Globalisation 1
case study: easy jet competitors
- European short haul sector was dominated for years by big airline countries which charged high prices. - today, EasyJet faces many competitors in budget airline market like Ryanair
example of economic interdependence
- UK economy is highly dependent on Eastern European labour in manufacturing and public services - Eastern European immigrants decrease the dependency ratio - Eastern Europeans in turn rely on migrant remittances from the UK - in 2016, after Britain voted out the EU, value of the £ dropped and money sent home from migrant workers fell by over 10%
example of unsustainable environmental interdependence
- beneficial interdependency b/w 2 countries for the short term - i.e. many south-east Asian countries trade siamese rosewood with china's increasing middle class, who's ability to purchase hardwood furniture is increasing
4 ways global flows can be seen as a threat
- drive of globalisation, make places interdependent - infant industry argument - migrant flows can bring around unwanted cultural change and religious diversity -information can provide citizens w/knowledge that their govt finds harmful
What are the 4 interdependent types of globalisation
- economic - political - cultural - social
3 advantages of FDI for a company
1) access to markets: FDI can be an effective way to enter a foreign market 2) access to resources: very effective to acquire important natural resources such as precious metals and fossil fuels 3) reduces cost of production: if labour market is cheaper and regulations are loser, profit can increase
development of internet
1) began as a scheme funded by US defence department during cold war. 2) internet has given mass media a means of being available constantly, anywhere in the world in real time.
5 advantages of FDI for recipient
1) infrastructure improvement 2) better training for local workers= increased human capital 3) can help grow a country's export capacity (i.e. through formation of SEZ) and develop new areas of comparative advantage 4) reduce primary product dependency from technology and know-how transfer, helps diversify an economy 5) more competition in markets which might lead to lower prices and higher real incomes 6) creates new jobs leading to higher per capita incomes and disposable income
development of electronic banking
1) internet banking introduced alongside telephone banking in 1980's 2) banking and finance companies in Europe and USA started development of home banking which was established in 1996 w/banks like 'Citibank' and 'Wells Fargo' in 2001 3) efficient mode of banking has spread worldwide as the reach and delivery capabilities of the internet is far better than any physical branch network
types of fdi
1) offshoring 2) foreign mergers 3) foreign acquisition 4) transfer pricing
development of message transmission
1) telegraph cables: across Atlantic in 1860 replaced a 3 week boat journey w/instantaneous communication. allowed real time access to important info 2) cost decreased considerably- telegraph text was initially limited and costly (10 words= $2600) 3) telephone= telegraph's successor. Today there are VOIP (voice over IP) services which allow you to run telephone calls over the internet to anywhere in the world at low costs)
how was globalisation in the 20th century achieved?
1) trade 2) colonialism 3) co-operation
2 types of developing technology that contribute to shrinking world via time-space compression
1) transport technology 2) communications technology
case study: easy jet when was it founded?
1995
19th, 20th and 21st century improvement to railways
19th: railway networks expanded globally 20th: BY 1904, the 9000km Trans-Siberian Railway connected Moscow with China and Japan. Innovation of 'Bullet Trains' in 1964, Japan introduced concept of high-speed locomotives 21st: railway building remains priority for national governments: proposed high-speed railway linking London and N England which will 1/2 journey times
foreign mergers + example
2 firms in different countries join forces to create a single entity Royal Dutch Shell has HQs in both UK and Netherlands
benefits of e banking
24/7 access to accounts and services, automatic money tranfers (direct debits), ability to bank via handheld devices.
case study: easy jet how many destinations in flight network?
289 across Europe
how many Facebook likes in 2014 per day
5 billion
ICT
Information and Communication Technology
19th, 20th and 21st century improvement to container shipping
containerisation has lowered shipping expense and decreased shipping time and helped grow international trade 19th: in 1800's, cargo was not grouped into containers, so items were dealt w/individually. 20th: In 1933, standardised intermodal containers were introduced. advent of containerisation occurred in 1950's where efficiency of transporting cargo increased, reducing shipping times by 84% and cost by 35%. 21st: example of modern intermodal container is Chinese vessel COSCO which is 365 metres long and can carry 12000 containers.
what type of globalisation has the internet accelerated the most and how?
cultural, real-time transmission of ideas and cultures, i.e. exponential fan base for K-pop, given rise to social media (for many of which accounts are free)
when was 'internationalism' established
especially after 1942 when Columbus reached the americas
2 ways international organisations promote globalisation
free trade policies and FDI
transport and trade are...
