Globalisation

Area of Study: Dynamic Places Topic Three Autumn Term Yr12

Define Globalisation

The growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows and more widespread diffusion of technology.

What is meant by these connections in terms of globalisation?

• Lengthening

• Deepening

• Becoming Faster

• Lengthening/widening - new links between places that are greater distances apart. e.g. bottled water is brought all the way to the UK from Fiji, 10,000 miles away.

• Deepening- more people’s lives connect with distant places-purchasing commodities, cheaper travel, connections between people and places seep into aspects of everyday life. E.g. where food is sourced from.

• Becoming Faster- people can talk to one another in real-time, faster travel (jet aircraft)

Define Capital

Money flows through the worlds stock markets

Define Commodities

Valuable raw materials which are traded and used in the production of consumer goods.

Define FDI

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

What are the different types/strands of globalisation? + examples

Economic- spread of FDI. growth of TNCs accelerates> cross-border exchanges of raw materials, components, goods, shares, and portfolio investment. global brands with a global presence. Growth in world trade. purchasing info+ communications technology supports growth of the international economy.

Political- western democracies dominate decision-making, dominance of the G7, the view that democratic consumerist societies are the way we should “aspire” to be. IGOs. Globalisation and hybridisation -outcome of old local cultures merging and melding with global influence, social media and 24hr reporting has accelerated the circulation of ideas and info.

Cultural- Mcdonald’s is present in 120 countries- Americanisation, CNN, BBC and global news means people hear westernised views and ideas.

Social- you can phone a friend living in Australia in under a second from the other side of the world. international immigration has created extensive family networks- multiethnic diverse world cities are created. Globalisation improvements in education and health are uneven.

Demographic- increased mixing and migrating of populations.

Environmental- problems are becoming far more far-reaching- global co2 emissions affect glaciers in Bolivia.

Define interdependence

two places become over-reliant on financial and or political connections with one another

Define Export Processing Zones

a Customs area where one is allowed to import plant, machinery, equipment and material for the manufacture of export goods under security, without payment of duty. An EPZ is a special type of Free Trade Zone typically located in developing countries. An EPZ aims to promote economic development by providing foreign investors with tax and other incentives to set up businesses that export goods.

What is the world becoming as a result of globalisation?

The world is becoming increasingly interconnected due to increased trade and cultural exchange. Interdependence is increasing due to the sharing and movement of services, goods and people.

For the Western world- rapid + profound increase in wealth since ww2, Improved quality of life, impacts popular culture.

What players is globalisation facilitated, built, held together and underpinned by?

It is facilitated by governments and international institutions that seek to better their countries statuses in the world and improve general quality of life.

It is built by transnational organisations (TNCs) that monitor trade and provide services.

It is held together by transport and communication networks.

It is underpinned by the choices and dreams of consumers.

What are the economic gains of globalisation accompanied by? (negative)

• Extreme inequalities: globalisation is uneven and therefore there are definite patterns of winners and losers. These are not stable identities and they can change frequently- due to variations in poverty, resource availability and government policies.

What do some people argue that the process of globalisation is leading to the emergence of? - two processes

Some argue that it is leading to the emergence of a global culture based on Western ideas and consumption (cultural erosion).

E.g. former communist countries shifting to capitalist ideals, unnecessary shipping of goods for consumers- e.g. fast fashion or Temu > has a high carbon footprint.

Localism- the preference for your area in close proximity to you, the idea that foods and goods should be grown locally, supporting local jobs and reducing transport. Overall, it is more sustainable and that is why people argue globalisation has led to it. The flows of technology have allowed those with ethical or environmental concerns about unsustainability can connect with those around the world and spread awareness of the impacts of the consumerist society.

What players are involved in globalisation?

• National governments

• trade blocs - EU

• Non- governmental organisations - World Social Forum

• Technology providers - google

• TNCs- Toyota, HSBC

• Consumers

What negatives has globalisation led to? / Give two downsides to globalisation

• rising inequalities that are affected by economic booms and bursts

• increased consumption threatens cultural identities as people put more effort into global companies than local areas.

• Affects environmental stability due to overconsumption and waste, especially in fast fashion.

