urban migration here

high speed rail has also developed in europe since the 80s and now many neighboruing countries are accessible through cross-border trains

this has allowed for flows of people internationally as it is cheaper and faster to move to a desired country 

air travel has also revolutionalised the transportation of people due to faster and cheaper flights

flights are now more affordable and attainable due to the amount of choice and competitive rates as well as the ability to book online

air travel technology has also improved, flight times are quicker and there are more destinations available to travel to

e.g in march 2018, the first non-stop flight between Australia and UK took place, taking just over 17 hours

air travel technology and management has lowered prices and expanded the places people can travel to, which has allowed millions of people to be transported overseas 

due to our world being globalised, countries face threats from other countries, therefore, certain security systems using communication technology and other technology have had to be developed in order to keep countries safe

there are now stricter regulations upon entering a country and transporting goods - international customs control the flow of people and goods in and out of countries to ensure security within the country e.g the use of automatic X-ray technology at airports allows suspicious objects to be traced

this system is put in place to ensure drugs, weapons, human threats etc do not enter a country and cause harm

cybersecurity is a global concern, and attacks can originate from anywhere in the world

technologies are being developed to ensure cyber attacks can be traced, no matter the country they originate from - this security technology has been developed as a result of our globalised world

there are global systems put in place to limit disagreement and wars, protecting civilians and ensuring security within countries. the United Nations Security Council for example, is an international organisation that aims to diffuse disagreements with the intention of maintaining international peace

the use of technology has allowed for security threats to be monitored and stopped. the use of CCTV, search histories, financial purchases etc can be used to track those who are attempting to commit crimes such as terrorist attacks

the ability to communicate globally has allowed flows of information, services and capital to accelerate, for example:

• satellites and fibre-optic communication enabled the growth of internet and mobile phone systems, allowing information and money to be transferred internationally 
• corporations can communicate with overseas factories quickly and easily, meaning the negatives of moving production overseas to low income countries are reduced
• services can be accessed through the internet or on the phone e.g call centres, allowing for millions of jobs to be created that can be accessed through communication technology alone
• the global availability of smartphones and the vast number of apps such as GPS apps and social groups, have added a new dimension to migration, allowing people to move with less restraints
• relationships can be maintained even from great distances, this has deepened global connections and also increase flows of labour as people are more likely to move if they can still communicate with their families abroad

the process of globalisation has been accelerated by the way companies manage flows, be that flows of labour, products, services, information or capital 

the way companies are managed have changed due to the global relationships and systems in place 

there are now common systems in the majority of global companies to make these companies more efficient

1. economies of scale = an economy of scale is the concept of increasing profits by producing a larger amount of products, as overall the average price to manufacture each product is lowered. companies can save money by upscaling their production:

• raw products can be bought in bulk, meaning they are cheaper
• a large amount of products can be made quickly on production lines, meaning less money is spent on labour
• large amounts of products can be shipped, meaning overall it costs less to send a large shipment rather than many small ones

overall, if a company is willing (and has enough money) to spend more on initially buying larger factories, shipping equipment, and raw materials - then they will save in the long term. economies of scale require management by companies to ensure profits are heightened

2. global supply chains = a supply chain is the organised managment of product flows, from when they are manufactued to when they are delivered to consumers 

due to the ability to communicate information and transport products, companies can now have different stages of production in different countries

this overall minimises costs because each stage of production is specialised rather than having one factory that has to control every aspect of production, saving time and money

3. outsourcing = the hiring of other companies to complete company tasks that are essential, but not necessary to complete by the company iteself e.g call centres

companies can outsource due to the ability to communicate information to companies they hire - overall saving money, especially when outsourcing is done in low income countries due to lower labour costs 

4. offshoring = offshoring is relocating a company process abroad. due to communication systems, easier transport and the ability to transfer money, a lot of companies use offshoring to minimise costs

this management strategy saves money when relocating to low income countries, as labour costs are lower

companies may also relocate due to lower taxes and availability of materials 

globalisation has accelerated due to trade agreements across the world. countries trade products to different countries; millions of products are imported and exported into and out of countries every year. trade agreements have made globalisation deepen and accelerate as they make international trading less expensive and easier

trading products is expensive due to the controls and restirctions put on imports and exports:

