global systems and governance - globalisation

what is globalisation?

the increasing connections between places and people across the plant, established through trade, politics and cultural exchanges and helped by technology and transport

what are some characteristics of globalisation?

• increasing integration of economies around the world, particularly through the movements of goods and services

• active exchange of goods between countries

• people and environment suffer as a result

what are dimensions of globalisation?

manifestations of globalisation occuring

what is economic globalisation?

• TNCs trade products internationally and use outsourcing and offshoring to lower costs

• industries moved to developing countries to save money on labour, brining economic growth there

• trade blocs create integration between states and promote development

• sources of income from international companies

• global transactions of money

what is political globalisation?

• governments form connections to trade such as trade deals and blocs

• deregulation policies enable markets to grow outside international reach

• international organisations exist to harmonise national economies and political relations

what is cultural globalisation?

• exposure to media sources e.g. television and social media enabling understanding of other cultures

• ability to travel internationally enables people to experience other cultures

• individuals have a better understanding of world events due to education and news

• westernisation - domination of western cultural traits in non-western areas e.g. well-known Western brands such as starbucks have branches in Asia

what is social globalisation?

• international immigration is creating multicultural societies where people share and adopt cultures

• social networking has revolutionised human connections, as tech platforms enable interactions with people living in different countries and access to international information

• global NGOs and charities are involved in the global improvement of education and health, such as WHO

what are the different flows in globalisation?

capital, labour, products, services and information

what is capital?

Capital flows are the movement of money for the purpose of investment, trade or business production.

what is labour?

Flows of labour are the movement of people who move to work in another country.

what are products?

Flows of physical goods from one country to another.

what are services?

Services are ‘footloose’ industries, meaning they can locate anywhere without constraints from resources or other obstacles. Services flow as they can be produced in a different country to where they are received (e.g. international call centres).

what is information?

Any type of information can flow from one place to another via the internet, SMS, phone calls etc. For example, international news.

what are the economic flows of capital?

can relate to investment by businesses, bank loans and international transactions

key pattern: flows between US, Canada + Western Europe was the most significant flow of capital

what are some examples of economic flows of capital?

2002 - US and Canada → hubs for flows to other regions

2012 - increase of flows to Eastern Europe and Northeast Asia → increased flow between eastern and western Europe

what are remittances?

money sent by migrants back to their home countries

how are remittances a flow of capital?

economic migration is responsible for the majority of migrants in the world, and therefore the amount of money that flows internationally as a result

what are goods of flows and services?

• becoming increasingly important e.g. middle east (fossil fuels) and sub-saharan africa (metals and materials)

what are some examples of economic flows?

• flow of remittances

• flows of capital

• flows of goods and serivces

what is international trade?

exchange of capital, goods and services across international boarders

inbound trade is defined as imports and outbound trade as exports

what are some of the factors of production?

• land = all natural resources provided by the earth

• labour = human resource available in any economy

• capital = refers to any physical resource that can be regarded as a human-made aid for production

• enterprise = a very particular form of human capital describing those who take the risk of establishing businesses and organising the production of goods and services

what is economic globalisation caused by?

• increase in free trade

• growth of TNCs

• faster, cheaper transport

• global marketing

what is economic globalisation characterised by?

long distance flows of goods, capital and services as well as information and market exchanges

what is cultural/social globalisation caused by>?

• migration

• global communication networks

• impact of western culture through media, sport and leisure

what is political globalisation caused by?

• growth of western democracies and their influence on less economically developed countries

• decline of centralised countries

what occured in the 20th century which was largely significant?

deregulation of the world financial markets meant that the activities of financial institutions such as banks, insurance companies and investment companies were no longer confirmed with national boundaries

what are periphery countries?

those with developed economies which have been exploited and negatively impacted by a lack of investment and out-migration

what are the BRIC economies?

