- Created by: barry
- Created on: 27-05-18 17:46
Factors in globalisation
Have rapidly increased the pace of globalisation in the last 20 years. They are:
- New systems of trade:
Trade barriers also known as tariffs are now far lower than in the past which means that trade can flow more easily around the world. Only the WTOs set the global tariffs and oversees 97% of all world trade.
- New systems of transport and communications
Improvements in transport systems such as containerisation of ships and more efficient air transport have both made the flow of people and goods quicker and easier. Therefore, the overall cost of shipping goods around the world has fallen by 70% since 1920.
New security system
Traditional border security has become less important– as customs posts at borders have become less important. For example in the EU Schengen zone goods and people move freely. This eases the flow of goods and people.
Factors in globalisation 2
- New financial systems
Financial institutions are similar to banks as they operate globally these are called (TNCs). This means that they can move finance quickly and easily across the world. Also, the deregulation of financial institutions like banks means that government controls and regulations have been reduced which also makes the flow of finance to move quicker and easier across the world than in the Past.
- New management and information systems
TNCs have made it possible for goods and services to flow globally because they have invested in new systems of management and production, which includes:
- Sourcing goods and services globally
- Using new financial, new trading systems, new systems of transport and clear communications = to supply a JIT system of production
- ·Having capable and highly trained management teams to clearly organise and maintain these systems
Dimensions of globalisation
Flows of capital
This refers to all money that flows between countries which is used for investment.
- Foreign direct investment (FDI) - $1500 billion in 2016. Usually by TNCs
- Bilateral loans and aid – between 2 countries
- Remittances – payments by diaspora
Flows of labour
This refers to the migration of people mainly in search of better employment.
- The flow is largely from periphery to core regions.
- These people are known as economic migrants.
- There has been a 40% rise in international migration between 2000 and 2012.
Global distribution of production and consumption
Global distribution refers to the spread of products or services across the world.. Global shift refers to the transfer of manufacturing industries from HICs to NICs and LICs.
Dimensions of globalisation 2
Flows of products and services
Products can flow easily around the world due to containerisation and a reduction in protection. Services can also flow globally, they include financial and insurance services. They can be sub divided into high level services like business and low-level services to the consumers.
Flows of information and ideas
Globalisation means that ideas and information can flow globally. This flow has been made possible by: Increases in international migration & Improvements in technology. Digitisation and satellite technology leading to widespread use of the internet and mobile communications
Global financial institutions
The main difference between the International Monetary Fund, and the World Bank lies in their respective purposes and functions. The IMF exists primarily to stabilize exchange rates, while the World Bank's goal is to reduce poverty. So the IMF focuses on macro-economic issues and the World Bank concentrates on long-term economic development and poverty reduction.
Dimensions of globalisation 3
Marketing refers to the process of promoting, advertising and selling both products and services. Global marketing means that companies are able to sell the same product, in the same way everywhere.
Global systems theory
- Is the idea that the world is now one independent system in which countries are not separate but connected.
- This idea is outdated for countries to follow each other “Eurocentric” – to become more developed. And insists we should look at it as a single system divided into 3 tiers in which some exploit other and that the development of some is at the expense of others.
Core- higher levels of education, higher salaries Generate more wealth in the world economy
Semi periphery- Places that are exploited by the core but then exploit the periphery.
Periphery- lower levels of education, lower salaries. Generates less wealth in the world economy
Evidence of inequality- Wallerstein argues that the consequences of the 3 tier arrangement is inequality. In core UK have a high amount of doctors- 2.81 out of 1000 people= low infant mortality rate 4.38 out of 1000. However, in periphery Congo they have a 0.03 out of 100 are doctors which results in a high infant mortality rate 71.47 out of 1000.
Global systems 2
Unequal flows of people, money, ideas and technology
Benefits for the source country-
- Loss of migrants in an over populated country can improve their standard of living as there will be more resources available.
Problems for the source country-
- Loss of migrants “brain drain” results in a labour shortage. Also, remittances are spent elsewhere and not in the source country.