interlinked... development of trade is mirrored in the development in international transport
free trade
international trade left to its natural course without tariffs, quotas, subsidies, tax or other restrictions
what has electronic banking given rise to?
internet banking, mobile banking and plastic money
how has the internet changed the business world
it has radically changed business world by providing a global market wherein there is more choice and therefore more competition and productivity due to speed and access of info
what does a global flow represent and demonstrate?
it represents the movement of capital, commodities, information, migrants and tourists between places as part of a large network. demonstrates increasing interdependence between places and the uneven distribution of goods and services globally
define intermodal container
large capacity storage units which can be transported long distances using multiple types of transport, such as shipping and rail w/o freight being taken out manually
china was persuaded to do what by the WTO
lift export restrictions on Rare Earth materials in 2014
how does FDI accelerate globalisation?
links source and host countries together economically
case study: easy jet what is easy jet engineered to be?
low cost and flexible
5 important ICT developments
message transmission, the internet, social networking, electronic banking, fibre optics
what are export subsidies
money granted for an industry to keep the price of their product low
FDI is commonly made in...
open economies that offer a skilled workforce and above average growth prospects
FDI
or foreign direct investment, an investment made by a firm or individual based in one country into businesses located in another country may include more than injection of capital, such as provisions of management or technology as well
Free trade policy
policies which allow trade to occur with less barriers, including abolishing taxes, tariffs, quotas and forming trade agreements which encourage free trade
time-space compression
refers to the set of processes that cause the relative distances b/w places (measured in terms of travel, time or cost) to contract, effectively making such places grow closer.
example of social interdependence
social ties b/w countries intensify due to increased international migration. i.e. the arrival of a large South Asian diaspora in the UK has deepened the country's interconnectedness w/India and Pakistan both economically and socially through extensive family networks
offshoring + example
some TNCs build their own new production facilities in 'offshore' low wage economies. US guitar maker Fender opened its Mexican plant in 1987
largest bilateral corridor in 2017 was b/w...
the USA and Mexico
define interdependence
the dependence of 2 or more countries on each other, impact each other in a feedback loop manner, as interdependency increases, the potential impact on other places in the case of change is higher different types of interdependence, economic, political, social, environmental
spatial division of labour
the distribution of different stages of economic activity across space, due to the specialisation of work within particular places
define international trade
the exchange of goods and services between countries, giving rise to a world economy and increased competition in the global market
international organisations aim is...
the formation of a global economy/liberalism as they provide their services for a price (price being that the recipient ultimately becomes more open to free trade)
what is the digital divide
the gap between those with access to ICT and those who don't caused by money, location, IT literacy and internet access
define shrinking world
the impression of distant places feeling closer, more accessible and taking less time to reach as a result of modern technologies
20th and 21st century improvement to jet aircrafts
the jet aircraft accelerated migration and tourist flows by decreasing pleasure periphery 20th: arrival of intercontinental Boeing 747 in 1960's made international travel more commonplace 21st: recent expansion of the cheap flight sector has bought it to the masses in richer nations (see Easy Jet case study)
what does a migrant flow represent
the number of migrants entering and leaving a country over the course of a specific period
how does trade accelerate transport?
- importance of transport for trade is recognised globally, so capitalist economies conduct research into transport technology to help reinforce and build global markets
case study: easy jet growth of passengers
- in 1995 it had 30,000 passenger numbers and in 2014, it had 65,000,000
what is 'deepening' globalisation?
- increasing the integration of global concepts in different areas of modern life (such as imported food) so we feel more connected to others globally
how did colonialism accelerate globalisation (+ fact)
- instilled economic and cultural globalisation - by the end of the 19th century, the British empire directly controlled 1/4 of the world and its population
how did co-operation accelerate globalisation (+ fact)
- instilled political globalisation - since end of WW1 in 1918, international organisations established
fibre optics development
- introduction of broadband in 1980's and 90's, lots of data transmitted rapidly through cyber-space as opposed to 'snail mail'. - presently, enormous flows of data are conveyed across the ocean floor owned by national governments or TNCs such as google - 1,000,000 km + of cables caarry worlds' digital data
what is 'lengthening' of globalisation (+ example)
- involves the connection of people from larger distances and places i.e. with the sourcing of products and services - consumption of Fiji water in UK from 10,000 miles away
case study: easy jet significance of easy jet
- its ability to increase no' pleasure periphery destinations allowed people to travel to places more frequently, capable of bringing cultural social and economic change
what is meant by different 'dimensions' of globalisation?
