Unit 4 - power, places and networks

Globalisation

the process by which people and places are increasingly interconnected via transport, trade etc

Global interactions

the ways in which people and places are increasingly interconnected (facilitates the connections) e.g. cultural traits, political agreements, social norms, global frameworks etc

Superpower

A state with a dominant position characterised by its extensive ability to exert influence or project power on a global scale. This is done through the combined means of economic, military, technological, political and cultural strength as well as diplomatic.

Neo-colonial

Indirect actions by which HICs exercise a degree of control over the development of their former colonies e.g. via aid and loans with conditions attatched

Soft power

the power of persuasion, meaning that some countries are able to make others follow their lead by making policies more attractive. A countries culture may be viewed favourably by people in another country e.g. US television programmes

Hard power

Getting your own way by using force, invasions, war are examples as are economic power e.g sanctions and trade barriers. Actual or threat.

UN

United nations - most powerful intergovernmental organisation made up of representatives from all 193 states in it. Its remit has expanded to include rights, environment, health and economics

G7

members include canada, france, germany, italy, japan, UK, USA. Holds an annual summit attended by the heads of government to discuss issues such as global economic governance, international security, and energy policy

G20

Global economic governance, but it has also discussed ageing populations, reform of the world bank & IMF energy security and resource depletion.

OECD

Organisation for economic cooperation and development (35 members). Aims for cooperation between countries and their independence, to analyse, identity and discuss problems to find policies to solve them, and provides a forum for countries to share experiences and seek solutions.

OPEC

Organisation of the Petroleum Exporting Countries. Aims to counter western oil prices and use oil as a resource to stimulate economic development

IMF

International Monetary Fund (186 members) Monitors the economic development of countries, lends money to states in financial difficulty and has the objective of stabilising international exchange rates and facilitate development

NDB

New Development Bank (formerly BRICS development bank) Aims to support private or public projects through loans, guarantees, equity participation and other financial instruments

World Bank

Source of financial and technical assistance to developing. countries around the world, aims to fight poverty by providing resources, sharing knowledge and building capacity

Shrinking world

illusion of a smaller world due to advancements in technology, particularly transportation and communication, making it easier and faster to connect with people and places across the globe (time-space compression)

Distance decay

as the distance between 2 locations increase, the number of interactions decrease

Global village

world seen as a community in which people are connected by computers, TV and all depend on one another

Containerisation

Transporting goods globally by loading goods onto boats in containers rather than individually, allowing mass transportation of goods

How has containerisation facilitated the shrinking world

It has allowed more good to be transported with less time spent loading and unloading, making transport quicker

Leapfrog technology

Technology that allows basic to be skipped in favour of more advanced technology, accelerating development e.g. mobile phones

What role do mobile phones play in creating a connected world?

• Make communication easier

• Online banking

• Increase in the amount of people using the internet

• Can improve healthcare

• Can improve QoL

• Powerful ‘multi tools’ that enable globalisation

FDI

Foreign Direct Investment - a financial injection made by a TNC into a nation’s economy

Glocalisation

When a ‘global’ product is adapted for a foreign market (owing to differences in taste, religion and interests)

TNCs

Transnational Cooperations - businesses whose operations occur is different parts of the world

Outsourcing

When a company offers a working contract to another foreign company

Advantage of outsourcing

Frees hassle of building or leaving property and employing people directly

Disadvantages of outsourcing

• may introduce a new element of risk into the supply chain

• TNC may find it harder to monitor the way goods or services are being made

Offshoring

When a company moves factories or office functions abroad to reduce costs e.g. dyson moved manufacturing to Malaysia

Advantage of offshoring

Creates a spatial division of labour e.g. The TNC has rising profits and the state it invests in has job opportunities created

Disadvantages of offshoring

• Costs - job losses in TNCs country of origin → relocate → can decrease sales

• Companies may expose themselves to new political and physical hazards

• Must consider power

Aquisitions

When international corporate merger takes place, two firms in different countries join forces to create a single entity (e.g. TNC Reed Elsevier → both UK and Netherlands

Advantages of aquisitions

• Very important strategy benefiting TNCs → In 2015 1/3 of FDI consisted of acquisitions and mergers

• expanded markets

• the opportunity to reduce costs through rationalisation

Disadvantages of acquisitions

changes in the TNC ownership affects the geography of global financial flows

• large profits are redirected towards the state where the buyers headquarters are

• major financial implications are paid to governments for tax

Joint Venture

Involves two companies forming a partnership to handle business in a particular territory (without merging to become a single entity)

Advantages of joint venture

• Reduces risk for TNCs

• Combined expertise can make the venture more successful

Disadvantages of joint venture

• reduces profits

• logistics can be complicated

• local knowledge may become invaluable in an emerging market

Global production network

A chain of connected supplies of parts and materials that contribute to the manufacturing or assembly of the consumer goods.

Tiered supply chain

Contractors outsourcing in turn to each other within a supply chain

Advantages of tiered supply chains

• lower costs

• can improve communication

Disadvantages of tiered supply chains

• many TNCs lack direct contact with suppliers

• poor working conditions for suppliers → social pressure

Protectionism

trying to use restrictions such as tariffs to boost your country’s industry, and shield it from foreign competition

Free trade

(the opposite of protectionism) using as few tariffs as possible, giving people the opportunity to buy cheaper and from anywhere

MGOs

Multi-government organisations operate across a number of states focussing on economic matters and attempt to increase trade and interactions e.g. the world bank or EU

Trading Bloc

an agreement among a group of nations to allow free trade between member countries, but to impose tariffs on other countries that may wish to trade with them

Free trade areas

where members abolish tariffs and quotas on trade between themselves but restrict imports from non-member countries e.g. USMCA

Common markets

Custom markets which, as well as having free trade in goods and services, allow free movement of people and capital

Custom unions

A closer form of economic integration. As well as having free trade between members, all members operate a common external tariff on imports and abroad e.g. Mercosur

Economic unions

groups of nations that not only allow free trade and free movement of people and capital, but also require members to have common policies on sectors such as agriculture e.g. EU

Export processing zones

industrial estates that are fenced in for producing manufactured goods for export

Free trade zones

A free trade zone is any location where goods can be shipped, handled, manufactured, reconfigured and re-exported without the involvement of customs agencies. A major seaport, an international airport or a boarder facility between two or more countries may be designated a free trade zone

Special economic zones (SEZ)

an industrial area, often near a coastline, where favourable conditions are created to attract foreign TNCs. Conditions include low tax rates and exemption from tariffs and exports

Why have free trade zones been significant for many countries?

• encourage FDI into a country by TNCs

• low tax locations

• supposes economic growth in countries

• reduce import and export tariff

Migration controls

ways to limit migration/movement between countries → goverment decided

LLDC

Land locked developing country

How can resource availability influence connectivity

• countries rich in resources attract TNCs and FDI → increasing their level of gloablisaiton

• countries with a large population tends to be highly globalised

How can physical location influence connectivity

• countries located on flat, fertile land attract high levels of global interactions (e.g. farmers) → highly globalised

• mountainous areas → low level of globalisation e,g. Himalayas

• Remote islands (e.g. Greenland) are disconnected → however hot temperature islands e.g. hawaii are highly globalised

• coastal countries → higher globalisation as they will have harbours and ports for foreign trade