Global systems and Global Governance

What is globalisation?

The process of becoming more globally connected through the movement of labour, information, services, products, and capital across national borders.

Economic globalisation

TNCs outsource and offshore manufacturing to lower costs, typically relocating to LEDCs. Trade blocs emerge to promote economic integration.

Political globalisation

Interconnectivity between national governments. Development of market economies and deregulation. International organisations promoting international relations e.g. UN.

Cultural globalisation

International travel. Media, TV, and social media has interlinked our cultures and increased awareness of global issues.

Westernisation

Domination of Western cultures in non-western regions e.g. the rise of McDonald's and Starbucks in Asia, this has lead to decline and potential eradication of local culture.

Social globalisation

Multiculturalism has risen due to international migration. Social networking (social media connections) has enabled human connection across continents. NGOs and charities are involved in efforts to improve global access to education and healthcare.

How does globalisation influence our daily lives?

Through the purchase of foreign products, communication via social media, and cultural exchanges e.g. on social media.

What are capital flows?

Movement of money for investment, trade, or business production. Core regions refer to wealthier, developed economies. Periphery regions are less wealthy and are LEDCs. The IMF aims to 'foster global monetary cooperation and stability'. The World Bank lends loans for development of countries.

What are labour flows?

The movement of people who migrate to work in another country, 3-4% of the world's population are international migrants (mostly to HICs). 15% of HIC populations are international migrants while this drops to 1.6% for LICs.

Different types of labour flows

Economic migrants, refugees, and asylum seekers.

What characterizes economic migrants?

People who move voluntarily for work and improved quality of life.

Who are refugees?

Individuals forced to leave their homes due to conflict or persecution.

What is an asylum seeker?

A person who has left their country and is seeking asylum (protection) in another country.

Labour flows to the Middle East

Over 5 million people migrated in 2017 from India, Pakistan and Bangladesh to the Middle East, in particular Qatar, Saudi Arabia, UAE, Bahrain. This migration is driven by the economic pull of work in the booming construction industry in places such as Dubai.

Product Flows

Movement of products from production area to area of consumption, globalisation has made this flow internationally. Products flow more efficiently due to containerisation and communication improvements. LICs typically have lower labour costs so production is relocated (offshored) to LICs.

Services flows

Can be high level, e.g. finance, typically located in HICs, or low level, e.g. customer service call centres, typically offshored to take advantage of low labour costs.

Information flows

The rise of the internet, social media and entertainment services has greatly improved the efficiency of information flows.

Footloose industries

Industries that can locate anywhere without constraints from resources or obstacles e.g. service industries such as call centres.

What role do intergovernmental organizations (IGOs) play in globalisation?

They create laws and regulations that affect international interactions and environmental policies.

What is the International Monetary Fund (IMF)?

An international organization that promotes global monetary cooperation and financial stability.

What is the World Bank's function?

To provide loans for development or relief to countries in need.

How does globalisation affect environmental issues?

Pollutants from other countries can impact local climates, necessitating international cooperation.

What is the impact of globalisation on product availability?

It allows for a diverse range of products from different countries to be available in local markets.

What is the relationship between globalisation and cultural exchange?

Globalisation facilitates the sharing and embracing of different cultures, such as music and food.

What is the significance of capital flows within core regions?

They indicate economic activity and investment opportunities in wealthier, developed countries.

What is the effect of migration on high-income countries?

High-income countries have a higher percentage of international migrants compared to low-income countries.

What is the role of social media in globalisation?

It enables communication and interaction between people from different countries.

What are the implications of a 'borderless world'?

Increased interconnectedness and interdependence among nations, affecting economies and cultures.

What characterizes highly skilled workers?

They are highly trained in specialized fields such as medicine, science, or ICT.

What defines unskilled workers?

They take positions that do not require qualifications or intensive training.

What has shifted the manufacturing of goods from high-income to low-income countries?

Technological advancements and lower labor costs.

What impact has offshoring had on manufacturing jobs in high-income countries?

De-industrialisation e.g. 40% of jobs in the UK were manufacturing in 1970, now it has declined to 26%

What drives the demand for products in emerging economies?

The growth of wealthier, middle-class civilians.

High level services

Services that require extensive training and expertise, such as financial services.

Low level services

Services that require less training, primarily customer service-based, like call centers.

Where are high level services typically concentrated?

In higher income countries and global hubs within cities.

What is the trend for low level services in terms of location?

Low level services are increasingly offshoring to take advantage of lower labor costs.

What is global marketing?

The practice of marketing products on an international scale to increase recognition and profit.

Global brands

Apple, Coca Cola, and Nike are examples of brands with strong global recognition.

What is 'glocalisation'?

The concept of adapting business practices to local interests and tastes. e.g. KitKat have adapted to Japanese collectibles culture by selling hundreds of unusual varieties.

Why do HICs consume more manufactured products than LICs?

There is significant demand for manufactured products in HICs due to derived demand and higher incomes than LICs. Developing economies have growing demand for manufactured goods due to industrialisation.

What has accelerated and deepened globalisation?