• kondratiev cycles > There are four major stages: prosperity, recession, depression or crisis period, and improvement.

Greater freedom to migrate across political borders scares some people because of issues such as terrorism.

TNCs are becoming responsible for a growing trend towards cultural homogeneity- uniformity on a global scale. Cultures blending and sharing traditions or becoming more capitalised can lead to a dulling down.

Outline the five flows of globalisation that have helped to make places more interconnected

• Capital - money that flows through the world’s stock markets- people buy and sell money in different currencies to make profits. IN 2013 THE VOLUME OF THESE FOREIGN TRANSACTIONS REACHED US$ 5 TRILLION PER DAY

• Commodities- valuable raw materials that are traded between nations. FLOWS HAVE INCREASED RECENTLY BECAUSE OF LOW PRODUCTION COSTS IN CHINA AND LOWER WAGED ECONOMIES E.G. BANGLEDASH, VIETNAMEN. IN 2015 GLOBAL GDP FELL JUST SHORT OF US$ 80 TRILLION- 1/3RD OF THIS BY AGRICULTURAL AND INDUSTRIAL COMMODITIES

• Information- the internet allows us to have real-time communication between distant areas, goods and services can therefore be bought at the click of a button, social media has a growing influence, on-demand tv has increased data usage, info is stored in server farms. E.G. IN WASHINGTON STATE- MICROSOFT, FACEBOOK AND IN LULEÅ, SWEDEN- THERE ARE COLDER TEMPS. WHICH REDUCE COSTS OF COOLING OF THE HARD DRIVES.

• People:

• Tourists- budget airlines have brought a ‘pleasure periphery’ of distant places with easy reach for people in HICs, for people living in emerging economies, budget airlines such as Airasia are available. CHINA MADE 120 MILLION OUTBOUND TRIPS IN 2014.

• Migrants - face the greatest number of challenges from borders and laws. Most governments accept trade flows but resist people unless they need them. QUATAR ENCOURAGES INDIAN CONSTRUCTION WORKERS. Despite obstacles people still migrate and every year the record increases, so that in 2013 THE COMBINED NUMBER OF ECONOMIC MIGRANTS AND REFUGEES WORLWIDE REACHED ALMOST ¼ OF A BILLION. Lots of remittances are sent back so both economies get better. Diversity of cultures also increases.

Outline how areas experience shallow and near globalisation

• LICs e.g. Sudan/Chad

• poorest people isolated from global influences

• some shallow links- cash crops/ aid received.

outline how areas receive globalisation of medium length and a less shallow depth

• middle-income nations e.g. Brazil

• poorer people still rely on local produce but work for foreign firms

• have global, cultural and political awareness

outline how areas experience globalisation at a large distance and depth

• HICs e.g. the UK

• Majority of population are global consumers

• many people are widely travelled

Define Time-space compression/ the shrinking world effect

the change in our perception of time, distance and potential barriers to the migration of people, goods, money and information due to heightened connectivity. As travel and communication times fall due to new inventions, distant places and services feel closer together than they felt in the past.

How have developments in transport accelerated globalisation?

Many important innovations have led to greater awareness and interdependence between countries including:

• Steam power- In the 1800s Britain was the leading world power in steam technology this made trading into Asia and Africa faster and this allowed for it to be less costly because goods such as foods didn’t have to be packaged in specific conditions and therefore foods that are more perishable could also be traded.- more profit!

• Railways- Additionally railways such as the trans-siberian railway meant that trade could expand globally, even today railways are important and a top priority, for social globalisation, the HS2 is useful as it will provide a mixing of people between areas of work with faster travel time. By the end of 2022, China had more than 42,000 kilometres (26,098 miles) of high-speed rail

• Jet Aircraft- has helped in lengthening and deepening connections across the world through cheaper airlines. This has made international travel more commonplace and therefore both cultural and social connections can be made.

