- Created by: RebekahW
- Created on: 21-03-20 20:43
The process by which national economies, societies and cultures have become increasingly integrated through the global network of trade, communication, transportation and immigration.
Dimensions of Globalisation
- Capital Flows
- Labour Flows
- Product Flows
- Service Flows
- Information Flows
- Global Marketing
The movement of money for the purpose of investment, trade or production of good and services.
Frank and Wallerstein's Core-Periphery Model
Model of the world system that suggested global power is concentrated in a handful of developed regions, leaving less developed countries vulnerable to exploitation, lack of investment, emigration and leakages.
The loss of income from an economic system, usually from profits of TNCs being sent back to the country of origin in profit repatriation.
Foreign Direct Investment (FDI)
The investment of TNCs or governments based in one country, into the physical capital or assets of foreign enterprises.
Transfers of money made by foreign workers to family in their country of origin.
They have become the 2nd most important income source in LICs, ahead of international aid and behind FDI. They are more reliable as they're less impacted by times of global financial crisis/.
A large group of people of similar heritage or homeland who have settled elsewhere.
What are product flows controlled by?
- Transaction costs
- Transport and time
- The WTO encourages global reduction in tariffs
Taxes placed on imported goods with the intention of making them more expensive than home-based goods. They are a strategy of protectionism.
Government policies that impose restrictions in foreign goods and services to safeguard home based goods.
High Level Services
Business services such as finance, investment and advertising.
Low Level Services
Consumer services like banking, travels and tourism, call centres or communicative services.
A collection of different companies which report to a parent company despite being different types of businesses. Most TNCs are conglomerates, eg - Unilever is a UK company owning food, cleaning and care products.
The transfer of languages, cultures, technology and ideas due to migration and communication, aided by digitisation and satellite technology.
The process of promoting, advertising and selling through creating a recognisable brand. It enables trade across a single global market that generates economies of scale.
Economies of scale
The cost advantages associated with a larger size, output or scale of an operation by spreading costs or rationalising (making more efficient) operations. Reduces average cost per production of unit.
Movement of departments from a single location to multiple others.
The filtering of industries that has resulted in many production operations being overseas in lower cost locations with lesser regulations and government incentives.
Factors in globalisation
- Government support/Democracy
- Financial/Deregulation of markets
- Capitalism vs Communism
Security in trade
Includes supply chain security, crime & anti-terrorism, food & bio-security, and fiscal security. (tax avoidance).
Initiatives to alleviate issues include the World Customs Organisation (WCO) and the EU 'Secure Operator' label.
Groups of normally spatially close countries that protect themselves from imports form non-members as a way of economic integration, increasingly shaping the pattern of world trade.
Free trade areas
A trade bloc where 2 or more countries agree to eliminate importing borders (tariffs, taxes and quotas).
Preferential trade areas
Often the foundations of a trading bloc, involving the elimination of tariffs on certain products.
Single / Common Market
Countries can be members of the single market without being members of the trade bloc, eg Norway, Iceland and Liechtenstein are in the EU single market but not part of the EU.
They eliminate tariffs, quotas and taxes on trade as well as including free movement of goods, services, capital and people.
Single markets also try to eliminate 'non-tariff barriers' such as creating product regulations and standards that are shared in every member country.
Accept the same rules as a single market, eliminating tariffs, quotas and taxes on trade, allowing free movement of goods, services, capital and people, and accepting shared product standards across all members.
They also impose a common tariff on goods from non-members.
A group of countries that use the same currency, such as the Eurozone, removing risks of exchange rate fluctuations.
Benefits of Trade Blocs
- Improve global peace & security by forming alliances
- Increase global trade & cooperation
- Development of economies
- Increase competition on a global scale
- Allow freedom of movement to fill labour shortages
- Set regional standards
- Spread democracy
- Support certain sectors
Drawback of Trade Blocs
- Loss of sovereignty as decisions are centralised
- Loss of financial control to the central authority
- Pressure to adopt central legislation
- Damage to certain economies due to resource sharing (eg- fishing grounds in the EU)
A customs union made up of 28 members. In June 2016 the UK voted to leave in he Brexit referendum. The EU is currently the UK's largest trading partner:
- 44% of all UK goods and service exports are to the UK
- 53% of all UK imports come from the EU
- 45% of all UK FDI stock is from the EU
Reasons UK Brexit from the EU
- The Common Agricultural Policy ensures minimum production levels in farming but UK farming is much more efficient so the fixed prices meant UK farmers lost out.
- The UK has a net contribution of £9.8 billion
- Free movement placing a strain on public services and increasing public security risks
- The UK were unable to negotiate separate external trade deals and tariffs
Brexit Voting Patterns
There was a 72% turnout of which 51.9% voted leave and 48.1 voted remain.
Scotland and Northern Ireland were strongly remain, as were 18-25 year olds.
All other constituencies were overall leave, and 60+ year olds were strongly leave.
