Factors Driving Globalization: Transport, Communication, and Transnational Corporations

The Historical Context of Distance and Interaction

  • Limitations of Past Communication Methods (The Pigeon Post Example):

    • Efficiency: Pigeons fly slowly, leading to extremely long durations for mail delivery.

    • Cost and Effort: Significant resources are required to feed and train pigeons until they are "smart" enough to navigate accurately.

    • Capacity and Variety: Pigeons are limited to carrying small pieces of paper; they cannot transport heavy or bulky items.

    • Reliability: Pigeons are susceptible to getting lost, being attacked by predators, running out of energy, or dying in adverse weather conditions.

  • Historical Constraints on Globalization:

    • The Silk Road: While Chinese merchants successfully traded goods with Central Asia and Europe, the journey typically took 22 years to complete.

    • Constraints in transportation systems in the past severely limited the movement of goods, people, and information.

    • The degree of globalization remained low because interaction between distant places was difficult to maintain.

The Friction of Distance and Time-Space Convergence

  • Friction of Distance:

    • Distance acts as a barrier to interaction between places.

    • Distance Decay Effect: Areas that are far apart are less likely to interact because substantial time and cost must be spent to overcome the distance.

  • Time-Space Convergence (TSC):

    • Definition: The process by which major breakthroughs in transport and communication systems reduce the time and cost required to overcome distance.

    • Mechanism: Improvements in transport (for raw materials, goods, and people) and communication (for information) lead to a reduction in friction.

    • Effect: Travel time decreases, and distance declines in significance, making the world appear to have "shrunk."

    • Cost Perspective: TSC also implies that less money is spent to travel the same distance compared to the past.

  • Calculating Time-Space Convergence:

    • The formula is expressed as:     Time-Space Convergence (TSC)=Travel time differenceTime difference\text{Time-Space Convergence (TSC)} = \frac{\text{Travel time difference}}{\text{Time difference}}

    • Example 1 (City A to City B):

      • Travel time in 19601960: 8 hours8\,\text{hours}

      • Travel time in 20102010: 2 hours2\,\text{hours}

      • Time difference: 50 years50\,\text{years}

      • Travel time difference: 6 hours6\,\text{hours} (360 minutes360\,\text{minutes}, though the transcript notes 240 minutes240\,\text{minutes} for a specific calculation, leading to 4.8 minutes per year4.8\,\text{minutes per year} on average).

    • Example 2 (Los Angeles to Santa Barbara):

      • Travel time in 19011901: 500 minutes500\,\text{minutes}

      • Travel time in 20012001: 100 minutes100\,\text{minutes}

      • Calculation: 500−100 minutes100 years=4 minutes per year\frac{500 - 100\,\text{minutes}}{100\,\text{years}} = 4\,\text{minutes per year}

Major Developments in Transport Systems

  • Ocean Transport Improvements:

    • Containerization:

      • Uses standardized boxes (containers) of uniform sizes.

      • Container vessels are equipped with specialized handling devices for rapid loading and unloading.

      • Facilitates faster transfers between transport modes (e.g., from lorry to ship), reducing transshipment costs and time.

    • Increases in Vessel Capacity:

      • Water transport is the most economical method for moving heavy, bulky goods (iron ore, coal, grain).

      • VLCC (Very Large Crude Carriers): Specifically used for transporting massive quantities of crude oil.

      • ULCV (Ultra-Large Container Vessels): Increasingly common in freight shipping, utilizing refrigeration to prevent products from perishing.

      • Large-scale transport reduces the per-unit transport cost.

    • Global Trading Networks and Infrastructure:

      • Major ports include Rotterdam, Singapore, Shanghai, Hong Kong, Los Angeles, and Busan.

      • Panama Canal: Upgrades scheduled for completion after 20162016 aimed to double the rate of container traffic to roughly 1 million1\,\text{million} per week.

      • Financial Risks: Piracy off the coast of Somalia forces boats to increase speed, costing the shipping industry approximately 2.7 billion USD2.7\,\text{billion USD} annually in extra fuel.

  • Air Transport Improvements:

    • Commercial Jet Aircraft: Characterized by higher speeds, larger capacities, and lower travel costs.

    • Capacity Example: The Airbus A380 can carry approximately 555555 passengers.

    • Corporate Movement: Facilitates the travel of business professionals; over 340 million340\,\text{million} people travel annually by air for professional events.

    • High-Value / Low-Bulk Freight: Ideal for "just-in-time" production and perishable items (e.g., fresh flowers from Kenya to Europe/Hong Kong, semiconductors, and fashion).

    • Budget Airlines (e.g., Jetstar, easyJet): Have driven ticket prices down, significantly expanding global tourism and cultural exchange.

Major Developments in Communication Systems (ICT)

  • Technological Drivers:

    • Advancements in ICT (Internet, personal computers, mobile phones), satellite technology, and optical fiber cables.

    • These technologies have sharply increased the speed and volume of data transmission while lowering communication costs.

  • Internet Penetration Statistics:

    • In 19951995, less than 1%1\% of the world population was connected to the internet.

    • By 20172017, this reached approximately 48%48\%.

