3.2.1.2. Global Systems

Global interdependence

Mutual reliance at a local, national and international scale through economic/political/social/environmental systems

Flows within a global system

Technology, people, capital, ideas

Economic interdependence features

Countries specialise on comparative advantage (export markets, imports of resources show dependence)

How large is the World Trade Value and what % of global trade moves by maritime shipping (economic interdependence)

$28 trillion, 80%

TNCs features in economic interdependence

80% of global trade controlled by TNCs which create global production networks. Apple is designed in the US, assembled in China and components from South Korea and Taiwan

Political interdependence features (±)

Global governance institutions used to avoid conflict and regulate trade. Power unevenly distributed and dominated by HICs

Social interdependence cause

Migration (labour demand, conflict, environmental stress)

How many international migrants are there and what are the remittances worth

304 international million migrants with remittances worth $831 billion

Effect of sending migrants from a country in social interdependence

Brain drain, dependent on remmitances

Effect of receiving migrants into a country social interdependence

Labour shortages filled, cultural diversification (discrimination)

Environmental interdependence features

Ignores national borders with the top 10 emitting nations releasing 70% of co2 and the LICs experiencing 75% of climate deaths

International Financial Institutions defintion

Support structure of world economic order by regulating flow of capital

International Financial Institutions examples

International Monetary Fund, World Bank

International Monetary Fund strengths

Provides loans to crisis countries, stabilises global economy

World bank strengths

Long term development loans, infrastructure/education/healthcare, $1 trillion invested since 1944, encourages bottom up business

International Monetary Fund weaknesses

Cuts healthcare/education, prioritises creditors (GDP of Greece fell 25% and 28% unemployment in Greece)

World bank weaknesses

Debt dependent, environmentally damaging projects (hydro-electric dams)

World Trade Organisation aims

Regulate global trade and act as an arbitrator for trade problems

Advantages of World Trade organisation

Reduce tariffs, Increase predictability, integrated China into economy (global trade grew 3x faster than GDP)

Disadvantages of World Trade Organisation

Favours HICs with complex legal processes, allows agricultural subsidies in US which distorts markets - $250million annual cotton losses for Mali

Effect of unequal flows of money

FDI creates jobs, Provides aid after disaster. Reparation of profits back to TNC, uneven distribution of FDI (>3% Africa), conditional loans to LICs cause implement of HIC ideas like deregulation

Effect of unequal flow of ideas

Free trade decreases the risk of international conflict. Westernisation, sovereignty threat

Effect of unequal flows of technology

Economic development in LICs when invested. Digital divide (<40% internet access in LICs) limits ability to compete

Outsourcing

Jobs relocated to LICs for lower wages and fewer regulations

Outsourcing weaknesses (with case study)

Job loss, deindustrialisation, Exploitation (1,134 dead Rana Plaza)

Strengths of outsorucing

Employment in new areas, female empowerment

Inequality issues between countries

HICs dominate (top 20% of countries control 80% of wealth), Interdependence reducing gap

Inequality within countries

Skilled workers and urban populations favoured, de industrialised areas and low skilled workers disadvantaged, London GDP 56,000 compared to 22,000 NE

Geopolitical issues

Energy dependence, Supply Chain Vulnerability

Energy dependence example

40% of EU gas from Russia before war, weaponization of energy escalated the conflict

Supply chain vulnerability example

PPE shortages during Covid 19 shows that interdependence increases efficiency but reduces resilience

HIC domiance in driving global system

Institution dominated by HICs like the IMF decisions determined by largest donor so they can set trade agendas . WTO has complex legal processes to favour HICs.

LIC weakness in global systems

LICs lack capital to intervene, LIC must accept conditional loans which can cause effects e.g Greece, Lack sanctioning power on other nations

HIC influence on global events

UN security council can veto power (Russia made UN response difficult in 2022), Weaponization of interdependence