Brazil, Russia, India and China

economies have advanced rapidly since the 1990s

what are leakage economies?

refers to a loss of income from an economic system, most usually refers to the profits sent back to home country by TNC’s

what are the MINT economies?

more recently emerging economies of Mexico, Indonesia, Nigeria and Turkey

how do flows assist emerging economies to develop/reduce disparities between core and periphery?

• international direct investment: mainly by TNCs based in one country, into the physical capital or assists of enterprises in another country

• repatriation of profits: TNCs investing in overseas products will normally take any profit back to their home country

• majority of these flows return to companies based in richer countries

• aid

• migration: majority of out-migration of labor takes place from less developed to more developed economies → exacerbate disparities as the less developed nations loose their most skilled labour who will pay taxes and spend more disposable income

what are some of the benefits of remittances?

• present a more stable, and steadily rising source of income and provide investment which fluctuates and dips during recessions

• an effective way to alleviate poverty because they go directly to families

  → reduced by the high charges made by banks/post offices for sending the money

  e.g. global average cost for sending $200 in 2019 was around 7%

how are flows of goods and services an economic dimension of globalisation?

HICs account for 60% of all goods and services exports in the world and yet have less than 15% of the world’s population

• key flow is from China, largest manufacturing hub

how are flows of labour an economic and social dimension of globalisation?

• main flow of migration internationally is for economic reasons → generally migrants move from areas with low years of schooling to higher mean years

• largest flows are Mexico → USA and India → UAE alongside this economic migration, this is creating spread of culture and social norms as a secondary impact

how are flows of people a social dimension of globalisation?

• global numbers of refugees → 2000 = 15.9 mil, 2015 = 21.3 mil

• global numbers of migrants → 2000 = 172.7 mil, 2015 = 243.7 mil

how are flows of information a social dimension of globalisation?

communication flows are a feature of global connections

• digitisation + satellite technology have revolutionised the speed at which we can communicate and the volume of information

• large contribution to expanding service and knowledge based industries

• flow + data and communication in 2013, x7 increase since 2008 → regions = northern america and western europe

how are flows of information a cultural dimension of globalisation?

homogenisation of cultures is the loss of diversity of culture between two or more cultural groups

• usually americanisation e.g. the idea of fast food

exacerbated by volume of migration taking place in the 21st century

what is glocalization?

focusing on local cultures e.g. mcdonalds have specific menus for different places

what are some examples of political dimensions of globalisation?

e.g. trade blocs - EU court and parliament → post WW2, EU started as a steel and coal enterprise zone

e.g. UN - every country accept for 3

what are some examples of environmental dimensions of globalisation?

• global atmosphere

CO2 emissions effect the whole world e.g. climate change and global warming is environmental globalisation and so is mitigation

what are some of the most important flows of capital?

• Foreign Direct Investment (FDI):

  • Around US$2 trillion annually comes from FDI by large TNCs (transnational corporations) acquiring overseas assets.

  • Growth of south–south FDI flows highlights their increasing importance.

• Global Transactions:

  • In 2017, global foreign exchange transactions reached US$6 trillion, lower than the 2007–08 peak of US$12.4 trillion.

• Investment and Trade:

  • Investment banks, pension funds, and private traders drive US$70 trillion in global trading of shares and currencies (2016 estimate).

what are the global trends of flows of capital?

• High levels of FDI (Foreign Direct Investment) originate in developed economies like North America, Europe, and East Asia (e.g., Japan, China).

• Emerging economies like India, Brazil, and Southeast Asia increasingly participate in south–south FDI flows.

• Remittances are crucial in developing nations such as India, the Philippines, and sub-Saharan Africa, sent primarily from developed nations with large migrant populations.

what are the trends in flows of capital over time?

• Increased volume of FDI: Reached US$2 trillion annually, fueled by the globalization of TNCs purchasing overseas assets.

• Peak capital flows occurred in 2007–08 (US$12.4 trillion), followed by a decline post-economic crisis to US$6 trillion in 2017.

• Significant growth in global trade of shares and currencies: US$70 trillion in 2016.

• Remittances have steadily increased as migration rises, becoming a critical income source for some nations.

what are the global trends in flows of labour?

