What is it?
Globalisation is how something that happens in one countrys influence on other countries.
- It started with the industrial revolution when colonism and trade were expanded by powerful countries. It led to the development of empires because of shipping routes, spread of religion, global trends and migration.
- Since the mid 1970's counties have invested in the developing world due to cheaper labour and no unions.
- Global corporations have become more important than goverments as they control more wealth and investment (TNC's)
5 Forms of globalization
- Economic - The growing control of the economies of the world by a range of TNS's whose headquaters are based in the G8(world richest countries), the global spead of foreign direct investment & growth in world trade.
- Cultural - Increased western and US (americanisation) influence over culture e.g music via ipods, films and the media.
- Political - The increased influence of western democracies and especially the USA. It promotes the idea that democratic, consumerist societies are the model to which others should aspire.
- Demographic - Results from increasing migration and mixing of populations (Also has cultureal impact e.g food)
- Environmental - Many environmental issues e.g global warming of the hole in the ozone layer requires global remodies.
Examples of Globalisation
- Economic - TNC's, fast food, dominance of western democrasies, FDI's and british empire
- Cultural - Global news channels, americanisation, Mcdonalds (american food), fast food, british empire
- Political - British empire and united nations
- Demographic - International migration and british empire
- Environmental - Global warming and hole in the ozone layer
Impacts of Globalisation
- Cultural - More diverse range of food, spread of music, film and fashion, global toursim, experience other cultures.
- Wealth spreading to more people by countries developing because of TNC's, FDI creates jobs by multiplier effect, infrastructure developing
- global agreement e.g kyoto to reduce co2 emissions, agreement to ban use of CFC's in aerosols.
- Cultural - Migration (loss of national identity), racial tensions, americanisation, everything becomes the same so lacks diversity.
- Economic - Not all will benefit, S.Africa not connected and switched off, deindustrialisation because manufacturers move too LEDC's.
- Environment - Global air travel (global warming), deforestation for furniture and loss of biodiversity.
Trans-national corporations (TNC's)
- A TNC is a company that has operations in more than one country e.g Mcdonalds, shell, dell and toyota.
- Reasons for global nature - cheap labour, increased profit, larger market, avoid trade barriers, lower land cost, lack of unionisation and attracted by incentives e.g China special economic zone
- Parent company is the original business that a TNC developed around.
- Branch plant - Factory built in a country by a TNC & HC is elsewhere.
- Glocalisation is local sourcing of parts by TNC's in places where they assemble the global products close to market e.g mcdonalds source their burgers close to their market.
Foreign direct investment - A financial investment made by a TNC into a nations economy e.g building a new factory
Trade Bloc - A political grouping of countries which usually allows free movement of goods, money and sometimes workers between other members countries.
Quotas - A limit on the amount of goods which can be imported.
Subsidies - A payment made to support producers in the home country/trade bloc from cheap imports.
Trade barriers - The use of tariffs and quotas to protect producers
Tariffs - A tax on imports to protect producers in the home country/trade bloc from cheap imports.
- Mcdonalds is one of the worlds best known TNC's as its growth into a global brand is one of the success stories of the last 50 years.
- There are now 30,000 restaurants in 120 countries and 50 million people
- The prices vary from around £1 to £4 according to varying wages.
- They have a preference to source locally (glocalisation)
- The products and packaging in all the countries are similar
The case against and for TNC's
- Tax Avoidance
- Limited Linkage - FDI does not always help developing world economies
- Growing global wealth divide - They selectively invest in certain regions.
- Environmental degradation
- Raising living standards - They invest in the economies raising wages.
- Transfer of technology
- Political stability
- Raising environmental awareness
Coco Cola costs and benefits
- Economic costs - people made redundant, harvest shrunk, 2000 jobs lost
- Economic benefits - Jobs created and gain profit from sports events
- Social costs - people lost jobs, no health and safety, minimum wage, no workers rights or unions.
- Social benefits - More people employed
- Environmental costs - more than 11million cans made,accused of pollution, severe drought and factory making it worse, use millions of litres of water a day, derelict buildings, 0.33 litre bottle or coke uses 1 litre of water.
The Global Shift
- The movement of manufacturing production and services from MEDCs to LEDC's.
- The consequences may be industrialization in MEDCs and industrialization in NIC's, RIC's and LEDC's.
- Much of the assembly's take place in LEDC's to make us of cheap labour which is known as the new international division of labour.
- Highly paid skilled and managerial employees in MEDC's and low paid unskilled labour in the LEDC's.
Positive and Negative effects of the global shift
- + Cheaper imports of all relatively labour intensive products can keep living costs down
- + Loss of industries can lead to improved environmental quality
- - Job losses of unskilled workers
- - Branch plants are very vulnerable and causes allot of job losses
In NIC's and LEDC's
- + Higher export
- - Health and safety issues
- + New technology
- - environmental issues
Measuring Development - Economic Indicators
- GNP (Gross National Products) - Value of all goods and services earned by a country.
- GDP (Gross Domestic Product) - Same as GNP but excludes foreign earnings.
- Per Capita - An average per person figure.
- Purchasing Power Parity (PPP) - Relates average earnings to prices and what it will buy.
Human Development Indicators
- Development Gap - The difference in levels of economic & social well being between the richest and poorest people in the world.
- Physical quality of life index - life expectancy, literacy rates and infant mortality rates. The higher the score the better quality of life.
- Human Development Index - The same as PQLI plus school enrollment and Purchasing power parity (PPP).
- Human suffering index (HSI) - Adds calorie intake, access to clean water, inflation rates, access to communication, political freedom and civil rights.