• tariffs = a tax for importing and exporting goods
• non-tariff barriers = such as quotas (a limit/fixed number of goods) or requirements 
• outright bans on products or country imports/exports 

to lower the costs of trade, countries can enter trade agreements, which work to benefit all parties that are involved. in trade agreements, certain restrictions can be removed or lessened in return for another country doing the same. all trade agreements are overlooked by the World Trade Organisation to ensure they are fair 

an example of a trade agreement is the North American Free Trade Agreement (NAFTA). this agreement has lowered and removed tariffs on imports and exports between canada, the USA, and mexico

interdependence is the theory that nations depend on each other economically, politically, socially and environmentally

many contemporary societies are now classed as interdependent as they rely heavily on the decisions of other countries, meaning they would struggle and be detrimentally affected without them

our countries are interdependent in different ways such as political, economic, social and environmental 

issues associated with interdependence:

• interdependence can cause issues for dependent countries due to unequal flows. the global flows of capital, labour, ideas and technology arent equal around the world, sometimes countries give more, sometimes countries receive more
• unequal flows can be beneficial to a country as they can bring benefits socially and economically, however, unequal flows can also cause inequalities and in some cases lead to injustice or conflict 
• in general, migration occurs from low income countries to high income countries due to there being more opportunity in high income countries (better employment, more freedom etc)
• therefore the flow of people globally is unequal, more people leave low income countries than those who enter them
• whereas more people enter high income countries than they leave

• mainly concerned with the workforce - migrant workers become an important part of the host country as they become intertwined in work forces and take jobs that must be done, but are 'unwanted' by others e.g 44% of the cleaning workforce in London is made up of ethnic minorities
• the countries that people are flowing from may also benefit from unequal flows of people out of their country. workers send remittances backto their home country, helping their home economy to grow. an example of economic interdependancy caused by migration is Indian workers moving to UAE. over 2 million Indian migrants live in the Unitee Arab Emirates (30% of population). an estimate of $15 billion is returned to India annually as remittances
• it is usually a positive that many people are fleeing from conflict and poor quality of life, and they may have a better life in countries they have moved to

• host countries may become dependent on the migratn workers, and this causes issues if there is a change in circumstances e.g the reliance on Polish migrants on UK potato farm has caused issues with potato crops in Jersey
• unequal flows can cause overpopulation. many countries experiencing large flows of people believe they suffer due to pressure on services such as healthcare, and social tension with migrants 'taking' jobs
• the country that migrants originate from may become dependent on remittances, so a change in circumstance may be detrimental to the economy. for example - the UK entered a recession in 2009. many building projects were cancelled, meaning migrants working in construction industries lost their jobs and stopped sending remittances home
• large amounts of emigration (leaving) can cause unemployment and economic deterioration, as areas may become underpopulated. skilled workers leave to wrok in high income countries, meaning unskilled people are left to keep the economy running
• as many migrants are more desperate for work than nationals, they may be vulnerable to exploitation, such as poor working conditions and low wages. in Qatar, estimated 1,200 migrant workers have died while building for the upcoming 2022 World Cup

the majority of money flows are into low income countries - foreign direct investment, aid, remittances all flow into low income countries, whereas the flows of money into high income countries are majorly repatriation of profits/product sales

benefits:

• to the country receiving money, foreign direct investments can improve quality of life as it provides an income, usually one that is higher than other employment in low income countries
• aid and remittances can also help to improve quality of life, such as rebuilding after a disaster. for example - $11.28 million in foreign aid was given to Figi after the devastating Cyclone Winston 2016, the majority was invested into the Help for Homes scheme, which helps rebuild stronger homes
• to he country sending money, there are also benefits - richer countries can take advantage of lower labour costs, maximising their profits 

• Problems associated with unequal flows of money are mainly concerning ​injustice ​towards people living in low income countries.

• Companies in low income countries operating from high income countries can create dependencies ​for workers. They are ​dependent ​on the ​higher wages​, meaning they must subject themselves to dangerous situations. ​Sweatshops ​with dangerous working conditions and low wages are set up by large companies.

• For example, the collapse of a garment factory - Rana Plaza - in 2013, killed 1134 people. The factory was known to provide clothing for well known brands such as Primark, Matalan, and Walmart.

• Foreign Aid can cause issues, as it can reduce ​incentive ​for governments to help their own countries.

• Companies can pressure governments to ​alleviate taxes ​or ​relax social and environmental laws​ ​so that TNCs will invest.