• Migration from developing nations (e.g., South Asia, Africa, Latin America) to developed economies (North America, Europe, the Gulf States).

• Major refugee flows from conflict zones like Syria, Afghanistan, and sub-Saharan Africa to neighboring countries and Europe.

• Tourism flows are strongest between Europe, the USA, and East Asia, with growing outbound tourism from China.

what are the trends in flows of labour over time?

• Increasing global migration, driven by:

  • Economic opportunities in high-income regions.

  • Conflict and climate-induced migration.

• Growth in global tourism with an expanding middle class in developing nations (notably China and India).

• Refugee numbers have surged in the 21st century, with the UNHCR reporting millions displaced annually.

what are the global trends in flows of products and services?

• Raw materials (e.g., oil, minerals) flow from Africa, the Middle East, and Latin America to developed nations in Europe, North America, and East Asia.

• Manufacturing shifts to low-cost economies like China, Vietnam, Bangladesh, which export goods to developed economies.

• Outsourcing of services (e.g., IT, call centers) from developed nations to India, the Philippines, and Eastern Europe.

what have been the changes over time in flows of products and services?

• Growth in global trade of goods and services during the 1990s and 2000s, especially textiles, electronics, and food products.

• Rapid expansion of supply chains in Asia due to low labor costs.

• High-value manufacturing in developed nations has declined, leading to an increase in outsourcing and global trade imbalances.

• The volume of traded goods increased dramatically, with global GDP tied closely to trade (one-third of GDP in 2015).

what are the global patterns of flows of information?

• Data flows dominate from North America (USA leads with tech giants like Google, Facebook, Amazon) and East Asia (China with Alibaba, Tencent).

• Cultural flows are driven by Hollywood, Bollywood, K-pop, and the digital dissemination of media.

• Emerging digital hubs in India, Southeast Asia, and Africa are becoming integral to the global exchange of data.

what are the trends over time in flows of information?

• Exponential growth in digital connectivity due to the rise of the internet and mobile technologies.

• The volume of data flows surged in the 2000s and 2010s, powered by globalization and rapid tech adoption.

• Social media and streaming platforms have globalized cultural influences.

• Increasing focus on digital trade agreements and concerns over data security have emerged as flows expand.

what are some ways of measuring globalisation?

• government stability

• levels of development

• exports and imports

• TNC investment

• migration trends

what are the two measures of globalisation?

• KOF index

• AT Kearing index

what is the KOF index?

introduced in 2002 and covers the economic, social and political dimensions of globalisation:

• economic - long distance flows for goods, capital and, services and information in market exchanges (36%)

• social - spread of ideas, information, images and people (38%)

• political - diffusion of government policies (26%)

what are the criticisms of the KOF index?

not very modern e.g. dosen’t consider social networking and tech advancements

what is the AT Keary index?

• economic integration

• personal contact

• technological connectivity

• political engagement

• strong links to economic

what are the criticisms of the AT Keary index?

only 62 countries are part of the index - about 1/3rd of the world

what are the factors of globalisation?

• developments in transport

• developments in communication

• trade agreements/BLOCs

• security

• TNCs

• global marketing

• patterns of production, distribution and compensation

how are developments in transport (containerization) influential to globalisation?

trailer could be lifted and placed on the ship instead of break bulk shipping - saved 2 weeks in loading and unloading = minimal cost

container ship can carry nearly 20,000 containers → 5x more than cargo ships

started widely being used in the 1960s and revolutionised trade

container sizes are standardised across the world

how are developments in transport (air travel) influential to globalisation?

commercial airlines developed following WW2 which enabled people to travel more quickly to businesses and leisure

increased global tourism levels → in 1950, 5 million people travelled abroad for holiday which was over 1 billion in 2010

• developments in budget airlines such as ryanair and Easyjet in the 1950s exacerbated this

how have developments in communication influential to globalisation?

telegraph = 1833, telephone = 1876

• began to lay cables under oceans to communicate internationally

how are trade agreements/BLOCs influential to globalisation?

