Dimensions of globalisation (2)

types of capital

FDI
Aid
remittance payments
repatriation of profits
loans

FDI

foreign direct investment

= money invested into a foreign company from another company

intention of making interest

investors have a lot of influence over the operations of the company

Aid

money sent from a country/global institute to help another country in a time of need

bilateral = from another company with intention of helping other country, i.e., disaster relief

can also come from world bank/IMF

Remittance payments

= payments sent to home countries by migrants working in a foreign country

vital source of income for LICs

workers send money back to families in their home country, helping origin countries economy rather than worker's country (typically a HIC)

Repatriation of profits

= sending money back to the HQ of a TNC company from an operating branch in a foreign country

money is sent back to a typically developed HIC country of the TNC rather than contributing to the economy of the operating country

e.g., coca-cola HQ in USA, primark HQ in Ireland

Loans

money borrowed that must be repaid with interest

can be given by a country, but usually from the world bank or IMF

e.g., Greece 2008 financial emergency, received a loan from the world bank

World Bank

a group of global institutions that give loans for development and relief

IMF

international monetary fund

aim = to secure financial stability and facilitate international trade

Core - Periphery Model + Wallerstein's world systems theory

a model that represents the flows of capital between core, periphery, and semi-periphery regions (+ world bank/IMF)


builds upon dependency theory

... the idea is that countries are interdependent, but periphery regions are more dependent on core regions and are therefore disadvantaged as their development relies on the actions and decision of core regions

core regions

developed, HIC countries

send FDI, loans, and bilateral aid to periphery regions
receive repayments, interest and repatriations from periphery regions

Tiger economies
Trade blocs (NAFTA(replaced by usmca) , EU)
G7
BRICs

Hong Kong, London, New York, Paris

Tiger economies

the most globalised countries

Taiwan, Hong Kong, Singapore

"tiger cubs" = emerging globalised countries e.g., Thailand

Periphery regions

typically underdeveloped regions, LIC's

send repayments back to IMF/World Bank and core regions
receive loans, aid, repatriations, and (sometimes) investments from IMF/world bank and core regions

LIC's and LDC

sub-saharan Africa, Caribbean countries

Semi-periphery regions

developed, newly emerging regions

typically receive the most investments and FDI from core regions

may have outstanding loans from development

MINT and some BRICs

MINTs

Mexico, Indonesia, Niger, Turkey

newly emerging countries

developing economies

BRICs

Brazil, Russia, India, China

developing countries that are gaining in economic status, stability, and power

How has flows of capital contributed to globalisation

FDI = HIC influence over foreign countries, interdependence for development and interest

Repatriation of profits = allows expansion of TNCs into foreign markets (e.g., China has 2nd most pizza hut stores in the world after USA), contributes to flow of products + services

Loans = dependency of LICs and NEEs on HICs and global institutions, build relations and progresses development

Aid = builds relationships between countries which may in turn lead to trade agreements, or beneficial geopolitical arrangements, contributes to flow of ideas + goods

Remittances = enable migrants to send money home, can move to HICs for better jobs, contributes to flow of people, ideas and culture

Flows of labour - movement of people

flows of labour is essentially migration, the movement of humans

could be political, social, economical or environmental

political conflict, environmental refugees, asylum seekers, economic migrants seeking jobs + labour, better Q of L

Flows of Labour

labour is the main motivator for migration

people in LICs typically migrate to HICs for better job opportunities that have higher wages

can be highly skilled jobs or low skilled jobs
... profits can be remitted back to home country

highly skilled jobs benefit the country and the person
i.e., NHS, 38% of its workforce are trained abroad

low skilled jobs often lead to the exploitation of workers and overpopulation in the country
i.e., moving to the UK for better jobs, but having to do the jobs that no one wants as are unqualified, low wages

can also lead to brain drain in origin country

HIC's + flows of labour

the majority of international migration is migration to a HIC

14.1% of HICs populations are made up of international migrants

LIC's + flows of labour

only 1.6% of LICs populations are made up of international migrants

typically move to HICs

highly skilled jobs

= require qualifications and specialised training

can be in finance sectors, science, computer science or medicine

have to be carried out be qualified people

highly paid

e.g., NHS, 38% of workforce are trained abroad (Pakistan and India)

low skilled jobs

= don't necessary require qualifications or intense training

customer services, factory production jobs, call centres

can lead to overpopulation and exploitation as workers are underpaid and employed in illegal work

often low paid jobs

Migration in Asia (Labour)