Benefits for the destination country-
- Remittances provides a income to the destination country. Migrants recruits will boost the productivity of the economy.
Problems for the destination country-
- The rise in migration workers can lead to arguments in times of stress and economic decline. FDI by TNCs can result in local companies shutting down due to lack of sales.
Global systems 3
Global distribution of production and consumption
How has the distribution changed
- Production- Factories have moved from HICS to NICS such as India- this is a global shift
- Consumption- decreases in HICS and increases in NICS
Why has the distribution changed
- Production- Labour is cheaper and there is less health and safety regulations- NICS more ideal
- Consumption- TNCs provides employment in NICs. Consumption increases in NICs.
What are some the consequences of these changes
- Production- Less jobs available in HICS de-industrialisation
- Consumption- Less jobs available in HICS de-industrialisation
Global systems case study
Unequal flows of people, money, ideas and technology – study Qata
- Migrants send remittances back to the source country to help support families
- They increase the
- Migrants boost productivity in Qatar which builds the economy
- number of young educated and innovative in Qatar as they bring their skills and hard work with them
- International reputation is negatively affected.
- Poor working conditions and exploitation in Qatar
- Brain drain in source country as the young talented, educated and talented people leave source country which results in a net loss
- Work is only temper as they are only allowed to stay 5 years.
- North Korea take 70% of 3000 workers wages which leaves about 10% for them to keep
Global systems case study 2
Unequal power relations - China
- Trade is the buying and selling, or the exchange of goods and services.
- Fairtrade is a different way of trading. Farmers are paid a guaranteed minimum price for their products. This means that they are a paid more (a fair price) for their products. This is called a ‘fair trade premium’ and it allows them the opportunity to improve their lives and plan for their future. The result could help LICs become more economic and social developed.
World trade- Bananas
Scale & distribution of world trade
- Bananas are the 4th most important food product within LICs (exported as low value primary product) being a staple food for 400 million people.
- Top consumer is India which is also a top producer.
- Apart from cotton, bananas have the largest agrochemical input into the environment. Bananas are treated with fungicides, herbicides and insecticides to protect against diseases.
- These chemicals have a negative impact upon habitats, biodiversity and water supplies.
World trade 2
World trade- Bananas
Role of TNCs in production
- Until recently banana production was dominated by 4 major TNCs (Chiquita, Dole, Del Monte and Fyffes). Profits are repatriated to origin of the TNC.
- This is changing as TNCs falling from 60% in 2002 to 40% in 2018- this may be due to the rise of retial TNCs in the banana market
Role of TNCs & SDTs in trade
- The WTO intervened in a dispute between the EU trading bloc and US banana TNCs over SDTs agreement between the EU and 70 former EU colonies allowed them to import goods (including bananas) into the EU for free.
Role of TNC retailers in the trade
- TNCs retailers like Tesco and Walmart are now playing a bigger role in the banana trade. Supermarkets are also prepared to switch suppliers and take bananas from other parts of the world- in particular from Africa, where costs are lower.
World trade case study
Case study- Winward Islands
- The Windward Islands include the islands of St Lucia, Dominica and St Vincent and the Grenadines. The Windward Islands earn around a fifth or 20% of their total export earnings from bananas. There are approximately 4000 banana producers in the Windward Islands today.
No child labour allowed this means that there is no exploitation of children so more socially sustainable.
The social premium helps to build schools, this would increase the amount of educated proportion of people in rural areas
Farmers are educated and encouraged to protect the environment, this will likely reduce the number of fertilisers used in the soil
World trade case study 2
- Farmers get 4.67c more for each pound of bananas, and this could help them out economically as they could save their money and plan for the future
- The social premium helps improve roads making it easier for farmers to get their products to the markets, this improves the environmental landscape for famers and the local people
- Bananas are not planted as close to rivers, this prevents any chemicals reaching the water supply. This reduced the amount of chemical pollution in water supplies.
- Old banana plants are mulched and reused on the land- adding nutrients and protecting soils. This improves the amount of nutrients in the soil, thus will reduce the amount of fertilisers used which will protect the environment.