enhance flows between countries

BLOC - several countries implement trade agreements

e.g. Nafta - Canada, USA + Mexico

what is security influential to globalisation?

corruption + conflict = switched ‘off’ from globalisation

correlations between countries experiencing a level of conflict and lack of measure of globalisation

• security within countries encourages FDI, but investors must feel the investment is too risky

• needed as a base standard in order for global connections to begin to ‘reach’ the country

how are TNC’s influential to globalisation?

e.g. 119,000 McDonalds outlets in the world

at least 75% of world flows from TNC’s

67% of all exports are directly related to TNC’s through relations with developing countires (2/3rds of world trade)

how is global marketing influential to globalisation?

marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences and similarities in order to meet global objectives

flows in globalisation has enabled businesses to expand internationally, taking advantage of communication and transport networks in particular

• many industries are now global e.g. entertainment and tourism

how is global marketing (adaptation to local markets) influential to globalisation?

e.g. Walmart → world’s biggest retailer

11,000 stores worldwide in 26 countries outside the USA since 1991

→ social and cultural factors can represent significant barriers to success and so Walmart has adapted dynamically

China:

had to double the size of their vegetables section, produce 85 of products from local areas e.g chicken feet

Germany:

‘friendly’ meet and greet shopping strategy did not work - singles shopping night on fridays → 25% more shoppers and 30 marriages

how have patterns of production, distribution + corruption been influential to globalisation?

1954 = 95% of manufacturing occurred in industrialized nations e.g. Japan

first stages of globalisation - shifts to LICs

how have patterns of production, distribution and corruption (international division of labour) been influential to globalisation?

• highly skilled, highly paid decision-making research and managerial occupations which are more concentrated in more developed countries

• unskilled, poorly paid assembly occupations, which tend to be located in developing countries which have lower labour costs

what has been the impact of the EU on Eu citizens?

• policies to control food production under the common agricultural policy

• can determine national law through the European court of justice

• controls and allows free movement of EU citizens through member countries

• promotes trade through the EU - boosts economies

• passes out laws protecting peoples rights and the environment

• tries to even out differences in development between richer and poorer member states

what do all members of the EU have?

high GDP, HDI’s and life expectancy

what are the differences between members of the EU?

GDP’s are not equal - recent joiners in the east of europe have lower GDP’s then longer standing members

what is the economic core?

businesses thrive; people have lots of opportunities and are relatively healthy

what is the economic periphery?

on the edge of the core which have fewer industries, lower living standards and fewer opportunities for people living there

what is the economic core and periphery of the UK?

core is London and south-east whereas the North of Scotland and NE are peripheral areas

what are some attempts to reduce the different levels of development in the EU?

• common agricultural policy

• european investment bank

• structural funds

what is the common agricultural policy?

a system of subsides to farmers (typically less affluent)

goals were:

• guarantee + maintain agricultural employment

• guarantee food production

• stabilise food prices

system led to an over production of goods and left impacts on the environment but did produce reliable food supplies

what is a criticism of the common agricultural policy?

consumes a large amount of the EU’s budget without contributing much to the economy

what is the european investment bank?

bank of EU that provides finance and expertise for sustainable investment projects → tries to support EU policy objectives

have invested £9 billion into innovation up to 2012 and provided an extra £60 bn between 2013-2015 to promote sustainable growth and jobs to prevent the economic crisis across the EU

what are structual funds?

are a way for the EU to narrow gaps in development among regions → important for the EU in trying to help all countries have reasonable even social and economic opportunities

• from 2007-2013, the budget allocated to regional policy amounts to around £348 billion

what are the EU’s contribution to globalisation flows?

• trade = no tarrifs against member states and negotiates free trade agreements →flows of goods and services

• people =2019 - more than 38 million jobs the EU were supported by exports to countries outside the EU, on average 12% better paid than other jobs

• worlds biggest exporter of manufactured goods and services and is the biggest import market for over 100 countries

• single market - a free trade area that allows the movement of goods, services, people and capital across the EU → 341 million people use the euro everyday in 20 countries + phones and mobile services across the EU

what are the positive impacts of the EU on people and places?

