Geography of the Economy

A comprehensive set of flashcards on the geography of the economy focusing on key concepts, theories, and their implications in the context of globalisation.

What is meant by the 'geography of the economy'?

The study of how economic activity is organised across space, shaped by globalisation, trade, power, and uneven development.

What major change occurred in the global economy from the 1970s onwards?

A qualitative shift in the world economy towards deeper economic interconnectedness, with production and trade spread across multiple countries.

Why is economic globalisation considered a relatively new phenomenon?

Because recent crises (e.g. 2008) show unprecedented levels of global functional integration and rapid contagion across economies.

Why is the 2008 financial crisis evidence of economic globalisation?

Because it began in the US and rapidly spread worldwide, demonstrating deep global financial and economic integration.

How does the US–China trade war illustrate global economic functional integration?

Functional integration = different parts of the global economy are specialised but dependent on each other

The US-China trade war is the result of the US trying to ‘decouple’ from China, i.e., attempting to separate national economies from one another (e.g. moving production out of China).

• US firms (Apple, Nike, Tesla) design products in the US

• Manufacture them in China

• Sell them largely to Western consumers

What are the three main theoretical perspectives on globalisation?

Hyperglobalists, sceptics (internationalists), and transformationalists.

Who are hyperglobalists?

Theorists (e.g. Ohmae) who argue that a single global economy has emerged (by the end of the 80s) and national borders no longer matter - follow the idea of ‘end of geography’ because location and distance no longer matter.

• Deregulation of the national economy during the 1970s = dominance of MNCs and global finance

What do hyperglobalists mean by the 'end of geography'?

That distance, location, and national borders no longer constrain economic activity.

How do hyperglobalists view the role of the state (nation-state)?

As declining in importance due to deregulation and the dominance of multinational corporations and global finance.

What did Ohmae hyperglobalist view?

• The view that present global economy is borderless. Information, capital and innovation flow all over the world at top speed, enabled by technology and fuelled by consumers’ desires for access to the best and least expensive products (Ohmae 1995)

What is neoliberalism? and how does it link to hyperglobalism?

Neoliberalism: A belief in free markets as a result of deregulation, reduced state intervention, and pro-business policies, which hyperglobalists see as spreading global prosperity.

What do sceptics argue about globalisation?

Globalisation is overstated and is largely a continuation of historical trends rather than a new phenomenon.

• globalisation is a myth and neo liberal ‘discourse

Why do sceptics say globalisation is a myth?

Because most TNCs remain nationally based and states still regulate markets.

What is often described as “globalisation” is exaggerated — the world economy is not truly global, but international and regionally organised.

However, what sceptics arent saying:

• nothing has changed

• countries are isolated

What is the core argument of Sceptics internationalists?

Sceptics (e.g. Hirst & Thompson, 1999) argue that:

• National governments still regulate markets

• states control taxation, labour laws, welfare, and bailouts

• crises are managed by states, not global markets

Example:

• 2008 financial crisis

• Bank bailouts were organised nationally (e.g. UK, US, EU)

Most TNCs are still nationally based:

• Most TNCs have a clear home base

• strategic decisions remain nationally rooted

• firms depend on home-state support

Example:

• Walmart → US-based

What historical period do sceptics compare to today’s global economy?

1890–1914 (the age of empire), when trade and migration were also highly globalised.

How do sceptics view inequality under globalisation?

Sceptics believe that globalisation exacerbates disparities, leading to greater inequality - it increases uneven development between the Global North and South and development gaps between wealthier nations and developing regions.

What is the transformationalist view of globalisation?

Globalisation is a long-term process that has recently intensified, reshaping relations between states, corporations, and places - recognition of recent qualitative shift

e.g., Dicken argues globalisation did not suddenly begin in the late 20th century

• it has been developing over a long period

However, something qualitatively different has happened recently (qualitatively meaning changing in the kind, not just the amount)

what has changed:

• how deeply states, corporations, and places are connected

• how power is organised across scales

What kind of qualitative shift does transformationalist argue has occured?

