Edexcel A Level Geography - Globalisation

The death of distance

With increased globalisation, distance is now no longer an obstacle - companies can source from overseas very easily

• Everything can be accessed from anywhere, and if this is the case, then a society can be considered truly global

Logistics, transport and communication are so efficient now that this shift has been deemed “the death of distance”.

Much easier to outsource and offshore than ever before, so fewer low-skill jobs available in the UK → social disadvantage of globalisation

Outsourcing vs Offshoring

Offshoring - Moving a part of a corporation to another country, which has the competitive edge over the source country. It sends in-house jobs to another country

Outsourcing - Contracting specific jobs within the company to third-party providers (usually but not always in another country)

Types of globalisation, trade organisations

Example of open-market economy - The US stock market, as there are no geographical barriers, and everyone is offered the same prices no matter where you are from.

• FDI has increased over 100x since 1970

• The richest countries in the world often meet to discuss important matters, and this impacts how TNCs trade, and the general state of the world economy (G7, G20 summits)

OPEC is a trade organisation that adjusts the supply of oil to stop volatility of oil prices. Critics claim that it “brings pain to the west” and “monopolises the oil industry” as the vast majority of the world’s crude oil reserves are under the control of OPEC

• Not many developed countries are part of OPEC as this regulating and monopolising of prices would be considered business malpractice.

Barriers to trade

Organisations such as the WTO are pushing against barriers to trade, however some countries and leaders feel that having a completely open market would cause lots of areas experiencing economic growth to stagnate, and lead to the demise and death of the true nation state. In the current economic outlook, this will not happen.

Tariffs - a tax on an import - it costs the company more money if they import a protected good from overseas

Quota - Only allowing a certain number of a product to be sold or imported

Subsidy - Benefit given by the government in order to increase desirability for domestic goods or services

Why are barriers to trade put in place?

• It would be beneficial to companies if they could just get the lowest price available on everything, however governments impose trade barriers to:

  • Raise revenue, and protect domestic jobs and industries (particularly in unskilled work where factor mobility is low)

  • Exert political leverage over another country - you may not want your local consumers using products from and indirectly funding the economies of your adversaries, and therefore impose barriers to trade on these goods.

So while trade organisations and governments are the most key of players, NGOs also make an impact on the trade scene:

• Organisations such as Amnesty International and Greenpeace attempt to bring to light previously unseen issues - be that environmental or political (such as plastic pollution or genocide in an area)

Since the 1980s, trade barriers have been gradually (mostly) lifted, in a process called economic liberalisation - this is a huge catalyst for globalisation, as now businesses can offshore easily, without facing barriers.

Case studies: exploitative practices

Bhopal Gas Tragedy

• Regulations were not followed, which led to a tank of poisonous gas that was far more full than was recommended. As such, when water was added to this gas, a deadly reaction was created, and the tank was too full to send in any other reactant to nullify this.

• Over half a million people were affected, and the blame falls squarely on Union Carbide for exerting malpractice by not installing coolers, not checking how full the tanks were etc. The corporation was charged with homicide.

• Soil near the factory is still contaminated

Rana Plaza Collapse

• Worst incident in the garment industry to date

• Rana Plaza was a building in Dhaka with lots of shops, and a factory on the top floor

• The building’s structure was found to be unsafe, and cracks in the building were shown and broadcast on local news. This caused the shops to close down the following day, but workers in the factory were threatened with loss of their salary for that month to come into work. Due to this pressure, around 5,000 people went into work that day. By late morning, the building had collapsed, and over 1,000 people died.

Plachimada Coca-Cola struggle

• The Coca-Cola factory in Kerala was using water from local wells and therefore water available to locals became contaminated and toxic

• The factory was open for 4 years despite protests

• The factory also passed on toxic waste from the factory to local farmers as “fertiliser”, - which created contaminated soils and crops, leading to adverse health effects and a reduced harvest. The factory finally closed after 4 years, but safe drinking water is still somewhat scarce in the area as a result.

Aral Sea

• What used to be one of the world’s largest lakes is now a shell of itself, split into 4 smaller lakes.

• It is regarded as one of the first examples of total ecosystem loss due to malpractice

• The Soviet Union in the 1960s opted to divert rivers that were providing water to the Aral Sea. This meant water was flowing out of but not into the lake, and the salinity of the water dramatically increased, meaning that fish populations died out.

