Global systems and global governance - intro

what is a global village?

a ‘flat world’ where free reign is given to economic and information flows

who coined ‘global village’ and when?

Canadian philosopher Marshall McLuhan in late 60s

what has temporarily slowed down globalisation?

2008 financial crisis

what has slowed down recovery from the 2008 crisis?

setbacks such as international conflicts

quote about globalisation

“It has been said that arguing against globalisation is like arguing against the laws of gravity.”

Kofi Annan, former Secretary-General of the UN

what is a world economy?

when prices, supply and demand are affected by global events

how has trade of manufactured goods grown?

US$100 billion in 1956

US$19 trillion in 2013

what 3 economic relationships have been impacted by globalisation?

1. international trade

2. foreign direct investment

3. international capital flows

what are factors of production?

productive resources that have to be combined in order to produce goods and services

what are the 4 factors of production?

1. land

2. labour

3. capital

4. enterprise

what is capital in terms of the factors of production?

any physical resource regarded as a man-made aid for production e.g. factories

what are the 3 dimensions of globalisation?

1. economic

2. cultural/social

3. political

what is capital in terms of international capital flows?

money that moves between countries which is used for investment

why were investment companies no longer confined within national boundaries in the late 20th century?

deregulation of world financial markets

whose is the core-periphery model?

Frank and Wallerstein

what is the core in the core-periphery model?

relatively small block of developed nations where global power is concentrated

what is the periphery in the core-periphery model?

countries that are less developed and have been exploited and suffered from a lack of investment, leakages, and out-migration

why is the core-periphery outdated now?

rapid growth of economies such as BRIC and MINT meaning there is now a continuum of development - more of the world can be seen as ‘core’

5 flows between economies

1. FDI

2. repatriation of profits

3. aid

4. migration

5. remittances

who makes foreign direct investments?

TNCs or occasionally governments

give an example of how TNCs do FDI

setting up a subsidiary company overseas

what is the repatriation of profits?

leakage - TNCs taking profit back to the home country

what is ODA?

Official Development Assistance - contributions made by richer countries via the UN

what are the 2 types of aid?

1. multilateral (e.g. ODA)

2. bilateral (one government to another)

what kind of economic flow was the least affected by the 2008 crisis?

remittances

what is the destination of most migrants?

short distances - neighbouring regions

what areas attract migrants from furthest away?

North America, Europe, and oil-rich Gulf countries in western Asia

what % of Somalians rely on remittances for their basic needs?

40%

what % of all investment in Somalia is remittances?

80%

when did many US and UK banks stop transferring remittances?

2012

why did many US and UK banks stop transferring remittances in 2012?

concerns that some money was falling into the hands of terrorist groups

what did the withdrawal of banks from remittances services cause?

devastating effects in Somalia, leading to protests

what is the situation of most economic migrants?

not the poorest but those with some education and financial means

where is the largest flow of labour?

Asia

how many moved from south to west Asia and when?

5 million between 2005 and 2010

what 3 things have made the flow of products cheaper?

reduction in:

1. transaction costs

2. transport and time costs

3. tariffs

why have transaction costs been reduced?

improvements in flows of data and the transfer of capital

why have transport and time costs been reduced?

containerisation and air transport

who has reduced tariffs?

WTO - World Trade Organisation

what are services?

economic activities traded without the production of material goods

what can services be divided into?

1. high-level e.g. finance

2. low-level e.g. customer call centres

what are conglomerates?

collection of different companies which all report to one parent company (most TNCs are conglomerates)

what has the improvement of information flows led to?

the expansion of knowledge-intensive goods and services e.g. computer technology

what is the ultimate goal of a brand?

sell the same product, the same way, everywhere

what does global marketing generate?

economies of scale

what are economies of scale?

the cost advantages resulting from the larger scale or output of an operation

what are the BRIC countries?

Brazil, Russia, India, China

what is a diaspora?

large group of people with similar heritage/homeland who have settled elsewhere

what are the MINT countries?

Mexico, Indonesia, Nigeria, Turkey

what is containerisation?

standardised transport system with containers that can be transferred between ships, trains and lorries

what is protectionism?

policy by governments to impose restrictions on the trade in goods and services with other countries

what is the intention of protectionism?

protecting home-based industries from foreign competition

what is a tariff?

tax or duty placed on imported goods

what is the intention of tariffs?

making goods more expensive so they don’t sell at a lower price than home-based goods

what is globalisation?

process by which national economies, societies and cultures have become increasingly integrated through the global network of trade, communication, transportation and migration

what is labour?

the aggregate of all human physical and mental effort used to create goods or services