Advancements in technology, international relationships e.g. security relationships (NATO), and financial systems, transport, communication, trade agreements, interdependence

What role do multinational corporations play in the global financial system?

They invest profits for interest, contributing billions to the system.

Financial system as a catalyst for globalisation

Increased access to loans, shares and stocks, investment, and lending has improved international connectivity. Governments can borrow and lend, this develops international relations. Individuals can now send remittances with greater ease as money can be transferred with ease via the internet.

Transport as a catalyst for globalisation

Containerisation has enabled bulk transport of goods. High speed rail and larger, faster aircraft have increased efficiency of labour flows

Security technologies as a catalyst for globalisation

The global, interconnected flow of labour and products between countries prompts the need for security systems e.g. stricter goods regulations and international customs. Security is threatened by conflict and cyberwarfare, this has led to international security pacts, e.g. NATO, and the use of technology to monitor and stop crime.

Conflict

Conflict and disputes between countries are diffused by the UN security council and intergovernmental diplomacy. Economic interdependency has incentivised governments to avoid conflict as it can be economically damaging to their own country.

Cybersecurity and cyberwarfare

Cyber attacks can originate from anywhere in the world due to the globalised flow of information. Cyberwarfare is increasingly used by governments as instruments of war.

Communication as a catalyst for globalisation

It has accelerated the transfer of information, services, and capital e.g. internet and mobile phones has enabled international flow of information and money and emails provide instantaneous international communication.

What is an economy of scale?

The concept of lowering average production costs by producing a larger amount of products, thus increasing profits. e.g. bulk buying raw materials for a discount.

What is a global supply chain?

The organized management of product flows from manufacturing to delivery to consumers. Firms often have different production stages in different countries, this lowers costs as each stage is highly specialised.

What is outsourcing?

Hiring other companies to complete essential tasks that are not necessary for the company itself.

Offshoring

When a company relocates its processes abroad, this has been made easier by communication, transport, and financial flow improvements.

How do trade agreements affect globalization?

Accelerating globalisation by making international trading less expensive and easier, via reductions (or removal) of tariffs and quotas. The WTO overlooks all trade agreements (e.g. NAFTA) to ensure they are fair and not exploitative.

What are tariffs?

A tariff is a tax levied upon goods as they cross national boundaries, usually by the government of the importing country

What are non-tariff barriers (NTBs)?

Restrictions such as quotas or requirements that limit trade.

What is interdependence?

The theory that nations depend on each other economically, politically, socially, and environmentally. Globalisation has increased interdependence.

What issues can arise from interdependence?

Unequal flows of people, money, ideas, and technology can lead to inequalities, conflict and unequal power relations.

Unequal flows of people

Migrant workers fill unwanted jobs, form diasporas, and send remittances back to their home countries. However, host countries may become overdependent on migrants to fill certain jobs, and discrimination and exploitation may rise between the host population and migrants.

Unequal flows of money

FDI, aid and remittances can improve quality of life and provide higher income in LICs. HICs often get send repatriated profit and product sales. However, the unequal money flow causes injustice for some LICs and workers e.g. poor work conditions in exchange for a wage.

Relationship between migration and geopolitical ties

Countries with large diaspora populations often have strong ties with the migrants' countries of origin.

What can happen to economies reliant on remittances during a recession?

They may suffer significantly if migrants lose their jobs and stop sending money home. Remittances make up a significant portion of GDP for some countries e.g. Lithuania, Moldova and Estonia.

Unequal flows of ideas

HICs are able to dictate LICs to deregulate and privatise industries, promoting free trade. However, this can exacerbate inequality as TNCs based in HICs are able to dominate profits in privatised industries, rather than LICs using those profits to fund their development.

Unequal flows of technology

Technology that enables capital gains, e.g. machinery, flows to LICs from HIC firms hoping to set up production and benefit from lower wages (potential worker exploitation) in LICs. This means lots of consumer technology, e.g., electronics, flow into HICs (where there are higher incomes) from LICs, where production is cheaper due to economies of scale. There is a growing flow of consumer tech into NEEs where there is a growing middle class e.g. China.

Deregulation

Deregulation can lead to lower prices, greater variety and innovation. If deregulation occurs too quickly then countries may not be able to keep up and groups may be left behind, exacerbating inequality, and environmental degradation may occur.

Unequal power relations

HICs often emit more carbon dioxide and may resist global environmental agreements. HICs often control trade agreements and pressure LICs into certain deals e.g. lower taxes, reduce tariffs, or special economic zones.

Consequence of unequal power relations for LICs

LICs may lack influence over geopolitical events and can only respond to decisions made by richer countries.

Criticism of privatization in low-income countries

Privatisation does not necessarily grow an LIC's economy but funds large companies instead who often repatriate profits to HICs.

What impact does climate change have on poorer countries?

LICs are disproportionately affected by climate change-induced natural disasters and have limited influence over richer countries' policies.

What role do the IMF and World Bank play in global finance?

The IMF and World Bank reinforce unequal power relations by attaching loan conditionalities that can negatively affect the economies receiving loans, often LICs.