• MOST IMPORTANTLY: Containerisation- has meant that each year 200 million individual container movements can take place. Container ships have standardised intermodal containers and their uniform structure allows for goods to be shipped in bulk- this is more cost-effective. These ships have also used steam technology and developed to be much faster since the 19th century. It leads to economies of scale (Economies of scale are cost advantages reaped by companies when production becomes efficient)

what is the spatial division of labour?

the distribution of different stages of economic activity across space, leading to the specialisation of work, within particular places at a range of scales

Describe the link between transport developments and a spatial division of labour.

Transportation has had an impact on the spatial division of labour firstly through linking jobs through the core/periphery, this increases economic development for both areas. - TNCs improve as transport develops. Areas can focus on specialities because they can use transport for imports/exports.

What does ICT stand for?

Information and Communications technology

describe and explain how developments in ICT has accelerated globalisation

• Broadband and fibre optics

  • invented in 1980/90

describe and explain how developments in ICT have accelerated globalisation

Broadband and fibre optics

• invented in 1980/90 - today data is conveyed across the ocean floor by fibre optic cables. They are owned by TNCs or national governments- more than 1 million reside undersea- so we can share and store data easily.

GIS + GPS

• first launched in the 1970s - there are now 24 situated above the earth. they continuously broadcast position and time data to users which means that global production networks can be managed. GPS is very helpful for travel -especially when in a car- travelling can cause a diffusion of cultures. It also helps managers of distant offices keep in touch.

The internet/ social media

• early computer networks- ARPANET was designed during the 1960s as a way of linking research with different locations- it has grown exponentially. It allows for people to connect faster in other areas and can also help to spread ideals in both a political and environmental sense. Social media has the ability to change values and allow for cultural assimilation.

Telephone/ the Telegraph

• the first cables across the Atlantic replaced the 3-week boat trip with instant communication which immediately transformed businesses.

• the successor of the telegraph is the telephone and it lies at the core of communication in present times. I areas where no lines have been laid like some areas of Africa in remote and rural regions the existence of mobile phones helps to connect people through every strand of globalisation.

Outline how technology is used by a range of players and how this contributes to globalisation.

Economic

• ICT allows managers of distant offices and plants to easily keep in touch.

• This has helped TNCs to expand into new territories

• e.g. each time a barcode in M&S is scanned in the UK an automatic adjustment is made to the size of the next shipment placed in distance countries.

Social

• it helps to maintain long-distance relationships- especially for migrants who have left families behind

• e.g. Skype can be used

Cultural

• cultural traits: language/music can be adopted/imitated and hybridised much faster

• e.g. live broadcasts of music videos.

Political

• social media can be used to help raise awareness and to fight for change or show political issues on a global level - similarly it can be used for environmental reasons or for campaigning.

Outline ways that mobile phones are changing people’s lives in a developing nation + examples and data.

Mobile phones have been life -changing in developing countries such as Kenya

where “the lack of communications infrastructure has traditionally been a big obstacle to economic growth.”

The number of people living in Africa who own a mobile phone largely increased from 2005 to 2015.

• this is due to “falling prices” and provider companies growing in size e.g. SafariCom.

• more people are buying mobile phones because they are aware of the benefits.

In 2007 SafariCom launched M-pesa which is a service that allows for direct transfer of credit between phone users. This has made paying for bills much easier e.g. in urban areas people use their mobile phones to pay utility bills and school fees. In rural areas fishermen can use their mobiles to check market prices before selling their produce- this decreases the risk of exploitation.

Money is the key to development as it leads to national economic growth so this is very useful. The service that mobiles provide has also helped to lift families out of poverty by providing women with the opportunity to borrow micro-loans. This means that they can help to make a living for themselves and eventually pay it back through the service once they have risen above the poverty line.

One-third of the country’s gap is now sent through the M-Pesa system annually- it is clear that it is a vital service.

What is the digital economy?

the economic activity that results from billions of everyday online connections among people, businesses, services, data and processes. It is an economy based on digital technologies.

What changes has the digital economy gone through and how has it changed businesses? Give 4 examples

It started off focused on e-business and e-commerce but social networks and mobiles have changed the way people interact and conduct every aspect of their lives, even culturally.