• TNCs have been criticised for ​profiting too much. The flows of money may be larger to low income countries, but the amount of profit that stays in the country is very small

High income countries usually dictate ​ideas ​of how countries should be run, and how trade should be carried out. This is mostly down to these countries having ​more money​, thus more power over less developed countries.

Benefits

• High income countries have introduced ideas of ​deregulation​ ​to developing countries and newly emerging economies (NEEs)​. Reducing ​state ownership ​has had benefits to developing countries, such as​ lower prices of products and services ​from competitive rates. For example, the long-distance telephone market in Chile has been deregulated, which has cut telephone rates by​ 50%​.

•  Free-trade ​(​created​ by HIC deregulation) has increased globally due to deregulation, allowing ​global markets to thrive​ and decreasing the risk of conflicts.

• Countries with successful strategies can ​educate​ ​low income countries on how to create economic growth​ or remove ​social injustice​, meaning low income countries can implement these strategies.

• Some argue that​ deregulation is occurring too quickly​ for low income countries to keep up, and this is not allowing the​ full benefits​ of the growth of the private sector to be achieved. Rapid flows of FDI and growth of the global markets mean some countries cannot keep up, and a ​reform​ ​of regulations would work better than only ​deregulation​.

• Privatisation​ ​allows​ large companies ​who buy originally state-owned industries to ​grow​. Profits are massively​ concentrated within these companies​, rather than ​nationalised industries​. This means low income countries may not benefit from privatisation as it is n​ ot growing their economy​ but is instead funding the company.

• Low income countries may feel ​forced​ ​to keep up with ideas of the wealthier countries, even if the ideas are not the most beneficial to these countries. E.g. it is a massive disadvantage to a country’s economy if they ​do not join trade agreements​ etc.

• Deregulation may lead to more ​relaxed ​social and environmental laws in low income countries, causing social ​injustice​ ​and environmental ​damage​ ​without proper government regulation.

• Ideas of ​multiculturalism​ ​and ​interdependency​ ​may be disputed by some people. Some citizens few an interdependent country as a ​threat ​to their nation’s ​sovereignty​.

1. There are flows of technology both ways between HICs and LICs/NEEs. However, these flows are unequal as ​different types of technology ​flow between countries.

   In the past, the majority of flows of technology were within HICs​, as there was virtually ​no demand​ ​for technology​ ​in lower income countries​.

   Now, HICs and companies wish to ​invest in lower income countries due to the benefits they bring, so ​technology that can make capital gains ​(e.g. manufacturing equipment, components for assembly etc.) flows to LICs. This type of technology does not flow from LICs to HICs because there are ​less companies based in LICs that wish to invest in HICs ​(as there are less benefits, including higher wages).

   In contrast, although design and research occurs in HICs, a lot of ​consumer technology is manufactured in lower income countries​, only to be ​distributed to HICs​. Phones, office and telecommunications technology, and electronics are mainly manufactured in lower income countries, then sold to HICs. This is slowly changing though, with a higher demand for ​consumer technology in newly emerging economies, such as China​.

   The EU, for example, receives ​10x ​the amount of electrical imports from China than it exports to China.

• The​ economies of LICs can develop ​through technology investments, opening up factories and increasing employment. This also strengthens ​trade deals ​between HICs and LICs, which allows HICs to benefit from the exports of HICs.

• Companies benefit from products being​ produced overseas​, meaning they can maximise profits.

• The concentration of technology innovation in HICs has lead to the development of beneficial​ ​technological advancements. This leads to consumers getting better products.

• HICs with developed markets have a ​technological​ ​advantage over lower income countries because they can ​afford to​ ​buy the technology​. People in LICs cannot afford to purchase technology that will ​advance their economy​ and ​improve quality of life​, meaning HICs can rapidly develop while LICs are left behind.

• It can be considered an ​injustice​ ​that ​the employees ​that ​manufacture and assemble consumer technology such as computers, phones, and household appliances receive​ ​so little compared with what they are sold for​. Companies make a​ ​large majority of profits​, ​whereas those who do a lot of the work are left with​ ​little income​, as well as ​often poor working conditions​.​ These countries rarely even have the ​benefits​ ​of the product they are creating - China is the largest producer of smartphones, yet only 55% of the population has a smartphone, compared to 77% of the USA.

• Companies investing technology into LICs means that HIC ​manufacturing jobs​ are often lost. This can leave many out of work due to job losses, and those with​ ​relevant training​ ​in manufacturing technology often have nowhere to go.