Criticisms of the WTO

High import duties in HICs reduce imports from LICs, protection of high-income agriculture, and underrepresentation of developing countries.

Trade and investment volume

World exports of manufactured gods has increased from US$8trillion in 2006 to US$11trillion. FDI has risen from $400bn to $1500bn in 20 years, with a growing portion of FDI going into LICs from HICs and NEEs, e.g. China, hoping to profit from lower labour costs etc.

Trade patterns

China has grown to be the world's largest exporter. HICs remain the largest exporters, while NEEs hold 41% of world merchandise trade. LICs are trading more, however their trade growth is the slowest out of all economies (they make up less than 1% of global merchandise and commercial services exports)

Fair trade

Fair trade aims to ensure producers receive better trading conditions and fair compensation for their labour and produce.

What are trade blocs?

Trade blocs (e.g. EU, NAFTA, ASEAN) are groups of countries in a trading agreement that provide mutual benefits such as reduced tariffs and quotas.

What is a criticism of trading blocs?

They limit trade to other countries, as a protectionist external tariff to non-members is imposed, this disadvantages both member and non-member countries. e.g. LICs face tariffs and quotas when exporting agricultural products to the EU due to protectionist EU policies.

Special Economic Zones (SEZs)

SEZs are areas within a country that have less strict trading regulations, lower tariffs, and lower taxes, increasing access to markets and FDI. e.g. Shenzhen in China

Special and Differential Treatment (SDT) agreements

Agreements by the WTO to help developing markets with poor access to markets by providing reduced tariffs and taxes.

How does wealth affect access to markets?

Wealthier countries can afford higher tariffs and invest in foreign markets, improving their access.

What is the effect of tariffs on LICs?

They struggle to pay high tariffs, reducing their access to international markets.

What are Transnational Corporations (TNCs)?

Companies operating across multiple countries, often based in HICs with factories in LICs where labour costs are lower.

What are economies of scale in the context of TNCs?

Economies of scale refer to the cost advantages that TNCs experience due to large revenue, allowing them to upscale production and reduce costs.

How do TNCs utilize global supply chains?

TNCs use global supply chains to increase profits by having headquarters and R&D in high-income countries while production occurs globally, often specialising stages of production where costs are minimised.

What is the difference between mergers and acquisitions?

Mergers involve TNCs joining to form a larger company, while acquisitions occur when a TNC buys another company to expand.

What is vertical integration?

Vertical integration is firms at different stages of production in the same industry merge together to integrate a production chain.

What is horizontal integration?

Horizontal integration occurs when there is a merger of firms at the same stage of production in same or different industries.

What is the primary market for TNCs?

The majority of TNCs trade with high-income countries, where the market for consumer goods is concentrated. There is a growing middle class market in NEEs such as India and China

What is global governance?

Global governance is the process of multiple nations acting together to address issues that affect the entire world e.g. climate change, conflict, famine.

Global governance on different scales

Global governance affects local, national, and international scales, with decisions made by global institutions impacting all levels.

What role does the WTO play in global governance?

The WTO sets trade agreements that influence how trading occurs internationally, affecting regions like the EU.

What are global societal norms?

Global societal norms are accepted behaviours that are developed through global governance, often concerning human rights and gender rights.

International law

When multiple countries act together to maintain global systems by creating legally binding law e.g. UN declaration of human rights. Failure to comply with international law can result in prosecution, sanctions or military action.

What impact does global governance have on environmental issues?

Global governance can set agreements at climate summits e.g. COP26 that affect emissions and environmental regulations.

What are Intergovernmental Organisations (IGOs)?

Organizations that include members from around the globe to ensure fair representation. e.g. the UN.

Positive effects of global institutions

Promote economic equality and fair representation of LICs/NEEs. IGOs such as the World Bank and IMF provide stability support for vulnerable countries, especially after a crisis, famine or conflict. IGOs can maintain societal equality by maintaining international law, help to prevent conflict and health crisis, and promote environmental stewardship.

Negative effects of IGOs

IGOs are criticised for exacerbating inequalities between HICs and LICs by over-representing wealthier countries. The IMF and World Bank give loans to developing countries with conditions that they open their economies to free trade, this can threaten domestic industry. Member countries, e.g. UN security council, can veto propositions, allowing disproportionate power to HICs in global decision making and some countries may ignore/bend the rules of global agreements, to benefit their own economy.

What is the concept of 'The Global Commons'?

Areas that do not belong to a single country, instead they belong to everyone, meaning every country has a right to benefit from the Global Commons e.g. International water, the atmosphere, outer space, and Antarctica

What is the 'Tragedy of the Commons'?

The exploitation of shared resources, e.g. overfishing, pollution, mining, and fossil fuel extraction, due to lack of ownership and regulation. This prompts the need for international law to protect the Global Commons e.g. Antarctica.

What is UNCLOS?

The United Nations Convention on the Law of the Sea, a treaty to tackle marine pollution, maritime territorial disputes and overfishing.

How do NGOs contribute to the protection of the global commons?

By raising awareness and funds for conservation efforts e.g. WWF, Greenpeace, Just Stop Oil.