• Woolworth and Blockbuster were forced to shut due to Amazon - example of the demise of traditional retailers

• General goods went online so manufactures had to adapt and make their own shopping sites. e.g. Nike

• Traditional grocery shopping is now being challenged.- amazon food shops?- decline of the high street. - click and collect model

• The establishment of online market places gave small businesses access to a global customer base.

What is an IGO?

An inter-governmental organisation is a group of sovereign states, often established through a treaty, with mutual interests who work toward a unified goal

Name 3 international organisations that have actively promoted globalisation by encouraging free trade and foreign investment.

• The international monetary fund

• world trade organisation

• china development bank

What is the IMF?

an organisation that provides loans to countries to prevent/bail out of economic crashes or to finance development, financial stability and monetary cooperation. They want to facilitate productivity, job creation and economic wellbeing.

What are the drawbacks of the IMF?

-lose economic sovereignty (having control over your own money)
- encourage privatisation - people suffer if eg healthcare privatised
- tell you what to do with money - eg cut funding for healthcare
- standard solutions don't always work with countries circumstance - can make stuff worse

What is the World Trade Organisation? WTO

It facilitates, regulates and encourages trade by creating global trade rules, providing a forum for negotiation, and settling trade disputes - believes in free-trade and liberalisation

Drawbacks of the WTO?

- not a level playing field - run by the rich for the rich
- too powerful - can compel sovereign states to change laws and regulations by declaring them in violation of free trade rules
- all 159 member states have to agree about trade policies

What is World Bank?

Owned by 187 countries - lend money in the form of loans to poorer members to develop, and improve economy and living standards. They aim to reduce poverty.

Drawbacks of World Bank?

- debt/interest burden placed on LIC
- rich countries hold power

- promote inflation

- failed to fulfil promises

What are the PIGS countries? - they were impacted by the financial crisis

Portugal

Italy

Greece

Spain

How did the World Trade Organisation have an affect on a local developing area?

Pakistan joined in 1995 - to complete with rules was forced to open up fishing grounds to foreign competition - TNCs and trawlers allowed to fish - locals couldn't compete - fishing community left in poverty

What is the China Development Bank?

China loaned more than US$10bill tp developing countries in 2010 - exceeded WB lending
Give money with no pay-back clause to countries

Chinese national development finance institutions differ from their Western counterparts and MDFIs in several aspects: they mostly fund infrastructure and energy projects; they lend large amounts to bundles of projects that involve multiple Chinese actors; they have less strict control on the social and environmental impacts of their operations; their loans often do not impose policy conditions; and they lend to different regions compared to Western development finance institutions. Although the Chinese institutions complement Western efforts in development finance by providing extra funds and supporting different regions, they also pose several challenges. For example, Chinese loans without policy conditions attached have become more attractive to many developing countries than Western loans. The fact that China’s SOEs have a significant advantage in securing contracts in Chinese-funded projects, which often do not include open tendering, is considered by many to be a violation of international market rules.

What are the Bretton-woods institutions?

The Bretton Woods Institutions are the World Bank and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. Their aims were to help rebuild the shattered postwar economy and to promote international economic cooperation. The original Bretton Woods agreement also included plans for an International Trade Organisation (ITO) but these lay dormant until the World Trade Organisation (WTO) was created in the early 1990s

How can National Governments encourage globalisation?

• join a trade bloc

• Neoliberalism / Free-market liberalisation:

  • Ronald Reagan and Thatcher in the 1980s- 2 beliefs- Government intervention in markets impedes economic development and as overall wealth increases a trickle-down effect will occur- richest to poorest

  • therefore restrictions are lifted on bank/company operations- trade and businesses.

• Privatisation

  • Transferring ownership of a public service/agency/property into private ownership - over time many assets are sold overseas - as state-run services are very costly. Previously almost all services such as railways or energy providers were owned by the state and this meant that there was a lack of interdependence and connectivity between different countries.

  • Eg French company Keolis owns a large stake in southern England's railways but until the 1980s they were owned by the state.

  • Successive UK governments have led the way in allowing FDI to gain a stake in privatised national services and infrastructure.

• Encouraging business start-ups

  • methods range from low business taxes to changes in the law allowing both local and foreign businesses to make more profit. 1994- Sunday trading in the UK.