The first 4 NICs, in South East Asia - Taiwan, Singapore, Hong Kong and South Korea.
Suggests that countries are locked into unequal relationships where 'core' countries systematically under develop 'dependent periphery' countries, using them for their resources. The Asian Tigers and surge of NICs undermined this theory.
Directing resources towards industries with export markets (countries that sell foreign goods and services), disregarding the domestic market until an export market is established. Method in the growth of LICs.
When countries begin to manufacture goods they would normally import, increasing their domestic market.
Free Market Economy
An idealised system in which prices for goods and services are determined by supply and demand, free from any authority or government intervention.
The International Monetary Fund - regulator of financial flows and stabiliser of the global financial system.
Made up of 189 countries who pay a subscription according to the size of their GDP.
Negatives of the IMF
- Criticised for imposing severe cuts on education & welfare in LICs/NICs in return for financial assistance
- Free markets supporters believe they are too interventionist
- Some countries may pursue unsustainable targets
- The quota system means that the more a country contributes, the more power they have
- Failed projects can be subject to high interest rates
Positive of the IMF
- Large provider of employment
- Advises countries attempting a new economic policy
- IMF loans can help countries achieve otherwise unobtainable projects
- Supports countries with a deficit of payments or in need of a bailout.
Provider of economic support for less developed countries, with an aim to reduce poverty.
Has 189 members and staff across 170+ countries.
Negatives of the World Bank
- They have implemented 'Top-Down' project that have not reduced poverty, rather than 'Bottom-Up' approaches that better achieve sustainable development
- Criticised for having conditions attached to loans
- Many projects (Eg - HEP) have severe social and environmental implications
- An OXFAM research revealed that 51/68 companies that lent money to Sub-Saharan Africa schemes in 2015 used tax havens
Positives of the World Bank
- Provides infrastructure for projects in developing countries
- Many recognisable educational benefits from investments into Early Child Development (ECD) programmes
- Aims to create sustainable economic growth, invest in people, and build resilience.
World Trade Organisation - governs the systems of international trade, dealing with the rules of trade and resolving trade disputes.
Established in 1995 with 160 members.
It holds rounds of talk to discuss particular issues, such as the 2001 Doha Development Agenda that focused on reforming agricultural trade.
Positives of the WTO
- Resolved the 20 year long Banana Trade war
- Promote free trade with increased efficiency
- Helps to dissipate and prevent trade wars
Negatives of the WTO
- Forcing nations into compromise, as in return for reducing import tariffs from LICs and NICs, the USA, EU and Japan insisted they opened their markets to western manufactured goods
- Reduced tariffs increase imports but depreciates employment and production in receiving country
- Domination of HICs over LICs as they have more control of the global financial market
A cost-saving strategy used by companies who arrange for goods and services to be produced by other companies in a location where costs are lower.
The Gini Index
Used to measure inequalities within countries - An index score of 1 means the entire country's wealth goes to 1 person (unequal), an index score of 0 means income is equally divided among the population.
The United Nations are an international organisation made up of 19 members established in 1945 to:
- Confront common challenges
- Manage shared responsibilities
- Strive for a peaceful, inclusive, more sustainably developing world.
Structure of the UN
- General Assembly is the main deliberative sector. Each member state has 1 vote, no matter it's size or power
- The Security Council maintains international peace and security, made up of 5 permanent members (UK, USA, China, Russia and France)
- Economic Council focuses on socio-economic development and includes WHO, FAO, UNESCO, UNICEF, UNDP ad UNHCR
United Nations Environment Programme, responsible for environmental governance including education and conservation.
The UNFCCC is responsible for overseeing climate change negotiation:
- The 1997 Kyoto Protocol
- The 2015 Paris Agreement (key features NDCs, climate finance, 5 year reviews)
Criticisms of the UN
- Moral relativism, different cultures have different values
- The 5 permanent Security Council members are all nuclear powers who do not provide international representation. Their veto power may be seen as unjust and discriminatory. India, the world's 2 most populous country, is pushing for expansion.
- The UNDP does not have a member of a developing country in a managerial position arguably meaning the council does not understand the needs of development.
- 'Oil and Food programme' meant Iraq was able to sell oil for food and other humanitarian needs. It was ended after 7 years after allegations of widespread corruption.
Successes of the UN
- Provision of education through UNICEF and protection of children's rights and standards of living
- UNHCR has helped 17 million refugees since made
- Key in the battle against HIV/AIDS through education and treatment.
The Jurisdictional Gap
The gap between the increasing need for global governance in many areas, and the lack of an authority with the power, or jurisdiction, to act.
The Incentive Gap
The gap between the need for international cooperation and the motivation to undertake it.
The Participation Gap
The gap between the decision making by governments, and civil society groups, over international cooperation.
The notion that countries should specialise in providing goods and services they excel at producing, and trade these things for items they do not produce.
Partial or complete prohibition of trade with a particular country, usually for political reasons.