Lake Peigneur

• Now the deepest lake in Louisiana at 60m, it used to be a small freshwater lake of 3m deep. There was a salt mine in the vicinity, and Texaco were drilling for oil near the salt mine, as some had been found accidentally when looking for salt.

• Texaco were drilling in the wrong place, and therefore punctured a hole in the side of the lake, causing water from the lake to flood into the salt mine, and dissolve all of the salt in the process.

• No casualties were recorded, as all workers of the mine could evacuate through the only lift. The nearest canal was reversed, leading to the temporary creation of the largest waterfall in Louisiana

• 10 barges were sunk, and species that used to be found in the lake are now no longer.

• Texaco paid $32 million in reparations

Technology’s impact on globalisation

Technology is becoming more widespread and global, and this means that culture, information, ideas and innovation can travel across borders very quickly and easily. This leads to an increase in globalisation, but also of Western culture spreading, as Western developed economies tend to own the large multimedia companies that spread information and own the social media platforms. This can lead to selective globalisation, such as in China where certain elements of the internet are censored, but a lot is not.

• With more global monopolies, particularly in the technology world, there is less desire for innovation, and consumers are less well-served as dissenting views and competing services are less likely to be found.

Causes of globalisation

• Frank’s dependency theory - core/periphery model by which raw materials are passed into the core by the periphery, and then distributed for profit by the core, and he claims that this will never change through economic change or growth.

• Switched off - unable to fully join a globalised world due to trade barriers against the economy or corruption, as well as lack of preparation for embracing new ideas and innovations, leaving these economies on the proverbial back foot

• Neo-colonialisation - countries’ largest companies being taken over by huge TNCs such as Tata from foreign emerging countries.

Some countries who are poor in natural resources are rich in other resources (such as having a huge labour force), and this can lead to economic growth also.

In the past (Frank’s dependency theory), resources used to travel into developed countries in the core, and goods would then go out to the entire world, making the core richer. However now with globalisation, developing nations can manufacture goods, while leveraging their competitive advantages, such as a large labour force, low cost of labour or plentiful natural resources. Sub-Saharan Africa is largely switched off from globalisation, due to corruption, lack of FDI and a resultant unskilled workforce comprising of a significant number of subsistence farmers.

There are four main factors to globalisation:

• Transport - cheaper and more efficient with containerisation

• Technology - enables flows of information, ideas, culture and trade to create a global culture

• International organisations - agree to rules for trade and provide loans to enable this.

• TNCs - invest in new markets, use resources and make goods - they are seen as the architects of globalisation

Sometimes, transport is not even necessary, as technology allows you to talk to almost anyone immediately, helping to create a global culture.

Challenges for globalisation

• An example of the world coming together to make positive change is when the use of cfcs was having a large impact on the hole in the ozone layer, and so global action was taken to eradicate CFC use.

Americanisation can sometimes cause xenophobia or racism, however since migration has become more rampant, this implies that cultural acceptance is at an all-time high.

• Globalisation is heavily linked to capitalist free-market economies.

STAGES OF GLOBALISATION:

1. Incipient globalisation (1850-1950): Early TNCs began, cross-border tourism began, league of nations was started and there was a global market for goods such as cars and drinks.

2. Onset of full-scale globalisation (1950-2000): Strong development of international organisations, communication revolution, growing awareness of issues, particularly in the environment.

3. Advanced globalisation (2000-present): Global language, total global communication systems, development of single global markets (i.e tourism)

Challenges:

• Many activities are exploitative, degrade and pollute the environment

• Developing countries can be thrust into debt while trying to keep up with others, and this does not help alleviate poverty

• Relocation of primary and secondary industries means less productive work for unskilled workers

• Global (mono)culture

• Economic liberalisation and the resultant decline of the independent nation state

Economic globalisation has increased quality of life of countries (like India, China, Vietnam) that have a competitive edge (cheap labour)

However, negative externalities such as pollution and exploitative practices stop this being entirely good.

Positives:

• Global consciousness of social and environmental issues

• Lots of countries with rapid economic growth

• Millions of new jobs

• Reinvigoration of some declining cultures

• Greater global cooperation in dealing with localised issues (like wars)

Globalisation of trade

• FDI has gone increasingly to emerging and developing economies

• Countries with competitive edges have picked up lots of secondary industry

  • Time-space compression as goods can get from China or Vietnam to distributors on the same day

• Exploitative practices are however rife, therefore greater cooperation is required on regulations to stop social or environmental exploitation.