• Protectionism

  • The economic policy of shielding an economy from imports in order to protect local businesses and workers

  • Common examples of protectionism, or tools that are used to implement a policy of protectionism include tariffs, quotas, and subsidies. All of these tools are meant to promote domestic companies by making foreign goods more expensive or scarce.

• Subsidies

  • A government payment that supports a business or market

• Growth of Free Trade blocs

  • agreements that have been drawn up allowing state boundaries to be crossed freely by flows of goods and money, freely with neighbours or more distant allies.

  • free trade is encouraged by the removal of internal tariffs - e.g. 2004- Tesco EU example- the firm grew. removal of tariffs incentivises countries to only import/export within their trade bloc. Flows of people and migration can increase globalisation because it can result in a diffusion of cultures and intelligences

• Governments can also encourage FDI through providing INCENTIVES!

Define a Quota

A limit placed on the quantities of a product that can be imported

Define a tariff

A tax on imported goods

What is a trade bloc?

a free trade bloc is an agreement between a group of countries to remove all barriers to trade e.g. imports/exports taxes, tariffs and quotas.

It is where flows of goods, money and sometimes workers can flow freely over national boundaries

Trade blocs create barriers for non-members and they can contain countries at different levels of development.

the different types of trade blocs are: free trade areas, customs unions and single markets.

What are the advantages/ benefits of trade blocs?

The removal of internal tariffs allows:

• markets to grow (in 2004 ten new nations joined the eu and Tesco gained access to 75 million extra customers)

• firms that have a comparative advantage should prosper (e.g. French winemakers have advantages due to their climate and soil.)

• enlarged market increases demand raising the volume of production and lowering manufacturing costs = economies of scale means products can be sold more cheaply and sales rise even further.

• Smaller national firms within a trade bloc can merge to form TNCs therefore making their operations more cost-effective and increase profits.

• In the EU members are eligible for structural funds to develop their economies.

• Protects from foreign competition and political stability.

What are the Disadvantages/ Costs of trade blocs

• Loss of Sovereignty

• increased Interdependence so issues or disruption of trade within the trade bloc will affect all members

• compromise and concession- countries entering into a trade bloc must allow foreign firms to gain domestic market shares sometimes at the expense of local companies.

What is the EU?

Economic + political partnership between 27 countries created in aftermath of World War II

The aims of the European Union within its borders are: promote peace, its values and the well-being of its citizens. offer freedom, security and justice without internal borders, while also taking appropriate measures at its external borders to regulate asylum and immigration and prevent and combat crime.

EU- advantages

• provided a single currency- the euro

• Abolition of border controls so people travel freely - easier to live, work and travel - migration encouraged

• Single market - enables most goods, services, money and people to move freely (main economic engine)

• focused on making its institutions more transparent and democratic

• it also focuses on human rights and equality not just trade

• protect local production e.g. uk leaving means the EU can put tariffs on UK goods and make them more expensive and therefore less appealing.

EU- disadvantages

- Loss of sovereignty
- increased interdependence so disruption of trade within the bloc may effect economies of all members
- foreign firms gain access to domestic market shares sometimes at expense of local firms

What is ASEAN?

the association of Southeast Asian nations - consists of 11 countries

Aim: to improve economic, political and social cooperation and improve corruption as a result of communism. development and trade.

What is USMCA

NAFTA but renamed

The Agreement between the United States of America, Mexico, and Canada (USMCA) is a free trade agreement between Canada, Mexico, and the United States.

What are the differences between the EU and USMCA?

Allows free movement of people/ doesn't affect migration law
Political agreement with own court + parliament/ agreement not law
9 world trade vs 8% world trade
Increased standard of living/ no evidence of this

What are some similarities between the EU and USMCA?

Remove internal tariffs + quotas, trade easier, exclude other nations

Outline China’s economic growth timeline

1978 - Open door policy - to gain FDI + Western tech- can now sell surplus crops- privatisation of other state-owned services
1980 - 4 SEZs created on east coast: Shantou, Zhuhai, Shenzhen and Xiamen.
1980 - joined WB + IMF
1983 - flow of FDI $1.7billion from virtually non-existent - TNCs are taking advantage of the cheap labour.
1990 - Shanghai stock markets opened - firms rush in to take advantage of cheap labour
1990s - economic growth avg 10%/yr - more than half a billion people
2011 - worlds 2nd largest economy

What is an SEZ?

