Global governance: Factors Affecting Globalisation


New Systems, Technology and Relationships

Development of systems, tech and relationships have been the driving force behind globalisation:

  • Systems have been introduced to make it easier for flows of info, capital, products, services and labour to cross national boundaries
  • Tech has advanced rapidly - allows people and goods to be transported swiftly and efficiently
  • Relationships are based on trade and common rules - allows everyone to gain 
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Financial Systems Promote Globalisation

Global financial system governs flows of capital between countries

1) Financial systems based on investment banks - help companies raise capital by selling shares. People who buy shares are investors and recieve a fraction of the profits

2) In the 80's several things happened to make the world more global:

  • Information technology allowes investors access to information
  • Investment banks created new financial products that made foreign investment less risky
  • Governments relaxed on nrules about what banks were allowed to do
  • Barriers were removed to capital coming in and out of a country 
  • Changes led to more companies getting involved in finance - selling shares and exchanging currencies
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Trade Agreements Remove Trade Barriers

Global trade system governs flows of products between countries

1) Trade = regulated by governments = control what comes in and price. Controls include tariffs (taxes on products), non-tariff barriers (rules on quality of product) and banning of certain products (illegal drugs)

2) Controls make products more expensive for everyone

3) Trade agreements = cheaper products. Countries remove control for each other. 2 countries in a trade agreement. = bilateral trade agreements

4) Trade agreements between several countries = multilateral trade agreements - all countries remove tariffs and other controls

5) Global trade system = governed by WTO

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Transport and Communications Improved Business

1) Improved transportation systems have allowed people and products to get around the world more easily

2) Shipping containers allowed more goods to be transported at once and are transferrable between ships and trains - good moved quicker and cheaper

3) Communications satellites launched - allow cheap wireless connections between devices - people in rural or remote areas can access internet and communicate with others

4) Optic fibre cables allow fast communications 

5) Significant growth in software allows free communication from anywhere in the world 

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Management Increased Companies Efficiency

1) Supply chains have become global - minimise costs 

2) Large companies benefit from economies of scale - buy in bulk, set up production lines = cheaper = advantage over smaller companies

3) Outsourcing - paying another comany to do work for them - saves costs - cheaper labour means companies outsourse abroad

4) Companies work practices have changed - 0 hour contracts allow companies to take on workers when they need them

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Countries Work Together to Prevent Threats

1) Countries become more interdependent - trade wars less likely

2) Working together = improve security and deter common threats

3) However, conflict can be more likely - developed countries have intervened to secure resources like oil.

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