geo- global systems and governance

Trade

The movements of goods and services from producers to consumers.

Global pattern of international trade

• emerging countries trade between each other

• HICs are exporting less to each other and more to emerging countries.

• commercial services can also be traded

• largest exporters; EU, USA, upcoming China and India.

• very low amounts for the countries of sub-Saharan Africa.

International trade is;

• inevitable- no country has all materials and resources needed

• contentious- foreign products may be brought cheaply but the domestic seller may lose a sale.

• Political- countries exert power to ensure national gains.

• The key driver of global economic growth- it has increased, particularly since ww2.

• Not always free trade- LICs continue to struggle to traded within trading blocs of HICs.

Global Trade Rules are set by world trade organisation

• Countries cant give another country special access to their market without doing the same for every ither country in the world except from their trading blocs.

• Should promote free trade e.g. removing as many barriers to trade as possible.

• countries should act predicably when trading e.g. not raising tariffs on some products after a deal is reached

• There should be fair competition: one company or country shouldn’t get an unfair advantage over rivals.

Trading relationships

• terms of trade tend to have bad impact on LICs

• demand for metal increased, in NEEs of Asia

• overproduction and increased competition from LICS and NEEs have resulted in declining steel production in HICs.

Trading Blocs

• Agreements between governments about trade (they promote and manage trade)

• trade blocs remove barriers between their members while keeping common barriers to countries who aren’t apart of bloc.

• WTO deals with rules of trade.

• WTO has 153 members representing 97% of total world trade.

• many trading blocs are regional e.g. the EU.

• Some around certain industries e.g. OPEC (Organisation of the petroleum exporting countries)

• Main trading entities are USA which is part of North American Free Trade Association (NAFTA) ad EU.

• Emerging nation  groupings like Association of South East Asian Nations (ASEAN) and also form Asian Free Trade Area.

• China is also member of Asia pacific economic co-operation - APEC

Special Economic Zones

• these oincrease he volume of trade with emerging economies and less debveloped countries

• SEZs are areas that have different trade and investment rules to the rest of a country.

• Increases trade while keeping barriers in the rest of the country.

TNC definition

• Large, global companies that operate in more than one country.

• Produce global products- these may be consumer goods that have a strong recognisable brand and which are distributed, marketed and sold in a large number of countries.

• Dominate all industrial sectors- primary e.g. mining; secondary e.g. food; tertiary e.g. banking; and quaternary e.g. pharmaceuticals.

Location

• Headquarters and Research and Development of TNCS usually located in home country, usually HICs.

• While manufacturing is usually in LICs

Advantages of multiple locations

• Escape trade tariffs

• Find lowest cost locations for productions.

• Teach foreign markets

• Exploit natural resources

Spatial organisation of TNCs

They outsource production and control processing at each stage of production with their HQs, R&Ds, and branch plants (located overseas where costs are minimised)

Micro-multinationals

• New smaller TNCs that are often high tech companies

shell oil

• primary sector

• HQ- in The Hague, Netherlands

• Parent company- royal Dutch shell plc, UK

• One of the richest companies on earth

• Does business in many countries

• Deals with 25 million customers daily

• Has refineries, drilling fields, 65000 filling stations

• employs many people world wide

• Operates in every continent

• 70+ countries

Nike

• secondary sector

• HQ- Beaverton, Oregon, USA

• Employs 5,500 people in Beaverton

• 2013 - 765 factories in 43 countries

McDonald’s

• tertiary sector

• Parent company - publicly traded corporation

• Spatial organisation - operates in 119 countries and has over 35,000 stores in globally with 1.7 mill plus employees

Apple

• parent company - publicly traded company

• Quaternary sector

• HQ based in Cupertino, California

• Sale HQ- Cork, Ireland

• Manufacturing happening in China and developing countries because wages are lower: direct to global market: land is cheaper to buy.

Mergers

When two separate companies combine to form an new larger entity

Acquisitions

Process where one company buys another by purchasing its shares or assets to gain control e.g. ford bought Volvo

Globalisation

The increasing flow of people, ideas, goods, services and capital means more countries around the globe have similar economies and societies.

economy

-trade android

-TNCs

-Capital flows

-Trading blocs

Society

-Migration

-Social networks

-example; roles around migration are changing so people are affected too

culture

-westernisation- a country or person adopting systems from Europe and north America

-cultural diffusion- spread of cultural elements through technology like social media and flows of goods/ services.

-flows of people- immigrants bring culture

-spread of ideas, information and images

-McDonald’s adapts menu to different countries e.g. they use sugar cane in drinks for North America.

Technology

-higher productivity

-communication

-less economically developed countries can develop trade links through technology.

Politics

• trading groups

• governmental and global institutions

• e.g. Donald trump charging tariffs affects a lot of other people and countries e.g. China because them and America has largest trading relationship

• growth of western democracies and their influence on poorer countries

• trading bloc growth'; NAFTA allows TNCs to merge and get forms in neighbouring countries while reduced trade restrictions and tariffs help market grow.

Environment

• impacts and degradation

• linked by ‘commons’

Concept of a shrinking world

• It seems like there is a shorter distance between countries around the world due to globalisation.

• flows of people means people from different countries are in other countries

• travel times are getting shorter because of interconnected and quicker transport

• cyberspace information in seconds

Flows of information

• information can be spread across the world very easily and quickly

• Development and rapid spread of e mail, internet, social media means that large numbers of information can be shared instantly across the globe, allowing people in different countries to work together

• Increasing flows of information are making everyone more interconnected e.g

Flows of capital

• capital historically mostly invested in country e.g companies would expand by building new factories/ setting up new branches within original country.

• Overtime amount of capital invested in foreign countries increased- foreign direct investment (FDI) e.g global FDI increased from $400 billion in 1996 to $1500 billion in 2016