63 million = internal migration
... mainly from SE Asia to West Asia
more high paid jobs, better Q of L and less overpopulation
e.g., UAE, Saudi Arabia

20 million to Europe
...Germany, UK, Spain and France
(Germany = highest)
=> England has a high pop. of Indian migrants that contribute to workforce

17 million to North America
... mainly to California and New York
majority = Chinese, followed by Indian and Philippine migrants

Migration in Europe (Labour)

43 million = internal migrants
Western Europe to Eastern Europe

e.g., Polish, Romanian and Czech republic migrants move to England, France and Germany

Migration in Africa (Labour)

19 million = internal migration
(majority of migrants are from sub-saharan african countries, and move to higher income countries like South Africa and Nigeria)

migrants in north Africa moving to European Mediterranean countries (Spain, Italy, Malta)
... seek better QofL, jobs, and flee from political unrest

Migration from Latin America and Caribbean to America (Labour)

26 million migrants

most of the migrants are from Mexico and Cuba and move to east coast of USA

22 million migrants are Latin American
4 million migrants are Caribbean

how does the flow of labour contribute to globalisation

Migrants = contributes to flows of people, culture and ideas

Economical: ... HICs have high skilled workforce, LICs have the remittances of profits

Social: ... interconnected + communication between countries, better QofL in HICs due to higher wages + remittances benefit economy and lives in origin country

Cultural: ... religion, diverse communities (St Paul's carnival + Afro-Caribbean community in Bristol), ideas + share of values
...global culture and community

Political: ... can benefit geopolitical relations, strengthen economies
... EU migration, can travel between countries within the EU with ease
... India and UK free trade agreement (2022), UK has a high pop. of Indian migrants

Flows of Products

= the movement of produced goods from area of production to area of consumption

increased globalisation has caused flow of products to become international

last 200 years, trade grown and transformed global economy

today, 1/4 of global production is exported
... generated gains but has distributional consequences

e.g., 2015, value of world trade of food and manufactured commodities was $25 trillion

Past patterns of production

produced goods were manufactured by high income countries due to them having access to resources (factories and ability to buy materials)

products were usually sold within they country they were produced in

Deregulation and the change in patterns of production

= a shift in product flows from internal (within the country) to international

- international trade has now created major product flows between LICs and HICs

- technological advancements

- decrease in manufacturing in HICs + higher prices of products in HICs due to transportation cost

e.g., employment in manufacturing in UK has decreased by over 3.4 million jobs since 1985

Globalisation

"the process by which people, their cultures, ideas, money, goods and services can be transferred between countries with few or no barriers"

Dimensions of globalisation

Capital, Labour, Products, Services, Information

Flows of Capital

the movement of currency and money

capital = all the money that moves between countries that's used for investment, trade, or production
i.e., stock market

2022 daily volume of foreign exchange = $6.6 trillion (40% lower than pre-pandemic)

technological advancements and flows of products

technological advancements (transportation and communication) mean that products can now be produced in LICs

.... beneficial to manufactures

1. lower labour costs
2. less restrictions
3. lower materials costs
=> offshoring

factors increasing the flows of products

Transport:
- reduction in transaction costs
- reduction in transport cost and time
e.g., containerisation

Communications:
- trade agreements and relationships

Technology:
- faster air travel
- repatriation of profits
- online transactions
- stock market

Containerisation

Movement of goods using ships/transport using standard containers


able to move large volumes of products at cheaper prices

e.g., HMM Algeciras, 24,000 containers

Changes in flows of products - NEEs

as emerging economies grow, so does the amount of wealthier middle class civilians (Newly Emerging Middle Class - NEMC)

... leads to an increasing demand for materials and manufactured products in growing consumerist societies

e.g., first apple shop opened in china (2008), now there are 57 stores open in 2024
= shows demand for consumerist products

how do flows of products contribute to globalisation

Economical: repatriation of products due to offshoring and increased flows of capital, investments and FDI in LICs
... unequal power relations due to influence of TNCs