A special economic zone is an industrial area, often near a coastline, where favourable conditions are created to attract foreign TNCs and FDI- including low tax rates, exemption from tariffs and export duties, huge pools of cheap labour, lower environmental standards.

They act as a window to the outside world in terms of commerce, trade and globalisation- that wealth will radiate out to the rest of the country.

Outline Shenzhen as an example of a SEZ in terms of accelerating globalisation in China

1981-1993 avg growth rate of 40%/yr compared to avg GDP growth of 9.8% for country
Apple outsources manufacturing to Taiwanese country Foxconn which operates its largest compound there.

70% of the world’s drones are manufactured here.

What is FDI?

Foreign direct investment is Investment made by overseas company/organisation into an org/company in another country (

China is still the world’s largest recipient of FDI

How does globalisation vary by country?

Western countries that are in the developed world are historically the most globalised- areas in Asia and Africa have significant globalised economies due to the effects of colonisation. Rural areas or peripheral areas are the least globalised especially since most migration is into towns and cities. Some countries also attempt to prevent globalisation and heightened connectivity - e.g. North Korea. There are massive inequalities within the world of globalisation, some areas face more barriers - e.g. landlocked regions. The degree of globalisation varies based on how developed a country is. Countries that are switched off will have fewer global connections.

What is the difference between an indicator and an index?Measure of a group of characteristics vs a single observable characteristic used to show change

an index is the measure of a group of characteristics while an indicator is using a singl

What is the KOF Index?

Most common index of globalisation

- used for countries
Aims to measure 3 main dimensions - economic political, social
Each variable transformed and compiled into index on scale of 1-100

produces an annual index

What is KOF based on?

Links in terms of tourism, communication, trade, FDI, no. of foreign embassies, cross-border transactions, global traffic, internet users.

KOF index ranking 2015

Ireland highest - 91.3
Solomon Islands lowest - 25.26
9/10 of top countries in EU

KOF index ranking 2022

Switzerland

Netherlands

Belgium

Sweden

What is the AT Kearney Index?

Global cities index - uses measures of business activity, human capital, info exchange, cultural experience and political engagement.

Ranks cities in terms of quality and quantity of global connections

What are the worlds most globalised cities? in 2014

New York, London, Jakarta, Manila (developing cities have a steeper more rapid rate than the steady increase in developed areas of globalisation)

Advantages of the KOF Index

• allows for comparisons to be made over time

• calculated for a lot of countries

• covers a wide range of globalisation data - 24 variables

• uses readily available data

• has a weighting system which reduces the effect of missing data

Disadvantages of the KOF Index

• smaller countries are overrepresented in the top rankings e.g. Belgium being so close to multiple countries makes it easier for freer travel

• uses international mail data - irrelevant due to increased use of email

• difficult to determine amount of internet users accurately

• trade calculations don’t account for the informal economy

• social flows aren’t focused on if informal

• countries can share diplomatic offices

Advantages of the AT Kearney Index

• covers 96% of worlds gdp

• covers 84% of worlds population

• allows for comparison of countries overtime and between them

Disadvantages of the AT Kearney Index

• only 64 countries

• weighting affects scores

• cultural trends can’t be measured

define Foreign mergers

when 2 firms in different countries join forces to create a single entity

define foreign acquisitions

when a tnc launches a takeover of a company in another country.

What is a TNC?

A transnational corporation that coordinates + controls operations in more than 1 country - bolt together different economies through global supply chains and marketing strategies. They are the architects of globalisation- they build bridges between nations through gpns which increase the flows of globalisation. They are the primary shapers of the contemporary economy

What is offshoring?

TNCs move parts of their production process (factories or offices) to other countries to reduce labour or other costs.

What is outsourcing?

TNCs contract another company to produce the goods and services they need rather than do it themselves.

What is a global production network?

