HL Extension short test

globalisation

globalisation

the expansion of global linkages organisation of social life on a global scale, and growth of a global consciousness, hence consolidation of world society

economic globalisation example

international monetary fund - provides loans and financial support for developing countries

political globalisation example

trading blocs e.g. EU

social globalisation example

international immigration - broad family networks all over the world

cultural globalisation example

cultural districts - overlapping culture; losing specific identity of both cultures and merging into one

KOF index structure

36% - economic flows, 38% - social, spread of ideas etc, 26% - politics (measured by the degree of political cooperation)

KOF index values

Includes cultural proximity in its data

concerns the political dimension,

takes into account trade restrictions and protectionist policies,

simple to use (scale ffrom 1 to 100)

KOF Index limitations

doesn’t take into account the wider global presence of companies,

data from each country will have to be manipulated specifically to each country (different data sources) - potential inconsistencies in the way countries are treated

doesn’t consider environmental globalisation

reasons for global super power

Ability to influence policy on a worldwide scale

developed to exert economic, cultural, military and geographical influence on the rest of the world

reasons for US to be global super power

the most advanced military technology in the world

extensive military bases, reaching overseas

growing production of aircraft, tanks, ships and weapons

reasons for China to be super power

major impact on the trade between other superpowers and geographical regions

China’s demand for raw materials for this economic boom had a major impact on world markets in oil, iron ore, metals, petrochemicals and machinery

IMF

International Monetary Fund

role of imd

Oversees the global financial system by following the economic policies of its member countries and by lending money to states with financial difficulty

imd criticism

IMF policy makers supported military dictators friendly to American and European corporation

It is said that the IMF is generally unconcerned about democracy, human rights and labour rights

There are delayed responses from IMF to financial crises and the organisation tends to only respond or even sometimes create them, but not prevent it

role of the new development bank

Supporting public or private projects through loans, guarantees, equity participation and other financial instruments

the new development bank criticism

Poor nations no longer have to agree to lending terms of US-dominated IMF and World Bank → more democratic world order

Less experience compared to the IMF and World Bank of managing global economic systems

loan

money borrowed from an individual, government or organisation repayable with interest over a specified period of time

oda

official development assitance loans

official development assistance loans

use of borrowed funds with required payment (the donor is unlikely to provide loans for projects that may fail)

debt relief

the partial or total remission of debt by the lending body

SAP

structural adjustment programme

structural adjustment programme

loans requiring the borrowing country to cut its government expenditure, reduce the amount of state intervention in its economy and promote liberalisation and international trade

HIPCs

The Heavily Indebted Poor Countries initiative

The Heavily Indebted Poor Countries initiative

Relieving certain low income countries of their unsustainable debt to donors + promoting reform and sound policies for growth, human development and poverty reduction

aid

the transfer of resources at non-commercial rates by one country or organisation, to another country

remittances

money sent back home by migrants working in a foreign country

FDI

foreign direct investment

foreign direct investment

a firm that owns or controls productive operations in more than one country through foreign direct investment

oda characteristics

use of borrowed funds with required payment

oda’s role in economy

Provides financial stability and high chances of project development

sap characteristics

loans requiring the borrowing country to cut its government expenditure

sap’s role in economy

reduce the amount of state intervention in its economy and promote liberalisation and international trade

HIPCs characteristics

promoting reform and sound policies for growth, human development and poverty reduction

HIPCs’s role in economy

Relieving certain low income countries of their unsustainable debt to donors

aid characteristics

Total(2021) → $202 billion; gift of money, goods or service to a developing country and doesn’t need repayment

aid’s role in economy

supports better economic and social policies

help expanding the needed infrastructure

provides resources for capital investment

remittances characteristics

International migrants → 270 million

Total remittance value → $626 billion (3x more than aid)

remittances’ role in economy

improved balance of domestic and foreign payments prevents deflation

increased investment - it’s major source of capital for investment in the recipient country → boost in economic growth

fdi characteristics

controls investments made in foreign country (the investor owns 10% of voting rights in the company)

transfers technology and expertise as a investment into foreign companies e.g. management techniques, restricted technology

fdi’s role in economy

job creation - due to new businesses, there are created new job placements local residents

infrastructure development - investment into infrastructure development in domestic country e.g. investment into transportation, energy and communication systems (benefits facilitate business operations)