Global patterns of trade and investment
- The value and volume of world trade has increased dramatically – especially in the last 50 years. The reason for the global increase in trade is the factors of globalisation
- Such as the concept of free trade as this idea is that trade barriers should be reduced or removed altogether so that all countries can buy and/or sell goods and services to any other country without interference.
- This is the factor called ‘new systems of trade. (The theory behind this is the idea of comparative advantage in which countries sell goods or provide services which they are good at producing and buy goods and services which they are not good at producing).
- There is an unequal distribution of the amount of trade as 37% for top 5 exporting countries but only 0.6% for poorest 49 countries (LDCs). Also, there is an unequal distribution of trade by type HICs and NICs produce manufactured/consumer goods which add value to raw materials. However, LICs produce primary products which are low value and for which prices fluctuate.
International trade 2
Trading relationships and access to markets- Countries need to reach agreements to be able to trade with other countries and there are several ways (Bi-lateral agreements, Trading Blocs) and so gain access to markets to sell their products. And, once an agreement has been reached countries can usually trade with few if any restrictions – free trade. However, reaching agreements is time consuming and complex.
- Bi-lateral agreements- These are relationships that countries negotiate directly with one other country such as the UK is currently looking to negotiate deals after Brexit so the PM visit to China in February 2018
SDT- agreements are promoted by the WTO and are designed to allow some of the poorest countries on the planet (LDCs) to have access to world markets to sell their products. This policy has had limited success as some HICs do not participate for fear of cheap goods flooding their markets.
Trading Blocs- These are groups of countries which have agreed to allow free movement of certain goods and services between all members. The EU, NAFTA and ASEAN. This is not free trade and can restrict the development of LICs. It is a form of protectionism.
International trade case study
What is the EU
- The EU was founded in 1957 has 27 members which includes most of Western Europe and parts of Eastern Europe
- It is an “economic union” in which nations allow the free movement of the 4 freedoms- goods, services, money and people.
- Now it is the EU is the world’s biggest Trading Bloc as it accounts for 20% of global trade
The EU has political and economic goals:
- The key political goal has been for European nations to co-operate politically and live in peace after 2 disastrous world wars.
- The key economic goal has been for European nations to co-operate economically and so become more prosperous.
- The EU has agreed and developed a range of common policies on political, economic and social goals: These include regional policies to redistribute wealth to the poorest (peripheral) parts of the EU.
International trade case study 2
- += Europe has become more prosperous as trade barriers between EU countries do not exist and business can trade without restrictions across the entire EU.
- -= Lower wages and costs in new members such as Slovakia may mean some business (VW and Peugeot) ‘shift eastwards’ leading to unemployment in the west of Europe.
- += Individuals can move freely across the EU to work, live and travel for pleasure.
- -= Individuals can move freely and easily across the EU to work, live and travel; however, this could make it easier for those who wish to commit crimes or acts of terrorism.
Political consequences :
- += Peace and political stability and no more European wars.
- -= Loss of national democracy as nations may have to introduce laws which they do not agree with for example the laws on maximum hours for junior doctors in the UK. Smaller regions within larger countries may feel that they are being ignored.
TNC case study
TNC- Coca Cola
Size and scale of operations
- Brand value of $79.21 billion and 1.9 billion average number of serving consumed globally per day.
- Coca cola now has 500 brands (from tea to fruit juice) that generates over $45 billion a year in revenue and sales in nearly 200 countries.
- Coca cola sometimes uses exiting bottling companies rather than building new factories. Where there is a shortage of bottling capacity (Eastern Europe, India and Africa) and Coca Cola take advantage of these situations. This is an economic benefit to the TNC as it is cheaper to manufacture goods outside. However, their headquarters is situated in Atlanta, USA.
Horizontal linkages- it took Coca-Cola 70 years to expand into new flavours: Fanta, originally developed in the 1940s, was introduced in the 1950. In 1960, The Coca-Cola Company acquired The Minute Maid Company, adding an entirely new line of business – juices.
