GLOBALISATION

What is globalisation?

• Globalisation is the increasing connectedness of countries around the world through movement of goods, services, capital and ideas across boarders

What are the four main ways that countries have become more globalised?

• Economic / Capital globalisation - Increase of TNCs and ICT

• Social globalisation - International migration, improvements in education and healthcare and social interconnectivity

• Cultural globalisation - through western cultural characteristics dominating in some areas, glocalisation and hybridisation, and the increasing speed at which of ideas and information are circulating

• Political globalisation - The increase in trade blocs, free trade agreements and global organisations (The world bank, The IMF and WTO)

What is glocalisation?

• Glocalisation = Global products adapted for local markets

  • e.g. Mc Donald’s sells the Mc Aloo Tikki burger in India because many people do not eat beef

  • Glocalisation happens to respect local culture and religion

What is a trade bloc?

• Trade bloc = A group of countries or organisations that work together for trading purposes

What has globalisation led to?

• Lengthening of connections - Between people and places, with products obtained from further away than ever before

• Deepening of connections - With the feeling of being deeply connected to other people and places in every aspect of life

• Faster speed of connections - With the ability to communicate with others in real time using new technologies or travelling quickly between countries

What are the flows of movement?

• Capital - Money flows through the words stock markets

• Commodities - Valuable raw materials are traded (e.g. fossil fuels, food and minerals)

• Information - The internet allows real time communication between countries globally

• Migrants - The permanent movement of people → still face challenges due to boarder controls and immigration laws

• Tourists - Budget airlines have made it possible for people to travel more easy

  • These global flows have increased the interconnectedness of places, which has increased the interdependence of places

What were the important developments in transport in the 19th and 20th century?

• Steam power - Steamships and trains moved goods and armies along trade routes quickly in the 1800s

• Railways - Railway networks expanded globally in the 1800s and remains important for governments globally

• Jet aircraft - Jet aircraft made international travel easier

• Container shipping - This has been vital to the global economy since the 1950s (today, the largest container ships carry 24,000 containers)

What is the shrinking world phenomenon?

• Makes people in different countries feel closer together

  • Due to developments in technology

  • This change in perceptions can also be referred to as time-space compression

How has ICT & Global Communication developed?

• The telephone and the telegraph - Vital for communicating long distances in real time, no longer needing to wait days, weeks, months for responses

• Broadband and fibre optics - Large amounts of data (e.g. in emails and tweets) are carried across the ocean floor by fire optic cables in real time, reducing the cost of communication - data is converted into light signals

• GIS and GPS - Satellites broadcast position and time data continuously all over the world in real time which speeds up business between countries

• Mobile phones - Countries that had limited communication infrastructure have skipped the telephone and moved straight to mobile phone, enabling them to connect with other places more effectively

What is the role of international organisations on globalisation (WTO, IMF, WB)?

WORLD TRADE ORGANISATION

• 1995 - Took over from the general agreement on tariffs and trade

• Promotes trade liberalisation / free trade policies (e.g. for manufactured goods) so global trade can operate as easily as possible - this is done by reducing taxes or tariffs which help remove costs from businesses - enables global production and the trading of goods or services

• Aims to reduce trade barriers

INTERNATIONAL MONETARY FUND

• Transfer loans from HICs to countries that have applied for help

• Recipients of the loan must agree to run free market economies so TNCs can locate there easily

WORLD BANK

• Lends money on a global scale

• Gives direct grants to developing countries

How do national governments play a vital role in globalisation?

• They put strategies into place to encourage the growth of TNCs, for example:

  • Free trade blocs

  • Special Economic Zones (SEZs)

  • Tax Incentives

  • Free market liberalisation

  • Privatisation

  • Business start - ups

What are the benefits of free trade blocs?

• Free trade blocs allow governments to trade freely with neighbouring countries and allies which brings many benefits:

  • Companies grow as they get access to more customers

  • A bigger market increase demand of products and services

  • Smaller companies can mergre to form TNCs reducing production costs

What government policies encourage the growth of TNCs?

• Free-market liberalisation - Lifting restrictions for companies and banks, reducing the costs for TNCs to locate and operate in these countries

• Privatisation - selling state-owned businesses to private companies

• Encouraging business start-ups - Aims to increase profits for businesses by using strategies such as low business taxes and changes in law - for example the UK became more attractive to TNCs when Sunday trading was introduced in 1994

What are special economic zones (SEZs)?

• The industrial areas, near the coast, where favourable conditions have been created to attract TNCs → increases globalisation

What are government subsidies?

• A reason for TNCs to locate in these countries as costs will be reduced