A chain of connected suppliers of parts and materials that contribute to the manufacturing or assembly of the consumer goods. The network serves the needs of the TNC. Eg BMW mini - supplied by 2,500 different companies

What are the problems with outsourcing and GPNS?

If poorly managed can result in damage to corporate profits and image
- natural hazards such as Japanese Tsunami 2011
- unexpected products eg horse meat in UK supermarket supply chains 2013
- collapse of production plants eg Rana Plaza factory in 2013- killed 1100 people

What is Glocalisation?

Glocalisation is a strategy that TNCs adopt where they adapt their products to local cultures and markets. Modifying a global brand to suit the taste cultureSome global brands no longer have fully global products. In this way, rather than globalisation simply homogenising the world, it actually creates a wave of cultural hybrids.

For some products, this is not necessary because it has a global appeal - e.g. Coca Cola or lego

What are some examples of glocalisation?

McDonalds- Cornpie in Thailand, McSpaghetti- Italy, Mango McFlurry- Malaysia, McPlant. McSpicy Paneer

Spiderman India

How do TNCs accelerate globalisation through the development of new markets?

Strengthening of eg Asian, Latin American + Middle-Eastern economies - more people with higher income - countries more attractive for TNCs to set up + invest in - profit

Rise of the middle class

The Multiplier effect/ cumulative causation occurs

What is a simple TNC spatial division of labour?

When there is a head office and then only 1 or 2 overseas production bases e.g. Ford in the 1920s

What geographical variations mean glocalisation makes business sense?

• peoples taste

• religion/ culture

• laws

• local interest

• lack of availability of raw materials

Why are TNCs vital to the spread of globalisation?

• they earn more revenue in a year than the GDP of some countries e.g. Chad

• the top 200 accounted for 25% of the world’s economic activity

• create bonds between economies and countries because of supply chains and marketing strategies

• their expansion involves the flows of globalisation

• lead to political stability, technology transfers, and raised living standards and environmental standards.

Outline 3 factors that have led to the expansion of TNCS?

• Motive

profit through minimising costs and increasing revenues by achieving economies of scale, developing new markets, and horizontal integration (when a company expands one level at a time)

• Means

banking and the free flow of reverse colonialism

• Mobility

faster and cheaper transport, rapid communications systems e.g. fibre optics, new production technology, GPNs

Pros of TNCs

• raised living standards because of FDI leading to higher wages

• technology transfers from parental companies to their branch plants

• political stability because of investment

• higher environmental standards- international brands can maintain and set sustainable living plans.

Cons of TNCs

• tax avoidance - they pay in the lowest tax regimes

• growing global inequalities - FDI is favoured in specific regions

• environmental degradation

• unemployment and reliance on TNCS- if they leave a lot of jobs are lost.

What is a switched on country?

Switched-on countries are those which are highly connected to others, in terms of both physical and human factors.

e.g. Europe, India, China, USA

What is a switched off country?

Switched-off countries are those which don’t connect with other countries.

Usually, the poorest nations in the world which lack a global hub and have no strong flows of trade/investment, lack investment of TNCs, cultural penetration of TNCs, any integration with the rest of the world that does exist tends to be shallow e.g. aid or providing agricultural products

e.g. Sahel region, Central South America, North Korea

What factors lead to a place being switched on?

Political

• Government Backing- they can open up their economies to TNCs and FDI by establishing SEZs

• some governments part own some of the companies that foreign TNCs would do business with which reduces the risk of losses for TNCs.

• Political Stability - tncs more likely to invest

Historical

• In pre-modern times wealth was closely related to physical factors such as soil fertility, accessibility and natural resources- some countries have benefitted from this ever since.

Environmental

• Oil resources - instant source of wealth, attract TNCs, political + economic power
  Coastal - ideal for trade, historical advantage

Economic

• Good infrastructure - attracts TNCS/FDI, ports that accommodate newest, largest container ships
  Stable currency - reduces risk of losses for TNCs

Social

• English speaking - attractive for outsourcing for service industries
  Technical skills - high quality quaternary sector labour attractive

What factors lead to a place being switched off?