• advantages for consumers → benefits of globalisation and trade come from imports = importers pay lower = lower prices for goods and services+ consumers benefit from a wider variety of products

• single market has created 2.8 million products

• single entity = greater global influence

• regional development - structual funds enable investment in poorer regions, reduces inequality among member states

what are the negative impacts of the EU on people and places?

• smaller economies may become more reliant on wealthier nations

• uneven benefits due to economic cores

• member states have to abide by EU trade rules, reduces countries autonomy to tarde

what is NAFTA?

was established in 1994 between Canada, the United States, and Mexico.

• primary aim was to create a trilateral trade bloc to eliminate most tariffs and promote economic cooperation between the three countries.

how has NAFTA influenced globalisation flows?

1. Trade Flows:

   • Tariff elimination led to an exponential increase in trade among member countries. For example, trade between the U.S. and Mexico increased from $81 billion in 1993 to over $600 billion by 2018.

   • North America became more integrated into global supply chains, producing goods more competitively for international markets.

2. Capital Flows:

   • Increased foreign direct investment (FDI), particularly into Mexico. U.S. companies established manufacturing plants (maquiladoras) in Mexico to take advantage of lower labor costs.

3. Labor Flows:

   • While NAFTA did not explicitly facilitate free movement of people, it indirectly influenced migration - economic disparity between the U.S. and Mexico drove many Mexican workers northward, seeking employment.

4. Technological and Knowledge Flows:

   • Sharing of technology and innovation between member countries enhanced production efficiencies and competitiveness.

what is NAFTA’s positive impacts on people and places?

Positive Impacts on People and Places

1. Economic Growth:

   • Mexico: NAFTA helped integrate Mexico into the global economy, boosting its manufacturing industry, particularly in automotive and electronics. Export-led growth contributed to the creation of jobs and an expanding middle class in urban areas.

   • U.S. and Canada: Consumers benefited from access to cheaper goods and a wider variety of products.

2. Increased Employment Opportunities:

   • Mexico’s maquiladora zones (factories near the U.S.-Mexico border) provided employment to millions of workers, particularly women, reducing poverty in certain regions.

   • U.S. agriculture benefited from increased exports to Mexico and Canada.

3. Improved Regional Cooperation:

   • NAFTA fostered closer economic and political ties between the three nations, enhancing regional stability.

4. Lower Consumer Prices:

   • Tariff removal led to reduced production costs, resulting in cheaper goods for consumers in all three countries.

what are the negative impacts of NAFTA on people and places?

• Loss of Jobs in Certain Sectors:

  • U.S.: contributed to deindustrialisation in parts of the U.S., particularly in the Rust Belt, where many manufacturing jobs were outsourced to Mexico - estimated 682,900 U.S. jobs were lost due to trade with Mexico between 1994 and 2010.

  • Canada: sectors, like textiles, struggled to compete with cheaper Mexican imports.

• Environmental Degradation:

  • In Mexico, lax environmental regulations attracted industries but led to increased pollution, particularly near maquiladora zones. Industrial waste and air pollution became significant issues.

• Exploitation of Labor:

  • In Mexico, workers in maquiladoras often faced poor working conditions, low wages, and limited labor rights, perpetuating inequality.

• Impact on Small-Scale Farmers:

  • Mexican farmers were negatively impacted by the influx of subsidised U.S. agricultural products, particularly corn. Many small-scale farmers were unable to compete, leading to rural unemployment and increased migration to cities or across the border.

• Uneven Development:

  • Economic benefits were concentrated in certain areas, such as northern Mexico, while southern Mexico and rural regions saw little improvement.

what are trade blocs?

a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

what are some of the characteristics of trade blocs?

• Special trade relationships between countries in the group, in preference to countries outside the group.