TNC case study 2
Sales and marketing
Coca-Cola sells 1.8 billion servings of the drink every day. Nearly 70 percent of sales are generated outside North America. As of December 31, 2016, the company, which was founded in 1892, employed about 100,300 associates worldwide.
- Economic- creates jobs both directly and indirectly in the host country
- Social- Coca Cola offer training and education -schemes in Africa and South East Asia
- Environmental- Replenishes the water it uses (funding local projects to protect watersheds
- Economic- Long hours for little pay (in poor working conditions in some bottling plants)
- Social- In 2010 workers were encouraged to abandon union membership in some LICs in Guatemala
- Environmental- Water pollution, Kerala, India 2004
- TNC- only has to have operations in two or more countries.
- MNC- is different as it has operations in a large number of countries.
Spatial organisation of TNC
- Headquarters and R&D (Research and Development) facilities are often located in the ‘country of origin’ which will usually be an HIC. As there is more qualfied people and better reasearch facilities
- Most sales and retailing takes place in HICs because people are on a higher income and can afforrd to buy the items.
- Horizontal integration means that a TNC extends its operations into similar areas in the same stage of production.
- Vertical integration means that a TNC owns the entire supply chain from raw material to finished product.
- Positive multiplier effect- TNCs will need to provide support for any new branch established. This can generate additional wealth and employment in suppliers, transport and maintenance companies. Wages earned can be spent locally generating further income and taxes for local government. If the TNC decides to re-locate the negative multiplier effect may take place.
- Enviorment- •A trans-national company will have access to the latest technology to monitor and reduce impacts upon the local environment. However, the amount of noise, air, light, visual and water pollution are all likely to increase with the construction of a large assembly plant.
- Products- the products or services provided by the trans-national will be sold in the country in which the new branch is built. Local people can buy these products or use these services. However, these may be beyond the budget of local people. They may even compete with locally produced products leading to the decline of local business. This is particularly the case with food and drink manufacturers. Local cultures may be threatened.
- Global governance- This refers to the way in which global issues affecting the whole world are managed.
- Norms- are the values and traditions that control the way people behave in a society. They may not be written down, but they are the ‘done thing’. However, not all societies agree to what is normal or reasonable.
- Laws- are the written rules that control the way people behave in a society. It is compulsory to abide by them and there are penalties for those who do not.
The problem for global governance is that norms vary and even when laws seem to be the same they can be interpreted and enforced differently in different places.
Issues which require global governance
- Climate change
- Human rights
- International conflict and terrorism
- Food and energy security
- Population increases
Global governance 2
Global governance operates at different scales
Agenda 21 was adopted in 1992 after the Earth Summit in Rio. It is a global agreement to promote sustainable development. It shows how agreements made at a global are passed down to national governments and then further down to local authorities and then NGOs to come up with plans to implement the ideas at a local level.
NGO’s or charities have a significant role in global governance. They are the only co-ordinated organisations to provide a voice for the world’s most vulnerable places and people.
They aim to, raise public awareness of the issue through global campaigns such as the “fracking campaign” they conducted protests, sharing posts on social media. Also, to make changes on the ground through their global operations they have conducted numerous protest in many countries. It has been fully successful in places like Scotland as fracking has been fully banned.
Global governance 3
Governance by the UN
Organisation UNICEF (1946)
- Aim To support global development
- Achievements Millennium development goals set up in 2000 have had success in some areas eg. improving literacy rates
- Weakness Other millennium development goals have had less success eg. reducing youth
Organisation UN Security council (1945)
- Aim To maintain global peace
- Achievements No major conflicts (world wars) and 170 peace settlements
- Weakness UN has been unable to halt long running conflicts such as the Vietnam war
Global governance 4
The Millennium Development Goals (MDGs)
Were 8 goals with measurable targets and clear deadlines for improving the lives of the world's poorest people by 2015. They were partly successful in areas like North Africa and Latin America and less successful in areas like sub Saharan Africa and parts of Asia. They include goals such as eradicate extreme poverty and hunger.