They believe Shallow integration to deeper integration has occured occurred, they explain what kind of change has occurred.

the Shallow integration was:

• Basic trade between countries

• limited cross-border interaction

• production mainly within national borders

Deeper integration:

• global supply chains

• foreign direct investment

• TNCs controlling production across many countries

• finance linking economies in real time

Economies are now functionally integrated, not just trading with each other

Why do transformationalists reject the idea of a 'borderless world'?

because Transformationalists reject the hyperglobalist idea that:

• The world is becoming a uniform, single economy

• Geography no longer matters

• borders have disappeared

Instead, they argue:

globalisation produces difference, not sameness - Some places benefit more than others, which creates inequalities between countries and within countries = therefore there are borders

How do transformationalists view governance in globalisation?

Rejects the idea that new global markets are uncontrollable.

Instead suggests governance structures can shape and regulate globalisation. However, this is done so unevenly.

How has trade grown compared to output since the 1950s?

Trade has grown much faster than output of merchandise, indicating increasing global integration.

Why does global production increase trade volumes?

Products are made using components from multiple countries, requiring extensive trade between suppliers = products can be made faster and at a higher quantity.

What does Apple illustrate about global trade?

A single product relies on parts from many countries, increasing trade flows and functional integration.

Why does globalisation not mean equal integration everywhere?

Because trade and production are regionally concentrated despite global connections.

Concentrations includes:

• Europe: 70% of europe trade is internal Asia: 57% internal and North America: 38% internal trade

They act as economic hubs which creates unequal trade elsewhere

Result of:

• Location (proximity) - shorter distance; lower transport cost

• Trade agreements

• Development level

What proportion of Europe’s trade is internal?

Around 70%, showing strong regional integration.

How has FDI grown compared to trade?

FDI has grown faster than trade, indicating deeper integration of production because of rise in MNC/TNCs (now account for 2/3rds of world trade)

RESULT OF:

• fragmentation of production

• Political policies encourage investment e.g., China in pearl rivier delta

• FDI can be internal

2011: 30% of global GDP driven by stocks of FDI

What role do TNCs play in global trade?

They account for over two-thirds of world trade.

What are structural imbalances in the global economy?

persistent, built-in inequalities in how the global economy works.

• Some countries consistently export more than they import → surpluses e.g., china

• Others consistently import more than they export → deficits e.g., USA

• Globalisation has meant integration produces uneven patterns of trade and finance

• Some places specialise in production

• Others specialise in consumption

How do deficits and surpluses interact globally?

Deficit countries (e.g. USA) borrow from surplus countries (e.g. China).

Why do these imbalances increase vulnerability?

They create dependency and increase the risk of economic contagion

How is the geography of the global economy changing?

Economic power remains concentrated but is increasingly shifting towards Asia

(remarkable growth in developing coutnries - china and hong kong alone account for 30% of all inward FDI

USA still dominates but less so

Why does the global economy remain highly concentrated?

Most production and FDI still originate from a small number of countries e.g., the USA, Germany, and Japan.

What is the significance of China’s rise?

China has overtaken the US in manufacturing but the US remains dominant in services and investment.

What are 'persistent peripheries' in the global economy?

Regions that remain marginalised from global economic growth e.g., much of africam parts of Asia, and Latin America aren’t fully integrated into the global economy and often lack access to necessary resources and infrastructure.

With sub-saharan africa being the largest areas of economic peripherality

Where is the largest area of economic peripherality?

Sub-Saharan Africa.

Why is there still hope for some peripheral regions?

Commodity exports offer opportunities for growth in countries like Ghana and Nigeria.

What is the main conclusion of the geography of the economy lecture?

Globalisation has intensified economic integration, but it remains uneven, geographically concentrated, and shaped by power relations (some states have more power than others in influencing globalisation)