Globalisation

Globalisation

the multi-strand deepening of global connections and interdependence through the flow of information, items and people impacting social, economic, cultural, political and environmental factors

Economic globalisation

spread of trade, investment and TNCs globally

Cultural globalisation

increasingly similar global trends of clothing, music and values

Political globalisation

spread of democratic supremacy and dominance of groups of countries (eg. EU)

Social globalisation

populations more fluid/mixed- immigration

Environmental globalisation

realisation of global environmental threats and need for solutions

Interdependence

success and problems of one place spread to another

Vietnam globalisation (VG)

2003

Investment capital (VG 2003)

US $119 million

People employed (VG 2003)

25,697

Exports (VG 2003)

$189.8 million

GDP in 6 years (VG 2003)

6 fold raise in GDP in 6 years

% under poverty line (VG 2003)

25% remain below poverty line

disparities (VG 2003)

Initially accelerated disparities

Flows

worldwide connections of people, good, capital, information

Containerisation

the process through which the world trade shifted use more containers

Increased size of container ships benefits

-cheaper shipping

-carry range so cheaper for seller

-commodities made bulk

-efficient

Increased size of container ships problems

-shift of economic power to Asia

-reliance on Asia as good quality shipped waste returned

-less competitors

-cost money to upgrade docks

-deeper docks needed

Online shopping benefits

-more goods available

-cheaper sellers- no store

-new ppl can sell/ be exploited

-money  for postal/ packaging ppl

Online shopping problems

- physical stores struggle

-less money in CBD

-more waste

-difficult to tax

-packaging=waste

-demand=sweatshops

Containerisation stats

320% rise in bilateral trade in first 5 years + 790% in 20 years efficiency- 1965: 1.7tonnes/hour 1970: 30tonnes/hour

Players

individuals/groups/organisations involved in making decisions (eg. about globalisation) can be national, international or local, small or large businesses ect

Trades barriers

gov policies that restrict international trade

Tariff

tax on goods/services moving across country borders

Quota

fixed amount of goods that can come from another country

Tax

money gov takes to fund gov services

Protectionism

gov trade policy where trade restricted to protect local industry from foreign competition

Subsidy

money to domestic producers/industries to help compete in markets/stay afloat

Embargo

ban placed on certain goods imported from other countries

Trade Liberalisation

1 or more countries agree to lower trade barriers

Special economic zone (SEZ)

region in nation with more relaxed business policies eg. less tax to encourage investment

Trade Bloc

international agreement where trade barriers between countries is reduced they

1) Promote free trade in member countries

2)Make trade between member countries easy

3)Negotiate trade agreements between bloc and non member countries

4)Protect bloc by placing barriers on outside traders

Benefits of trade blocs

Increase trade+access to markets

TNCs access to large market so more economies of scale and more competitive

Competitive advantage against outside TNCs

Protects firms in bloc from cheaper outside firms (eg. 2007 Bra Wars £50million China import block from EU)

Boost jobs/economic growth

More bargaining power and bulk discounts as a group

Negatives of trade blocs

Blocks trade with outside (anti- globalisation)

Trade wars

TNCs from poorer countries struggle to trade with rich blocs

Raise prices of non-bloc goods

Interdependence

Crush smaller nations/firms

Remove power from national govs (allegedly)

Economies of scale

average cost of making goods goes down as companies make them in bulk

FDI

Foreign Direct Investment (companies in other countries)

TNC

Trans-National Corporation (operates in 2 or more nations)

Free trade increases globalisation by

1) gov remove barriers= more TNCs as trade is cheaper

2)more FDI= multiplier effect=TNCs bring new ideas

3)TNCs generate wealth which increases living standards + demand for foreign products

4) more TNCs= more interconnected

Hyper-globalisers

people who view globalisation as a positive thing

Offshoring

Basing some of companies practices overseas to take advantage of lower costs

Offshoring example

US guitar company Fender opened Mexican plant in Esenada, 1987

Outsourcing

some business is contracted to be done by a company in a different country rather than by the company

Foreign Mergers

2 firms in diff countries join to become 1 firm

Foreign Merger eg.

Exxon and Mobil Merger (1998) $81bn (oil)

Foreign acquisitions

TNC launches takeover of another countries company

Foreign acquisitions eg.

2010: Cadbury taken over by Kraft

Transfer pricing

setting a price for transfer of products or services between controlled sections of a TNC (channel profits through other country for less tax)

Privatisation

state-owned businesses or infrastructure sold to private TNCs

Global production networks

link sources of raw materials, finance, marketing, and sales- headquarters mainly in high income countries

Glocalisation

global firms adapt their products for different customer appeal in local markets

Glocalisation eg.

‘McVeggie’ burgers in India due to Hindu custom

International Monetary Fund (IMF)

Short term helpers that lend money to prevent economic difficulty in a country

When was China’s ‘open door’ policy started?

1978

How did allowing FDI in SEZs change where GDP was generated in China in the 1990s?

50% was generated in SEZs.

How is FDI from China and its companies predicted to rise from 2015-2025?

$1.25 trillion

How many nations does Zara operate in?

Stores:96 Production:40

What are 3 examples of countries Zara factories are in?

Spain, Bangladesh, China

What are some examples (in Zara) of glocalization?

Middle East: focus on modesty

India: Brighter tones, embroidered details, vibrant

Europe: sharp, bold shoulders, trend driven

When and who exposed Zara child labour?

2016- BBC

When was Zara accused of sweatshops?

2011

When did Rana Plaza (factory) collapse and how many died?

2013, 1,234 died

What did China do in 1980?

Became member of World Bank + IMF and created 4 SEZs (Xiamen, Shenzhen, Zhuhai, Shantou)

In 1999 what % of China’s exports were high tech and how much money did they make?

40% $12.9 billion

What is Beijing’s air quality?

PM 2.5

What attracts companies to China?

SEZs, low minimum wage, good infrastructure and supply chains, large market, 34 major and 2000 minor ports

Corporation

business which exists separately from its owners (shareholders that appoint directors to run it)

Horizontal integration

company expands at 1 level of production eg. Apple acquired E magic to download music

Vertical integration

company controls every stage of production

What 3 things do companies need to spread globalisation?

1: Motive: profit

2: Means: money

3: Mobility: of goods + info

New economy (or knowledge economy)

GDP mostly earned through quaternary jobs

How many suppliers does Disney have?

40,000 in 70 countries

How many countries does Disney operate in?

130

Disney 2014 revenue?

$48.8 billion