In general, richer, more developed countries are the more ​powerful ​countries. These countries have more ​money ​and technology​, as well as ​deeper relations with other countries​, meaning they are able to ​influence​ ​global systems to their advantage
In contrast, low income countries that lack money and technology have less ​influence ​over geopolitical events. This is ​problematic ​for these countries, as they ​rely ​on the decisions made by richer countries, and only have the power to ​respond​ ​to the events rather than directly intervene.

The environment: ​As previously mentioned, all countries are ​interdependent ​in a way due to our reliance on others to protect the environment. Richer, powerful countries (and emerging economies especially) usually ​emit ​a lot of carbon dioxide.

Some rich countries may be less likely to ​agree to global environmental protection if this may reduce CO2 emissions, even though they are likely to feel the effects of climate change less. Poorer, less powerful countries that are frequently affected by climate change induced ​natural disasters cannot do much to influence the ideas of these richer countries. The USA, for example, has recently withdrawn from the Paris Climate Agreement. In theory, the USA’s reluctance to fight climate change may cause less powerful countries to suffer.

Trade: ​Richer countries generally control trade agreements, as those who enter trade agreements with rich countries can ​benefit ​from the country’s wealth, whereas the richer countries will not benefit to the extent of the less wealthy countries.
As richer countries have the ​upper hand​, this means they can ​pressure low income countries ​into making ​more beneficial deals ​to the richer countries. Lower income countries may lower taxes, reduce tariffs, set up Special Economic Zones (SEZs), etc. to encourage investment, which may have negative effects on the economy.

Rich corporations and TNCs can influence trade, as they may create ​sanctions ​on other countries or refuse to trade with them in order to get their way.

Global Financial Institutions: ​The IMF and the World Bank can be seen as ​reinforcing the unequal power relations between countries, rather than providing a ​level playing field​. The main concern is that these institutions attach ​loan conditionalities​, such as deregulation, privatisation etc. This is usually without regards to the economies receiving the loan, and can have negative effects such as ​less investments into education and healthcare sectors.

The World Trade Organisation (WTO) has also been criticised for widening the gap between low income and high income countries, despite being the very organisation created to avoid this. In general, the WTO can be seen as biased towards richer countries​. Some examples include:

• The maintenance of (some say unfair) ​high import duties ​and ​quotas ​in rich countries, which ​reduces imports ​from ​developing countries

• The protection of ​HIC agriculture​, but the pressure for LICs to ​open their markets up to international produce

• Developing countries are ​not represented as much​ in the WTO

trade and investments in a globalised world

volume -

international trade is occuring more than ever before. globally, the amount of exports has been steadily increasing. the only time trade has decreased was during the Global Financial Crisis. world exports of manufactured goods has increased from US$8 trillion in 2006 to US$11 trillion in 2016

The volume of ​global investments is also rising. FDI has risen from $400 billion to $1500 billion in 20 years. The graph below shows how FDI has risen over the past decades as a percentage of the ​receiving ​country’s GDP

Global trade and investments have changed over the past 40 years. Trading and investments used to be heavily concentrated within ​the most developed countries​. Investments are now mainly concerned with ​High Income Countries ​investing into ​Low Income Countries​, due to the profits that can be made from lower labour costs etc.

Investment patterns have also changed because ​emerging economies ​are beginning to invest in ​low income countries​, causing these emerging economies to rapidly develop. For example, China invests a lot of money into Africa.

There are some ​patterns arising in international trade​. Although high income countries remain the largest exporters, many ​emerging economies are also arising as huge exporters, such as China (the world’s largest exporter). Developing economies’ share of world merchandise trade is currently at 41%.

Low income countries are also ​trading more​, but the growth at which LICs trade is the slowest out of every economy. The least developed countries (LDCs) make up ​less than 1% of global merchandise and commercial services exports.

International trade is also changing due to new international ​relationships​, including ​fair trade and ​trade blocs​. Trading relationships between high income, middle income (NEEs), and low income countries generally follows the same pattern

In general, economies with ​more money ​invest into those with ​less money in order to develop lower income countries. This generates economic growth in the LIC, and allows HICs to take advantage of the lower labour costs.

This is why HICs especially send ​capital goods ​to lower income countries - these goods can create consumer goods, generating a profit. Emerging economies produce ​consumer goods ​for HICs, e.g. the garment industry in Eastern Asia and the Pacific.