The North South Divide
Spectrum of Development
- LDC - Ethiopia, Haiti, Bangladesh, Malawi
- LEDC - Egypt, Pakistan, Peru
- RIC - Thailand, Indonesia, Tunisia
- NIC - China, India, Brazil
- FCC - Ukraine
- ORC - Saudi Arabia, Angola, Russia
- MEDC - USA, UK, Australia, Singapore
MEDC's - High Income ($11,115 or more)- services account for 70%+ jobs, research and development and quaternary industry's important.
NIC's - Upper middle income ($3,596-11,115) - significant manufacturing of primary and secondary industries.
RIC's - Lower middle income ($906-3,595) - significant primary employment, manufacturing is growing rapidly.
LEDC's - Low income - Primary industry 40% + jobs
LDC's - Low income (under $905) - Dependent on primary industry and high levels of poverty
European Union - 27 countries - internal free trade and population movement - accounts for 7.5% of pop and 31% of global GDP.
Organisation for economic cooperation and development - 30 members - ensures the rich developed countries run smoothly - 75% of global GDP
Organisation of the petroleum exporting countries - 12 major oil exporting countries - safeguard the oil exporting countries - 65% of global oil reserves and 35% of production.
Group of eights - Formed in 1974 - group of rich and powerful - Accounts for 65% of global GDP but only 15% of population.
Group of 20 developing nations - formed in 2003 - to press developed nations and open up their markets - 60% of world population and 20% of the global GDP.
Group of 77 - Formed in 1964 - Grouping of developed nations to give a collective voice - Its influence is lessening as China is no longer a member.
FCC's - Russia, Estonia, Poland - Middle or low income which used to be under communist control + now adjusting to capitalisation.
NIC's - China, India - Middle incomed countries in the 1970/80's whose average earnings have risen rapidly.
OPEC - Iraq, Saudi Arabia, Angola - Major oil exporting countries, although wealthy their wealth is unevenly distrubuted.
RIC's - Mexico, Malaysia, Turkey - Recently emerging middle incomes countries developed in the 1990's.
OECD - Russia, Belgium, UK, USA, Japan, Canada, Mexico (30 members)
LDC's - Niger, Mali, Haiti, Burma - The worlds poorest countries.
G8 - USA,UK, France, Germany, Italy, Canada, Russia - 8 most powerful.
MEDC's - The wealthiest counties in the world.
Political Groupings - Trade Blocs
- They are different from economic grouping because they trade freely.
- They contain nations at varying levels of development .
- e.g Mexico and USA both part of NAFTA which makes sense because Mexico has a cheap labour force and USA have management and research expertise.
- Geographers describe this as a spatial division of labour.
- Dont allow the free movement of people.
World Trade Organisation - Aims to cut trade barriers so goods can flow easier. It has been accused of acting in the interests of wealthy countries.
G8 + 5 - Represents 65% of the worlds trade and meets annually.
G20 - 23 members from the developing world focus of agricultural trade.
World bank - Promote investment globally and provide loans for countries who agree to conditions(like IMF) e.g building dams.
International Monetary Fund - Forces countries to sell government assets which are bought by TNC's, open up trade in return for re-financing dept. This has forced poorer countries to sell their assets to wealthy TNC's
OECS - It is a global think tank for 30 of the worlds wealthiest nations.
OPEC - Established to regulate the global oil market, stabilize prices and ensure a fair return.
What is a global network?
Global networks seek to connect the world into an integrated whole.
- Links between different countries in the world e.g air travel, ships, trade, undersea cables, population movement, money flow and services.
- Some areas are well connected (switched on) which tend to be high income areas, whilst other areas are poorly connected (switched off) which tend to be low income areas.
- The internet - political freedom to use it, education/training, people cant afford it, no infrastructure, no market for service providers, no power supply.
- Digital divide between developed and developing worlds.
- Africa remains the big loser in terms of internet usage.
- Development of technology
- Telephones - communication - more network
- Internet - communication - broadband -allowed businesses to operate annually - allowed people to work from home.
- Air Travel - bigger aircraft(airbus A380), cheaper flights, global tourism
- GIS/GPS - 24 satellites allow information to pass around the world.
- Rail - High speed rail link e.g Japan bullet train + TGV France
- This is shrinking the world and making it more connected
- The cores that demonstrate a number of intense connections to the rest of the world. Places others wish to connect too.
- They tend to be places of increasingly diverse populations are demographic flows, as well as flows of finance, trade and ideas.
- The poorest nations of the world remain switched off and may lack a global hub, flow of trade and investment with other places or economies.
- Integration with the rest of the world is small
- May rely on agricultural products.
- Incomes are low and TNC's dont see market potential.
- The world richest 1% of individuals own 40% of all wealth and the poorest 50% own just 1% of global wealth.
- EU favored bananas from small producers in former colonies (ACP country)
- Many EU countries applied a 20% tariff to banana imports from non ACP counties
- Dollar bananas are produced in central and south america, 70% of trade from the region controlled by USA TNC's.
- A recent ruling backed the dollar banana producers and stated the EU's trade position is illegal.
Whats at stake?
- TNC's vs small producers
- Cheaper bananas for consumers (dollar bananas cheaper)
- Working conditions and wages
- Carribean - Low wages, near sewage, exposed to harmful chemicals, 12-15 hour days.
Creating Connections - China
- Special economic zones
- Size of market (1.3 billion)
- Huge pool of high skilled + low wage people
- Focus on exports that undercut MEDC prices
- Investment in infrastructure
- Proximity to Asian markets + capital
The $100 Laptop
- One laptop per child scheme - wind up machine - Large TNC's donated $2 million each to launch the project e.g ebay and google
- Actual cost is closer to $200
- Aim to get children in the developed world improved education, understanding of technology and improved opportunities.
- The cost of setup, training and internet access not included
- There are more pressing problems e.g clean water and sanitation
- 85,000 people contributed to the give one get one scheme but it has now been stopped.