A social movement whose goal is to help producers in developing countries achieve better trading conditions and to promote sustainability.
A movement where investors and consumers choose to invest capital based on the activities of the organisation receiving investment - seen as a responsibility to consider social and environmental concerns.
USA trading relationships
The USA has traditionally had a protectionist economy, only forming NAFTA in 1994.
The development of the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade & Investment Partnership (TTIP) is a strategic move so the USA can trade with the West and the East, placing them at the core of international trade to compete with China's rising dominance.
The TPP is a free trade agreement between 12 countries. It has been criticised for lacking transparency (accountability, openness and communication). It is set to be one of the most vital modern trade agreements considering the regions economic growth.
Trans-Atlantic Trade & Investment Partnership
The TTIP is a bilateral agreement between USA and the EU aiming to reduce regulatory barriers. It has also been criticised for a lack of transparency. It could lead to the rising dominance of TNCs over democratically elected governments, undermining democracy.
Transnational Company - Companies that operate in at least 2 countries, with a HQ in 1 country and operations in many others.
Reasons why include:
- Lesser Environmental regulations
- Lower labour costs
- Avoid trade tariffs through barrier free market access
- Access foreign markets
- Exploit minerals and resources
- Government incentives that attract FDI
A method of gaining market control - the supply chain of a company is controlled entirely by that company, to enhances economies of scale and maintain control of their stocks.
A method of gaining market control - the company diversifies operations by expansion, mergers or takeover to increase it's ownership of a market (eg- Kraft buying Cadbury)
The Race to the Bottom
The term given to many large companies relocating operations in search for lower labour costs and weaker legislation.
Central American banana plantations, owned by American TNCs.
The ACP group
African, Caribbean and Pacific banana plantations
Special and Differential Treatment
SDT - where strict trade barriers are removed from less developed countries to allows access to larger, developed markets.
The ways in which global affairs are managed through treaties and international laws. It can be carried out by individuals, nation governments and international governments. It's main focuses are on environmental issues, trade & investment inequalities, poverty, human rights and financial instability.
Resource Domains that are outside the political reach of any one nation - they are supranational spaces in which common, shared resources can be found.
- High seas
- Outer space (and more recently possibly cyberspace)
The Principle of the Common Heritage of Mankind
Guides international laws - it says that some localities belong to all humanity so the resources within it are available for everyone's use, benefit and protection.
Governance is being made more difficult due to increased technology allowing greater access, and increasing pressure on the commons due to resource scarcity elsewhere.
The Tragedy of the Commons
Individuals acting independently and according to self-interest being the reason why shared 'common access resources' are likely to be overexploited.
International Institutions over the global commons
- 1979 Moon Treaty
International migration of skilled workers to developing and developed nations meaning less developed countries face a labour shortage.
The Antarctic Convergence Zone
An area at approximately 60 degrees south where cold, northward flowing waters from the Antarctic meet warmer, sub-Antarctic waters. The colder water sinks and creates areas of mixing and upwelling currents.
The Antarctic Circumpolar Current
The world's largest surface current, found near the convergence zone. It block warmer waters from travelling south. It is driven by westerly winds known as the 'West Wind Drift'.
The Trans-Antarctic Mountains
A mountain range consisting of peaks 4000m+, dividing the thicker, larger and older East Ice Sheet from the thinner, smaller and younger West Ice Sheet.
The Antarctic Treaty System
The main method for international governance of Antarctica. It was originally set up in 1959 to avoid disagreements and conflict over research in Antarctica, resolve disputes over ownership and mining rights and establish guidelines to limit development.
Rules and Protocol of the ATS
- No disposal of nuclear waste or practice of nuclear explosions
- Equipment can be checked at any time for ATS compliance
- Research and personnel shared
- Military activities prohibited
- Countries must give notice of expeditions
The Madrid Protocol
Formed in 1991 as a result of France and Australia not ratifying the mineral convention.
It provides additional protection to the Antarctic.
- Waste must be returned to the country of origin
- All activities must have an EIA
- Bans mineral exploration and exploitation
NGOs in the Antarctic
The Antarctic Southern Ocean Coalition (ASOC) is a group of research groups and NGOs such as Greenpeace that were key in opposing the 1988 mineral convention, and producing the 1991 Madrid protocol.
They have achieved observer status meaning they can attend Antarctic Treaty Committee meetings (ATCM).
SCAR is a group of researchers that advise the ATS, ATCM and UN on research and conservation efforts.
Marine Protected Areas
Limit ship transport, and local & noise pollution from ships.
The largest MPA is 1.5 million km 2 in the Ross Sea.
The International Whaling Commission
Set up in 1946 and led to the end of most whaling by 1985.
Responsible for the conservation of whales and management of whaling.
In 1994 they set up the "Southern Ocean Whale Sanctuary", a 50 million km 2 area where all whaling is banned.
Japan, Norway and Iceland form a pro-whaling lobby so opposed the agreement. Japan still hunt on the grounds of scientific research.