Globalisation has unfortunately left many ​less developed markets vulnerable to exploitation

Many small-scale farmers in LICs struggle to compete with the competitive prices of huge plantations owned by TNCs

This has lead to farmers being paid ​much less than deserved for ​a large amount of labour and produce​

The Fairtrade Foundation ​was set up in 1992 to ensure producers receive better trading conditions, and since then has developed into a well-known trademark, sold to supermarkets.

Trade Blocs are groups of countries in a ​trading agreement, ​allowing them to have certain advantages ​over other countries, such as reduced tariffs or higher quotas

A trade bloc gives all countries involved ​mutual benefits​, and often include countries with ​varying economic levels​

Trade Blocs are usually between ​neighbouring countries​, but this is not always the case

There are also trade blocs for​ ​industries​, such as ​oil ​trade blocs.

There are several major trade blocs around the world that ​exemplify international trade​.

• EU - ​The European Union. 28 countries. Free trade within the EU has allowed goods and services to be transported internationally with ease.

• NAFTA - The North American Free Trade Agreement. 3 countries. The aim of NAFTA was to remove barriers to agricultural products, manufactured products, and services.

• ASEAN - The Association of Southeast Asian Countries. 10 countries. The bloc has free trade agreements to ensure political, economic, and social stability.

  Other trading blocs include The African Union (AU)​, The Union of South American Nations (USAN),​ and The Caribbean Community​ (CARICOM).

The effects of trading blocs are both positive and negative There are obvious positives concerning free trade, the removal of non-tariff barriers, and other trading advantages However, some criticise that trading blocs ​limit trade to other countries​, causing disadvantages to both the countries within the trade bloc and those outside of it Overall, trade blocs (among other reasons) are said to limit the​ ​access to markets​, which will be explored further

All countries have ​differential access to markets​ Access to markets refers to a nation or company’s ability to ​trade within the international market​ A country’s access to market is limited by any ​barriers ​that limit a country’s imports and exports If access to markets is poor, a country is likely to be negatively affected Economically, a country would be missing out on ​profits from exports​, and societally, a country may miss out on products (and the poor economy may also negatively affect societal well-being)

trade agreements 

Trading agreements, such as trade blocs, can positively and negatively affect countries. A country’s access to markets may be ​improved ​by trade agreements, as ​relationships between countries are created that allow more trade to occur. This is especially true when lower income countries are introduced to trade agreements, as they are able to trade at lower prices, sometimes freely.

However, trade agreements may also bring negative effects to countries. Some argue that trade agreements disallow countries ​within them to trade as well with other countries, which may negatively affect these countries. One of the reasons that the UK has decided to leave the EU was that the EU​ ​limits trading​ with other countries, as trading​ ​within the EU​ i​s obviously encouraged

Furthermore, countries ​left out ​of trade agreements can be at even ​more ​of a disadvantage. Less developed markets especially must pay tariffs when those in trade agreements do not, meaning they may struggle to have access to the market.

Countries like Kenya struggle to get a good price for the food they sell to European markets, due to the tariffs placed on non-EU agricultural produce as an attempt to protect EU farmers. Heavy tariffs are also placed on African citrus fruits - especially South African orange produce - in order to protect Spanish farmers.

This has weakened LICs access to markets. Overall, many trade blocs and agreements are made up of primarily ​core regions​, meaning they develop quickly and benefit the most, whilst the ​periphery regions are left with​ less developed markets ​and little opportunity to gain access into the market

Special Economic Zones ​(SEZs) are areas ​within a country ​that do not have the same ​trading regulations as the country they are located in.

The regulations within the SEZs are usually ​less strict​, with lower tariffs and lower taxes. SEZs increase access to markets as countries can afford to invest in the area, increasing international trade from that area.

Special and Differential Treatment (SDT) agreements ​are put in place by the WTO to help specifically ​developing markets with ​poor access to markets​.

These countries receive ​special treatment such as reduced tariffs and taxes, priority in trading etc. Overall, SDTs aim to ​develop the least economically developed countries’ access to markets

Generally, countries with ​less wealth have less ​access to markets​. In HICs, countries can afford to pay for higher tariffs on exports and imports, meaning overall they are able to make profits and receive products.

HICs also increase their access to markets through FDI into foreign markets, as this allows some countries to ​save money​ through cheaper labour and often ​avoid​ ​tariffs.