The Sustainable Development Goals (SDGs)
They are a set of 17 aspirational "Global Goals“. They aim to build upon the progress made by the MDGs in improving the lives of the world’s poorest people. MDG & SDG are both examples of global governance as all countries/stakeholders involved in the agreement must try to complete these targets.
- Global commons- this refers to spaces and resources which are shared by all and so are not controlled by any single country.
- International law recognises 4 global commons: The high seas, The atmosphere, Antarctica and Outer space.
- The principle of common heritage is recognised by international law, as the global commons belong to all humanity and that the resources found here are available for everyone's use and benefit. And it includes considering future generations which means that this is a sustainable approach. However, the over exploitation of the fish stocks in the high seas shows that a principle is not enough to stop countries= ‘tragedy of the commons’
- So the principle of common heritage needs to be backed up by international laws such as, For the high seas there is the UN convention on the law of the seas (UNCLOS), For the atmosphere there is the UN framework convention on climate change (UNFCCC) and For Antarctica there is the Antarctic treaty system (ATS).
The global commons are now under increasing pressure because of two main reasons:New technology allows us to explore and potentially exploit regions which were previously difficult to access. An increasing population and higher living standards increase the demand for new resources as existing ones are used up.
Global commons case study
Antarctica as a global common
The Antarctic Treaty, covers the area south of 60 degrees south line of latitude (is a man made boundary). But others use the Antarctic convergence (The Antarctic convergence zone is a natural boundary.
- Climate- average weather conditions in an area measured over a 30 year period. - On average Antarctica is the coldest, windiest and driest continent.
The Antarctica climate varies according three factors:
- Altitude –the higher above sea level the lower the temperatures
- Latitude –the further from the equator the lower the temperatures
- Proximity to the ocean –the further from the ocean the lower the precipitation and the lower the temperatures
Global commons case study 2
- The western part- of the continent has seen a rise in temperature of up to 3 degrees in the last 50 years while ocean temperatures have also increased by around 1 degree. Ice sheets here have thinned, and sea ice has melted. As se ice melts glaciers are more likely to slide into the sea and increase global sea levels.
- Ecosystems are changing - the distribution of penguin colonies has started to change.
- As ocean temperature rise there has been a decline in krill stocks. Krill in turn are the main staple in the diets of hundreds of different animals, from fish, to birds, whales.
- Ocean acidification in the southern oceans will impact upon marine organisms.
Tourists largely visit on cruise ships involves short supervised onshore visits to minimise the environmental impact. The International association of Antarctica Tour Operators (IAATO) was set up in 1991 and limited to 100 visitors ashore at one time.The small scale and supervised visits means that the impact upon the environment is limited.
Global commons case study 3
Most scientific bases are located on the accessible Antarctic coastline. 30 countries currently have research stations on the continent. Scientific research is focused on using ice cores to study past events and make predictions about the future. Potential threats from vehicle exhausts, construction of buildings and waste disposal.
Fishing and whaling
The Southern Ocean is high in marine productivity – especially for Krill in the Antarctic convergence zone- water is rich in nutrients and oxygen and so rich in wildlife. In the 1900s various whale species were hunted by 1985 stocks were so low that the International whaling commission (IWC) was able to reach an agreement to ban all commercial whaling globally.
Exploration for mineral resources
Resources in the Antarctic include: coal, oil, manganese, gold and silver and much is undiscovered. Deposits of these minerals are difficult to locate and therefore uneconomic to reach. However, this could change as: Technology improves, Physical conditions change and Demand rises as finite resources are used up in other areas.
Global commons case study 4
The Antarctic Treaty (ATS)
Been in operation for 50 years, it governs the continent of Antarctica and the surrounding oceans below the 60-degree line of latitude. It has been signed by 46 countries representing 80% of the world’s population.This is to run until 2048. Antarctica is now a ‘natural reserve devoted to peace and science.
