GLOBALISATION

Globalisation

Globalisation

Increasing inter

TNC

Trans

MNC

Multi

FDI

Foreign direct investment

Economic Causes for Accelerated Globalisation (4)

Political Causes for Accelerated Globalisation (3)

Migration as a cause for Accelerated Globalisation (2)

Cultural Causes for Accelerated Globalisation (1)

Americanisation and Westernisation spreading to other parts of the world

Technological Causes for Accelerated Globalisation (2)

Flow of Commodities as a Cause for Accelerated Globalisation (2)

Economic Globalisation (3)

Political Globalisation (3)

Cultural Globalisation (3)

Social Globalisation (3)

Lengthening of Connections

People can now travel further afield and goods are brought in from further away

Deepening of Connections

Where connections are penetrating more in depth into most aspects of life

Faster speed of connections

People can now talk in real time from different parts of the world and you can travel much faster than previously between different countries

Increasing globalisation throughout history

1712 = steam engine 1866 = telegram cable 1876 = telephone 1985 = mobile phone

Containerisation

Movement of goods using ships/transport using standard containers Costs fallen 100% since 1950s

Mass Air Transport

1970 = jumbo jet (524people) Open Skies Agreement resulted in increased competition and lower prices Air freight increased 15% since 1970

Flows in globalisation (5)

Capital Flows

Movement of money for the purpose of investment, trade or business production

Labour Flows

Movement of people who move to work in another country

Product Flows

Flows of physical goods from one country to another

Service Flows

Services are 'footloose' industries (can be located anywhere). They flow as they can be produced in a different country to where they are received

Information Flows

Data that moves from one place to another through the internet, SMS etc.

Global Shift

Relocation of industry that has moved towards Asia from 1980s Due to open

Imperialism

Country that doesn't directly rule another but influences economically (USA)

Sahel Region

Area of West Africa just south of the Sahara Desert Long term political instability leading to poor investment High levels of corruption and uncertainty makes it unattractive for FDI

Sahel Region GDP and HDI

Chad

Environmental Reasons for being Switched off

Sahel Region (3)

Physical Reasons for being Switched off

Sahel Region (3)

Economic Reasons for being Switched off

Sahel Region

Why may global flows be a threat for some countries? (3)

Functions of the IMF

Cons of IMF

Function of the World Bank

Cons of the World Bank

Function of WTO

Cons of WTO

Free Market Liberalisation

The process of removing government control and opening up markets to private companies

Why does Free Market Liberalisation occur?

It is believed that government intervention in the markets hinders economic growth and development in the long term

Example of Free Market Liberalisation

Privatisation

When a private companies buys state owned services and operates them. Allows the government to raise a lot of money.

Encouraging Business Start

ups

Offshoring

Setting up production facilities within another country. This is usually in countries with cheap labour forces.

Outsourcing

When a firm signs a deal to obtain a product or service from another supplier. This is done to lower production costs

Foreign Merger

When TNCs join together to make one larger company

Foreign Acquisition

When a TNC purchases another company. Usually done in a hostile way to reduce competition.

Transfer Pricing

TNCs transfer their profits through subsidiaries in tax havens

Censorship

Restriction of information and knowledge flows by the government by using state controlled media outlets and internet restrictions.

Limiting Migration

With an increase of extremist views, more countries are adopting strict migration control

Trade Protectionism

Implementation of subsidies, tariffs and quotas within a country to help protect domestic industries

Trade Bloc

A group of countries that work together in order to reduce restrictions of the flow of capital and goods

Benefits of Trading Blocs (3)

Disadvantages of Trading blocs (3)

The EU as a trade bloc

ASEAN as a trade bloc

Similarities between the EU and ASEAN

Special Economic Zones (SEZs)

Areas in China where TNCs receive special tax. They are also tariff and quota free.

How are SEZs attractive to FDI? (5)

China Open Door Policy

Policy change = Free

Impact of China's Open Door Policy

Why is trading expensive? (4)

Restrictions and controls which include:

Example of a trade agreement

NAFTA

KOF Index

Measures globalisation of countries for political, economic and social indicators. Measured on a scale from 1 to 100. (100 = Most Globalised)

KOF Index

Political

KOF Index

Economic

KOF Index

Social

AT Kearney Index

Measure of globalised cities. It considers economic, personal, technological and political factors.

AT Kearney Index

Economic intergration

AT Kearney Index

Personal contact

AT Kearney Index

Technological activity

AT Kearney Index

Political Engagement

Simple Measure

Based upon one factor. Most commonly statistical measures of wealth and productivity.

GNI (Gross National Income)

Total value of money earned by individuals and businesses within a country. This also factors in values of imports and exports.

PPP (Purchasing Power Parity)

The buying power of income in a country

Income Per Capita

Average income of a person within a country. This method hides inequalities

GDP (Gross Domestic Product)

The total value of goods and services produced in a country

Issues with GDP as an indicator (2)

Composite Measures of Globalisation (2)

Gender Inequality Index (GII)

Measures female participation and treatment in society and takes into account

Human Development Index (HDI)

Measure of social development within a country

TNC Economic Activity and Employment

Account for 25% of World's economic activity Only employ 1% of World's population

How do TNCs create links through FDI?

Investment within other countries Provide jobs and contribute towards the economy

How do TNCs create links through integration?

TNCs expand by mergers with other companies or takeovers.

Horizontal Integration

Joining with a firm in the same stage of the production process. This can create monopolies.

Vertical Integration

Joining with a firm in another stage of the production process. This enables TNCs to expand into new markets

Implications of TNCs Example

Natural Disasters (2011 Japan Tsunami) can disrupt supply chains Due to the interdependence developed by TNCs. Lead to a decrease in productivity and profits. Affected Nissan Sunderland due to lack of parts arriving from Japan.

Glocalisation

Adaptation of goods and services to meet local needs or tastes

Examples of Glocalisation (3)

Benefits of Outsourcing (3)

Costs of Outsourcing (3)

Sweatshops

Previously accelerated China's economy. They have moved to countries such as Vietnam and Bangladesh due to China having a bad reputation. New, higher tech industries have developed in China

Benefits of Manufacturing in China (2)

Costs of Manufacturing in China (3)

Services in India

Services in India

Economic Facts

Why does Rural

Urban Migration occur?

Urban Pull Factors (3)