In contrast, those with less wealth may struggle to pay for ​high tariffs​, and cannot save money through offshoring and outsourcing as they do not have the funds. This reduces LIC’s already poor access to markets.

TNCs, to put it simply, are companies operating ​across multiple countries ​(​trans- = across, ​-national = nations).

These companies usually work by having their headquarters, production, and sales all in different countries across the globe​, meaning they are a crucial aspect of globalisation.

These corporations can provide raw products, manufactured goods, services, or information - they exist in different ​industries (sectors)​. 

Overall, TNCs make ​products​, produce ​jobs​, ​invest ​in countries, and sometimes contribute to ​cultures​. Some TNCs are very powerful, and can even have ​political influence​, e.g. the pressuring of some countries to reduce taxes and create SEZs so that the TNC will invest there.

1. The Headquarters of TNCs are usually located in ​high income countries​. HQ is responsible for the ​big decisions​, such as ​investments​, ​meetings with global organisations​ etc

The majority of headquarters are heavily concentrated within the USA, Europe, Japan, as well as many in the emerging economy of China.

2. Research and Development (R&D) are the facilities in which customer research, software developing, plans for manufacture etc. is carried out. There are usually R&D facilities in the country where the TNC operates from, but there may also be multiple facilities in different countries, so that research can be ​varied​ ​and ​specific to the target market​.

3. Manufacturing and production facilities are mainly concentrated in lower income countries due to increased profits. Lower costs for labour, lower material costs, and lower taxes/tariffs all contribute to the global shift in manufacturing. The ​production ​of TNC products is usually organised and complex, allowing the ​greatest profits possible ​to be achieved.

TNCs use global ​management systems in order to maximise their profits. These systems of production, as previously mentioned, are:

● Economies of scale: ​TNCs usually have a large revenue, meaning they can afford to upscale their production​. This allows​ ​profits to increase​ ​as less is spent in production.

● Global supply chains​: TNCs use global supply chains in order to increase profits. HQ and R&D are in HICs, whereas the ​production ​often occurs globally, especially with TNCs that operate within the ​secondary industry sector​.

As an example, Boeing is an American aircraft TNC. Different components are manufactured in different countries, which overall gives the ​best product​. This type of global supply chain happens throughout TNCs.

Products that are made for ​consumer audiences​, such as smartphones, use global supply chains as a way to ​spend less money on manufacturing​.

TNCs may often ​invest in the source of raw materials also in order to save money in the supply chain. E.g. many TNCs that provide food (like fruit) invest in plantations to lower the cost and remove the ‘middle man’.

• Outsourcing: ​TNCs that provide ​tertiary industry products (services) will often ​outsource tasks to other companies in order to save money and time. TNCs like Apple outsource their manufacturing process so that profits can be maximised.

• Offshoring: ​Companies that make ​manufactured products ​will often have their factories in LICs due to lower labour costs, better taxes, weaker regulations for workers and weaker environmental regulations. This leads to much dispute about the ​ethical issues ​with TNCs exploiting poorer citizens in order to maximise their products.

TNCs create ​links ​between countries and with other companies. Linkages are created in order to benefit the TNC​, and often includes ​expanding​ ​the company.

• Links through FDI: TNCs create links with other countries by ​investing in them​, which benefits the country as this creates jobs and contributes to the economy. TNCs can be investments into a factory, for example, but they may also take the form of:
  • Mergers: ​TNCs join to form one larger company​, helping to form foreign links if the TNC is from a foreign country.
  • Acquisitions: ​A TNC ​buys another company ​in order to expand (usually a smaller company). Acquisitions are frequently associated with local job loss as a large TNC will take ​full control​.
• Links through integration​: TNCs often ​expand ​their company by creating linkages between other companies. There are two types of integration:
  • vertical integration: taking ownership of part of the supply chain e.g buying a plantation
  • horizontal integration: taking ownership of another company, often one that is in a similar industry. The food industry is a prime example of vertical integration. a lot of large companies control the majority of smaller companies 

The majority of TNCs trade with ​HICs​, as the market for ​consumer goods ​is concentrated within richer countries.

However, there is now a ​rapid increase in demand for popular brands in emerging economies ​such as Latin America, East Asia and the Pacific. This means TNC trading has increasingly expanded to countries.

The lowest income countries, though, still see a lack of TNC-made consumer products, as few people have a disposable income to buy these products.

As TNCs are usually large companies with a ​lot of revenue​, they can afford to ​take advantage of global marketing​.