• Key goal is trade liberalisation, with the aim of establishing free trade, a customs union or common market.

• Strives to reach common positions for all its members in negotiation with third parties or other blocs.

• Tries to coordinate national economic policies of its members to minimise disruption of transactions within the bloc.

what features enable trade blocs to facilitate smoother and more efficient trade?

1.Reduction or Elimination of Tariffs: Trade blocs often aim to reduce or eliminate tariffs on goods traded between member countries → lower the cost of imports and exports, promoting increased trade within the bloc.

2.Trade Quotas: establish quotas to control the volume of certain goods that can be traded between member countries - protect domestic industries from being overwhelmed by foreign competition.

3.Harmonization of Taxes: work towards harmonizing tax policies, including value-added tax (VAT) and corporate taxes, to create a more predictable and stable business environment for companies operating across borders.

4.Common External Tariffs: implement a common external tariff (CET) on imports from non-member countries → means that all member countries apply the same tariff rates to goods coming from outside the bloc, simplifying trade policies and protecting the bloc’s industries.

5.Regulatory Alignment: Trade blocs often strive for regulatory alignment, ensuring that standards and regulations are consistent across member countries

• reduces barriers to trade, making it easier for businesses to operate and comply with regulations in multiple countries.

what are the forms of trade bloc?

• free-trade area

• customs union

• common markets

• economic + social union

• full political union

what is a free trade area?

A grouping of countries within which tariffs and non-tariff trade barriers between members are generally abolished but with no common trade policy toward non-members. 

e.g. NAFTA is an example of a free trade area.

what is a customs union?

A group of states that have agreed to charge the same import duties as each other and usually allow free trade between themselves.

what is a common market?

A group of countries imposing few or no duties on trade with one another and a common tariff on trade with other countries

what is an economic and social union?

A type of trade bloc which is composed of a common market with a customs union.

The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production and a common external trade policy.

what is an example of full political union?

the EU

what is the RCEP?

• regional comprehensive economic partnership

the world's largest free trade agreement, covering: About 30% of the world's population, About 30% of the world's GDP, and Most of Eastern Asia and Australia. 

how many people are in the RCEP?

2.2 billion people/ 1/3rd of the worlds population

• 30% of global GDP

who will benefit the most from RCEP?

China = $100b

what will the RCEP do to the US?

diminish its influence

what is the issue with the RCEP?

without India the countries may rely heavily on China - largely unequal power balance

what are the positive impacts of the RCEP?

1.Trade Growth: The RCEP has facilitated substantial trade growth among its member countries → trade between China and ASEAN countries reached approximately $817 billion in the first 11 months of 2023

2.Economic Stability: played a crucial role in stabilizing the economies of its member countries, particularly during global economic challenges. It has helped boost post-pandemic recovery and sustainable long-term economic growth¹.

3.Tariff Reductions: Preferential tariffs under the RCEP have significantly increased trade volumes. For example, Cambodia’s exports to other RCEP members surged by 27% in the first 11 months of 2023 compared to the same period in 2022¹.

4.Investment and Services: The RCEP covers various areas such as tariff reductions, trade facilitation, and the opening up of services and investment, which highlights the importance of multilateralism and an open world economy

what are the negative impacts of the RCEP?

1.Trade Imbalances: For instance, India’s decision to stay out of the RCEP was influenced by fears of widening trade deficits, particularly with China

2.Opaque Trade Practices: China’s opaque trade practices have been a point of contention. These practices can undermine the benefits of the agreement for other member countries.

3.Non-Tariff Barriers: non-tariff barriers such as complex customs procedures and logistical bottlenecks continue to hinder trade.

4.Impact on Domestic Industries: concerns about the impact of RCEP on domestic industries, especially in countries with less competitive manufacturing sectors. For example, the influx of tariff-free goods from more industrialized countries could overwhelm local small and medium-sized enterprises (SMEs)

5.Limited New Opportunities: For some countries, the RCEP does not significantly expand new export opportunities. India, for example, already has free trade agreements with many RCEP members.