    • The Digital Divide:

      • Developed countries (e.g., USA, Japan) have penetration rates above 85%85\%.

      • Developing countries (e.g., Chad, Congo) often have penetration rates below 10%10\%.

  • Speed of Adoption (Time taken to reach 50 million50\,\text{million} users):

    • Telephone: 75 years75\,\text{years}

    • Radio: 38 years38\,\text{years}

    • Television: 13 years13\,\text{years}

    • Internet: 4 years4\,\text{years}

    • Facebook: 2 years2\,\text{years}

    • Instagram: 19 months19\,\text{months}

    • YouTube: 10 months10\,\text{months}

    • Twitter: 9 months9\,\text{months}

    • Angry Birds: 35 days35\,\text{days}

    • Pokemon Go: 19 days19\,\text{days}

    • Facebook Live (50 million views): 24 hours24\,\text{hours}

Dimensions of Globalisation Fostered by ICT

  • Economic Dimension:

    • Media Advertising: High efficiency and low cost via global platforms like YouTube and Facebook.

    • E-commerce: Platforms like eBay and PayPal, and electronic banking services.

    • Security: Advancing internet security increases consumer confidence in global online transactions.

    • Supply Chain Coordination: Cloud platforms, email, and conference calls allow for the coordination of complex global supply chains.

    • Empowerment: Allows small businesses and individuals in developing countries to access global markets.

  • Social and Cultural Dimension:

    • Spread of Knowledge: Social media (Instagram, X) and entertainment platforms (Netflix) distribute culture and ideas globally.

    • Translation Technology: Facilitates tourism, cultural exchange, and shopping on foreign platforms by breaking language barriers.

    • Counter-dominance: May challenge the dominance of Western media and culture by providing platforms for alternative voices.

Additional Drivers of Globalization

  • Promotion of Free Trade:

    • Removal of trade barriers such as tariffs.

    • Establishment of international organizations like the World Trade Organization (WTO).

  • Political Opening-up:

    • China's 19781978 Opening-up policy encouraged foreign direct investment (FDI) and socio-cultural flows.

    • The Belt-and-Road Initiative.

  • Global Cooperation on Crises:

    • Large-scale issues like global warming cross national borders and require international solutions.

Manufacturing Systems and Industrial Classes

  • Types of Industry:

    • Primary: Extraction of raw materials (e.g., growing wheat).

    • Secondary (Manufacturing): Processing raw materials into finished or semi-finished goods (e.g., baking biscuits).

    • Tertiary: Providing services (e.g., transport, retailing).

    • Quaternary: Information-concentrated services, R&D, and ICT (e.g., research on high-quality wheat).

  • Components of a Manufacturing System (e.g., Glico Factory):

    • Inputs: Land, raw materials, labor, technology, machinery, power, and capital.

    • Process: Making chocolate paste, baking, packaging.

    • Outputs: Finished products (Glico biscuits), waste (sewage, solid waste, air pollutants), and profit (which feeds back into inputs).

  • Past vs. Present Industrial Location:

    • In the past, primary, secondary, and tertiary stages were located close to each other due to large friction of distance.

    • High costs and long times for transporting materials and information forced industries to cluster to maximize profit.

Transnational Corporations (TNCs)

  • Definition: A corporation that operates in more than one country, featuring headquarters, offices, and factories in several nations.

  • Operational Structure (The Apple Inc. Example):

    • High-Skill Processes (MDC-based): Headquarters, R&D, design, and major decision-making are centered in California, USA.

    • Component Manufacturing: Highly distributed globally.

      • Camera: Japan (Sony).

      • Display/Touch/Processor/RAM: South Korea (Samsung).

      • Storage: Japan (Toshiba).

      • Chassis: China, Taiwan.

      • LTE Modem/Transceiver/WiFi Module: China (Qualcomm, USI).

    • Assembling: Often outsourced to countries with lower costs, such as China.

  • Advantages of International Operation:

    • Cost Reduction: Outsourcing low-skill processes (production, assembly, storage) to Less Developed Countries (LDCs) to exploit cheap labor and land.

    • Favourable Policies: Targeting countries with low tax rates and less stringent environmental controls.

    • Market Expansion: Selling products in diverse international markets.

  • Key Features of TNCs:

    • Giant Size: In 20182018, Walmart's revenue (≈500 billion USD\approx 500\,\text{billion USD}) was roughly equivalent to the GDP of Thailand (ranked 25th25^{\text{th}} globally).

    • Advanced Technology: Heavy investment in R&D to maintain competitiveness (e.g., Apple vs. Samsung).

TNCs as Drivers of Globalization

  • Interdependence: TNCs create a network where many countries are involved in the production of a single product (Headquarters in US, materials from China, sales globally).

  • Capital and Tech Flows: TNCs invest in other countries through Foreign Direct Investment (FDI) and spread technology rapidly.

  • Exploitation of Infrastructure: TNCs rely on low transport costs (containerization) and ICT (internet coordination) to manage multi-point production.

  • Global Trading Initiation: The constant search for cheaper components across borders initiates continuous global trading and labor flows.