Many TNCs use the same marketing strategy as it creates a ​trademark​, but they also have the money to ​adjust their marketing strategy to different countries to ​maximise profits

Global governance is the process of ​multiple nations acting together in matters that affect ​the entire world​. In our globalised world, issues can be ​international​, such as climate change, famine, epidemics, war etc.  This has caused the ​need ​for global governance, as a single nation cannot tackle ​worldwide ​issues. Countries are not only governed by their governments, but are now also under a sort of​ ​global management​

Global governance works on a ​variety of scales, ​from local to global. In short, decisions made by ​global institutions affect all scales, including local​. This can be seen in many scenarios.

Trade agreements set by the WTO (a ​global institution) affects how trading happens internationally, for example in the EU (an international institution).

In turn, the Department for International Trade (a ​national ​institution) decides what products the UK imports from where.

A ​regional ​institution, such as a warehouse, receives the international products and distributes them.

A ​local ​shop buys the international products from the warehouse.

The effects of global governance on a variety of scales occurs in different respects, such as the environment. Nations sign global agreements, which affects, for example, how much CO​2​ localities can emit.

Global governance ​maintains global systems ​(e.g. the environment, politics, economics etc.) through​ ​global societal norms​, global ​laws​ and global ​institutions​.

A ​norm ​generally refers to a ​social norm​. This is normal and therefore ​accepted ​behaviour. Although norms differ between countries, global governance has worked to develop ​global norms​, mainly concerning the unfair treatment of people.

An example of a global norm is gender equality. It is generally a norm for women to be equal to men, however in other countries, such as Saudi Arabia (who only lifted a ban that ​prohibited women from driving ​in 2018), equality is not a social norm.

Although countries may ​disagree ​with societal norms in other countries, there is little that can be done to ​globally govern ​a country’s norms and ideologies, which is where​ ​international laws​ are helpful

International laws are an aspect of global governance, as this is an example of how ​multiple nations ​act together to maintain global systems. A ​law ​is legally binding, unlike a norm, meaning failure to comply with this law can result in ​prosecution​.

Anything from trading sanctions to attacks can result from countries not respecting international laws.

For example, the Universal Declaration of Human Rights is a ​legally binding document ​that protects the social rights of citizens. If a member has ​agreed ​with the declaration but does not abide by it​, ​there may be consequences and prosecutions.

As laws are legally binding, countries may be ​deterred ​from global governance if they do not agree with the laws but must follow them.

As an example, one of the reasons UK citizens wished to leave the EU was so the country did not have to comply with their rules and regulations

In order for countries and people to be ​governed globally​, there are certain ​international institutions that have been developed to ​oversee ​the maintenance of global systems.

These institutions aim to ​represent all nations​, as well as ​protect these nations​. This can include the development and enforcement of laws, dealing with law breaks, keeping international peace, and promoting equality.

The majority of global institutions are Intergovernmental Organisations (IGOs), as global governance should obviously include members from ​around the globe so that all opinions are fairly expressed.

Global institutions have ​positive ​and ​negative effects​. This is especially true of the United Nations

‘The Global Commons’ is the concept of ​an area that does not belong to a single country​. Rather than belonging to ​nobody​, the commons are supposed to belong to ​everybody​, meaning every country has a right to ​benefit​ ​from the Global Commons.

the four global commons are: 

- international waters: areas of the sea that don't belong to a country

- the atmosphere: the gases that surround the earth, making life possible

- outer space: the area after our atmosphere

- antarctica: the only continent without citizens; only scientists live there

The global commons are ​very beneficial to humanity ​as they provide ​untouched environments for ​research ​and ​wildlife growth​. Animals can ​thrive ​in these environments where humans cannot ​interact​, such as deep sea creatures. ​Scientific research is also enhanced by these environments, as scientists can gather information about the world without interactions by humans, as well as beyond our world

Unfortunately, as the commons do not belong to one country, this can leave the commons ​vulnerable ​to ​exploitation​, especially considering these environments are ​rich in resources ​(such as oil, wildlife, minerals etc.).

Countries and companies that exploit the global commons may face ​fewer consequences​, due the the fact that they are ‘owned’ by every country. Therefore, unless an international law is created there are no rules.

The ‘shared’ nature of the commons has unfortunately left it vulnerable to issues such as mineral exploitation, fossil fuel extraction, overfishing etc.