Social: jobs for people in LICs, wages to support family, NEMC
... low wages, exploitation and poor working conditions, health

Cultural: share of global products, westernisation e.g., Apple stores in China

Political: increased coordination between countries
... trade agreements, trade blocs, geopolitical relations
e.g., banana trade wars

developments in transportation and technology have aided the increase in flows of products

Flows of Products - trade

trade has grown over the last century
... exports in 2014 were 40x larger than in 1913

- up until 1870, worldwide exports were less than 10% of global output

- 2014, value of exported goods was near 25%

trade is a fundamental part of economic activity
... countries exchange final products and intermediate inputs, creating networks of economic interactions

why has trade grown?

Higher levels of communication, transport and capital make it possible to exchange products

increased integration of economies

trade is a fundamental part of economic activity
... countries exchange final products and intermediate inputs, creating networks of economic interactions

WTO

world trade organisation

theory of comparitive advantage

Ricardo's theory

= a country can specialise in manufacturing one product

specialisation and free trade will benefit all trading parties

impacts of covid on world trade (Products)

2020: global trade reduced by 20%

2023:
- Trade between US and china shrunk by 15% from 2019 levels

- Trade between US and EU will grow but lower than $135 billion surge in 2015-19

- Trade between EU and china shrunk by $30 billion from 201

Flows of Services

= the transfer of economic activities which are traded without production of material goods

- high level of service to businesses
- low level services to consumers

grown due to ability to transfer information globally

... no longer has to be tied down to exact location due to internet

High level services - Flows of Services

= activities that generally require a higher skill level, usually important and complicated, meaning the person delivering the service should be qualified and trained so that they can deliver the best service possible

e.g., financial services
... those who give financial services are usually trained and fully qualified as they should be well-informed to make decisions about money

e.g., finance, investment, advertising

Low level services - Flows of Services

= services that require less training and are not as important to consumers
... usually customer service based

e.g., call centres
... workers only need basic training to offer advice or sell products

e.g., banking, travel, tourism, call centres, communication services

Distribution of high and low level services

high level services = usually concentrated within HICs
... increasingly locating to global hubs within cities

(can also be cities in NEEs)

e.g., London, Paris, Moscow, Hong Kong, Singapore, Rio de Janeiro


low level services = outsourcing in order to take advantage
... HICs can utilise lower labour costs for less vital tasks

e.g., calling up a customer service centre in India
=> has developed global connections and accelerated globalisation

How do flows of services contribute to globalisation

Economical: outsourcing of TNC's, capital, expansion into global markets

Social: migration and flows of labour
... economic migrants, seeking high skilled + high paying jobs in HICs
... can communicate with people in different countries, technology
(may lead to brain drain)
... jobs for people in LICs (low wages, low skilled)

Flows of Information

= governed by the movement of people through migration and by speed of data and communication transfers

... digitalised and satellite tech transformed flows

e.g., phones, internet, live media coverage, on-demand tv, online platform

... becoming increasingly significant, especially in the expansion of knowledge based economy

different types of information flows

- fast broadband and connections
- social media
- real time data
- large databases and archives

fast broadband and connections - flows of information

= allows news and financial information to be transferred almost instantly, allowing people to be more informed about global current events

social media - flows of information

= has allowed people to communication across countries and allows people to experience other cultures, making people across the world more interconnected

e.g., 400 million tweets a day

real time data and data transfers - flows of information

= contribute to the "knowledge economy" (quaternary industry)

... is essentially the industry that requires information to develop rather than products

=> the ability to transfer information has created developments in stock markets, high tech products, the education sector, and many areas of society

large databases and archives - flows of information

can be used for research and education

... the ability to research allows people to seek better employment opportunities
=> creates more global connections and allows online working from home jobs

How do flows of information contribute to globalisation

economical: stock market (real time data), FDI, TNC info based off of databases and archives, cryptocurrency and finance, operation of TNCs in foreign countries (offshoring)

Social: communication, share of ideas via social media, education, NGOs operate based off of databases in LICs, 400 million tweets a day

Cultural: share of ideas and values via the internet and social media, knowledge of current events and news (broadband and connections), research and knowledge of other cultures (databases and archives)

Political: increased communication between countries, news and and current affairs to base geopolitical ideas off of,