Key aspects of the ATS are:
- Guaranteed free access and research rights for all countries
- No military or nuclear activities
- Existing territorial claims to be set aside and no new claims to be made
- No mineral resource exploration or activities
The International Whaling Commission is a voluntary organisation, established in 1946 to monitor and control whale stocks. In 1985 an agreement was reached to ban all commercial whaling. Only Japan still takes Minke whales from the Southern Ocean for ‘scientific research’ purposes. Whaling is an issue were different norms make global governance difficult to achieve.
Global commons case study 5
NGOs- ASOC- The Antarctic and Southern Ocean Coalition (ASOC)- is a group of 30 NGOs (groups such as Greenpeace has proposed that Antarctica should be designed as a World Park).However, it’s now ‘observer status’ which means that it can attend meetings but does not have a formal say.
Successes of global governance in Antarctica
- The ATS has protected Antarctica from mineral exploration and military/nuclear activities.
- There are claims on Antarctica by 7 countries but under the ATS these claims have been put aside and no new claims have been received.
- The IWC has produced an agreement which has seen the elimination of commercial whale hunting since 1986.
Weaknesses of global governance in Antarctica
- However, the current protocol on environmental protection comes to an end in 2048 and may not be renewed- only tempory.
- Existing claims on Antarctica by 7 countries remain and could lead to conflict in future.
- However, Japan still hunts Minke whales in the Southern Ocean for ‘scientific research’ purposes.
Positive outcomes from global governance:
- Global governance of the global commons has had notable successes. The ATS and the ban on commercial whaling introduced in 1985 following agreement through the IWC have both increased environmental protection of Antarctica.
- The UN security council is the most important source for global governance has had success through the security council - No major conflicts (world wars) and 170 peace settlements.
- Through the WHO - Eradication of smallpox and near eradication of polio. Both through vaccinations & education programmes.
- And through the UN development programme - Millennium development goals reduced absolute poverty.
- The WTO has seen an increase in world trade – now stands at $18 trillion compared to $157 billion 50 years ago. Free trade agreements between countries have contributed to increased developmets of LICs and lower prices for consumers
Globalisation critique 2
Negative outcomes from global governance:
- However, pollution of the high seas and the time limited nature of elements of the ATS mean that governance of the global commons has not been entirely successful as its tempory
- However, the UNs role global governance has not always been entirely successful.
- Some long running wars have not been prevented by the UN such as the Vietnam war and the Syrian conflict.
- AIDS/HIV remain as epidemics in parts of Africa.
- Not all of the MDGs have been as successful, hence the need for a new set of global goals to reduce poverty – the SDGs
- However, the WTO has not been able to eliminate protectionism – recent US import tariffs on steel and aluminium. It could be argued that the drive for free trade not fair trade has not benefited LDCs as shown by the destruction of the Lome agreement
Globalisation critique 3
The economic effects:
- Trade: world trade has expanded rapidly at $18 billion annually. The emergence of NICs (India/China) develop rapidly due to the increased ease with which goods and services can be traded globally - Positive.
- Migration: Opportunities in richer countries have driven talent away from poorer countries, called the ‘brain drain’ which costs the African continent over $4.1 billion- Negative
- TNCs: TNCs take advantage of the lower wage rates.This has resulted in longer hours and an intense work pace which leads to health and social problems- Negative.
- TNCs have provided millions of global employment opportunities in semi-periphery and periphery countries- Positive.
The environmental effects:
- Resources: Increased levels of wealth brought about for some by globalization have increased the demand for resources leads to increase in amount of pollution- Negative.
- Pollution: the impact of activity especially TNCs in one country has a clear impact now in others as it leads to global warming- Negative
Globalisation critique 4
The political effects:
- TNCs: Have assets and wealth far in excess of many nation states this make the shareholders more powerful than governments- negative.
- Nation states: the influence of nation states has diminished as more countries organise themselves into trading blocs- negative for countries outside.
The cultural effects:
- Westernisation: western culture has diffused to all parts of the world through TV, the internet. The concern is this may overrun other countries' cultures, leading to indigenous customs and values being lost forever- negative.