Furthermore, the often ​pristine and untouched nature of the commons is also under threat from ​human advancements​. CO2 levels are causing climate change, which affects the ​atmosphere, the oceans, and Antarctica​.

Furthermore, technology is, in some cases, threatening these commons as they are becoming more and more explorable every day. Therefore, these environments need the ​proper protection ​in order to stay a beneficial asset to mankind.

Although every country has a right to use the commons to ​develop​, it is now recognised that this development must be ​sustainable​. In order for the use of the commons to be sustainable, there are measures in place to ensure it is protected.

● Global Institutions ​have been created to directly manage issues associated with the global commons so that these issues can be solved in a fair and sustainable way. For example, between 1973 to 1982 the ​United Nations ​developed The United Nations Convention on the Law of the Sea (UNCLOS), a ​treaty ​designed to tackle marine pollution, overfishing and competing territorial claims between states.

● International laws are now effective within the global commons, although these laws are usually set by institutions like the UN. This means any non-member countries will not be prosecuted under these laws. There are several treaties in action to protect ​outer space​, including the Convention on Registration of Objects Launched into Outer Space (Registration Convention), which ensures countries protect outer space by documenting their launchings etc.

● NGOs ​campaign to protect the commons, by spreading awareness as well as raising money for their protection.

Although there are protection efforts for the commons, these are hard to police and regulate due to their ​size​ ​and ​isolated, hard to reach nature​.

It is impossible to monitor the ​entirety ​of the commons, meaning they are still left vulnerable to exploitation. In oceans, for example, illegal, unreported and unregulated fishing still takes place frequently.

Monitoring boats cannot patrol the whole of international waters or protected areas constantly, so many illegal practices take place. For example, there are numerous reports of ​ships displaying false flags​ as an attempt to pose as another country to avoid laws and commit crimes.

Nestle - 

This Swiss transnational is the world’s largest food and drink company founded in 1866.

It operates in 81 countries and sells its 10 000 different products in 189 countries.

Generally, Nestlé chooses a country to operate by analysing the strength of the market and the need for investment, that’s what defines its spatial organisation.

However, there are other reasons like the exploitation of resources, taxes and the low cost for production.

For example, Nestlé is one of the major bottled water producers in Mexico (and the world), so it is obvious that they need water to do it and not only for bottled water but also for its different plants nationwide, thus they tend to install in places where this natural resource is abundant causing sometimes water shortage in nearby communities. 

Nestlé is always doing research to develop new products by understanding the people needs

This has led to the incursion of not only food and beverages but also in other categories like pet food

As you can see it is continuously one step ahead based on world trends

When it comes to production, Nestlé is constantly optimizing the efficiency of their plants, and renewing their strategy according to the current market

Regarding the marketing, they are really good at understanding the culture of a place and by doing so they find a way to connect their products to society encouraging consumers to accept a foreign company

Free trade within trade areas such as the EU has, in theory, been beneficial for some UK citizens. 

In a tariff-free European Union, cars made in the UK have been exported for sale in mainland Europe for decades now, with few additional costs incurred (other than transport).

Since 1993, non-European TNCs have viewed the UK as a manufacturing base for sales not just in Britain but in the entire EU - a region which is home to nearly half a billion people, most of them in car-owning households. As a result, many UK citizens have found work in car factories owned by Nissan or BMW.

Over time, the price paid per car has often fallen in real terms due to economies of scale (as the scale of output increases, the production price per unit falls, according to economic theory). As a result, prices per unit are lowered in a beneficial way for UK (and EU) customers.

There are other positive impacts of world trade for UK citizens too:

Cheap imported products from China and other EEs have benefited the typical UK high street consumer. The price of many electronic goods such as TVs and laptops has fallen markedly since the early 1990s as they have been increasingly produced in lower-cost locations.

In the UK, farmers’ incomes are protected. One estimate suggests that the world’s richest countries, including the UK, spend around £150 billion each year subsidising their own farmers. Every cow raised in the EU currently receives a large subsidy each year. This has the knock-on effect of reducing the price UK supermarkets are prepared to pay to farmers in other countries for their meat and vegetables. As a result, UK consumers are able to buy extremely cheap food imported from a wide range of countries.

Although Fairtrade is more expensive to buy, many UK shoppers choose to embrace it. Buying Fairtrade goods lets shoppers know that what they spend is finding its way into the wages of poor workers in developing countries. Becoming part of an ethical value chain is important for a growing number of UK citizens who care about world issues.