Political

• Corruption - politicians/police take money/don't use it properly - risk of losses increased - time-consuming + frustrating for TNCs
  Political instability - eg civil wars/terror/hostile gov - increased risk of losses, reduced trade, sanctions

Economic

• Weak markets - low consumer spending power - can't sell products
  Debt - repayment of these limits gov spending - harder to attract FDI

Environmental

• Natural disasters - hold back economic development - high risk for TNCs to operate
  Landlocked - trade more difficult eg Chad

Social

• Unskilled labour - debt + lack of education funding - low skilled labour - attractive for manufacturing however not much else
  Negative image - many LDCs particularly in Africa portrayed negatively in media - which deters investment

• crime - kidnappings and robberies - high risk for tncs

Historical

• Recovering from the effects of colonialism- resources exploited

What is the Global Economic Shift ?

the movement of manufacturing/industry and services from the more developed and previously industrialised West to the East. It has been done by TNCs since the 1960s especially in China due to the Open Doors Policy, Cheaper labour, incentives and containerisation.

(think Clark Fisher Model)

In 2010 China became the number one manufacturing country of the world.

- originally workshops for cheap 'throwaway' goods but since 2010s more hi-tech manufacturing

Benefits of the global shift to China

1. Investment in infrastructure- By 2016 - built the worlds longest high-speed rail - 26,000+ miles - links Beijing to Shenzhen, Shanghai
82 airports built since 2000 bringing the total to around 250
2. poverty reduction- 1981-2010 - no. Of people in poverty reduced by 680mill 2018 - just over 50% of population in the middle class
3. increase in urban incomes- Urban incomes increased by 10%/yr since 2005. By 2014 incomes averaged US$9,000/yr
4. better education + training- Education is free + compulsory from 6-15yrs
1950 - adult literacy rate was 20%, 2020 was 97%
2014 - 72mill uni graduates, 15x that in 2000 - aids in escaping the cycle of poverty.

Cumulative Causation!

The Costs of the Global Shift to China

1. Loss of productive farmland and land degradation- - 3mill+ hectares polluted with heavy metals
- 12mill tonnes of grain polluted in 2014
- 40% of farmland experiencing degradation
- soils for grain eroding and acidifying due to emissions

2. increase in unplanned settlements - - Rapid urbanisation - increase in illegal, informal homes eg farmland privately developed for housing
- land prices increased massively - decent housing unaffordable

3. pollution and health problems- - 70% of rivers and lakes polluted
- 360mill ppl have no access to safe drinking water
- estimated 4,400 killed every day by issues due to air pollution

4. over-exploitation of resources- - has abundant resources however struggling to keep up with demand - seeks resources elsewhere
- Amazon cleared in Ecuador for timber, oil fields under development in Venezuela, land in Brazil cleared for soy

5. Loss of biodiversity- - 2015 - WWF found terrestrial vertebrates declined by 50% since 1970
- main cause land degradation + habitat loss due to development

Describe and explain the outsourcing of services to India

The role of technology is vital in globalisation.

Call centre services are outsourced from the US or UK because many Indian citizens are fluent English speakers (after-effects of colonialism)

Fibre optics allow for this to happen

There is a large broadband capacity because of previous FDI by TNCs e.g. Texas Instruments in Bangalore.

The workers get paid relatively good wages - £40 a week

Companies such as Dell, Yahoo, Intel have become extremely profitable

Costs of Outsourcing services to India

• exploitation of workers

• night shifts and long shifts - very repetitive work

• larger gap between the super-rich and super poor

What are the 3 Ds ?

• Dirty

• Dangerous

• Difficult

jobs that migrants do in host countries

Describe the evolution of the Earth’s economic centre of gravity

It is shifting eastwards 140 km a year because of rapid urbanisation in Asia in middleweight cities and jobs being created due to outsourcing and offshoring

What is the Environmental Kuznets Curve?

The theory says that during the early stages of a country’s increase in wealth, it increasingly degrades its environment at a faster and faster rate. At some point there is a turning point and the developed country makes a transition to protecting and restoring its environment

Define Deindustrialisation

the decline of regionally (tax) important manufacturing industries

What is the Rust Belt?

A Region in NE US that has experienced industrial decline since the 1950s e.g. Detroit