- its deepening, lengthening and rate
4 disadvantages of FDI
- lack of domestic competition: profits sent back to source country, country's market is dominated by TNC due to little competition from domestic industries (infant industry argument) - cultural erosion: undermining of local culture, westernisation - lack of human rights: focuses on economic rather than social development. exportation of unethical production practices - inequality: gains of FDI captured by powerful elites and its benefits may not flow equitably to people and families
4 negatives of interdependency caused by unequal flows b/w interdependent places
- loss of profits: the repatriation of profits by TNCs to home country may limit 'trickle down' of wealth for local societies - environmental degradation: i.e., siamese rosewood and in Ghana, entire families break down old computer monitors from Europe for high value metals- lots of waste - worker exploitation: exporting of unethical workplace practices to developing countries has produced dangerous working conditions, like child labour - brain drain: international migration of high skilled workers, like Indian and Polish doctors and dentists in UK.
2 manners of economic flows
- multilateral (between more than 2 countries) - bilateral (between 2 countries)
examples of efficient e-banking services
- paypal services - standardised digital currency Bitcoin
how does WTO promote free trade
- persuades countries to lower their import tariffs and other obstacles blocking open markets - utilises import licenses and export subsidises
4 main transport developments in 19th and 20th century
- railways -steamships - jet aircrafts - container shipping
define social globalisation and give 2 examples
- refers to increasing integration of people globally - international immigration, extensive family networks that cross borders - global improvements in healthcare and education - increased social interconnectivity due to social media, internet and mobile phones
define political globalisation and give 2 examples
- refers to the extent of political co-operation b/w countries - growth of trading blocs like EU and NAFTA which allows TNCs to merge and make acquisitions of firms in neighbouring countries and reduce trade restrictions and tariffs helping markets to grow -global involvement of economic and social affairs by national governments like free trade, credit crunches, natural disasters - global organisations like IMF, World Bank and WTO
define economic globalisation and give 2 examples
- refers to the interconnectedness of economies through trade and exchange of resources and is closely linked with political globalisation. Hardly any national economy operates in isolation as they all influence each-other - the growth of TNC's leading to the increase of cross border exchanges of raw materials, components, manufactured goods, services, shares and portfolio investments - the growth of complex spatial divisions of labour formed by TNCs
define cultural globalisation and give 2 examples
- refers to transmission of ideas, meanings and values around the world to extend social relations - successful western traits dominating in global territories- 'mcdonaldisation' - increasing practice of globalisation and hybridisation - circulation of ideas and values via internet
5 benefits of interdependency
- remittances: provide reliable source of income - labour flows: states like Qatar and Singapore depend on migrant labour for their prosperity. Many foreign employees and families have relocated to these countries resulting in international schools with international staff - inflows of FDI: average incomes have soared amongst Asian tiger economies which have been major recipients of American, European and Japanese FDI. Worldwide, one billion people have escapes $1.25 a day poverty since 1990. - capital flows to countries where TNCs are HQ'd: TNCs contribute much to the source country- apple with HQ in California paid US $6 Billion to US government in 2012 - lending!!!: interdependency on international organisations like IMF and World Bank lead to helpful loans (in return for implementation of free trade policies)
what is involved in a commodity flow? (+ example)
- the trade of valuable raw materials b/w nations, with imports and exports - global GDP in 2015 was $80 trillion, a third of this was from trade flows in agricultural and industrial commodities
what is involved in information flows?
- transmission of information via technology, especially social media and internet - introduction of the internet has Brough real time connections b/w distant places. - facebook had 1.5 billion users by 2015 - introduction of on demand TV
how does transport accelerate trade
- transport facilitates trade as it provides a means of the import and export of goods and services. - impacts profitability- longer it takes to travel a distance, less valuable product or service is - improvements to transport see an increase in scale and rate of trade
what do migration flows occur via?
bilateral migration corridors, in which migratory movements b/w pairs of countries occur.
case study: easy jet when were its first flights commenced and to where?
Barcelona in 1996
biggest tourist country
France with 86.9 million international tourist arrivals in 2017
where is the WTO based
Switzerland
foreign acquisition + example
TNC launches a takeover of a company in another country In 2010, the UKs Cadbury was taken over by US giant food company Kraft
transfer pricing + example
TNCs channel profits through a subsidiary company in a low tax country like Ireland Starbucks and Amazon have been under fire by OECD for this
case study: easy jet ability to 'switch-on' locations socially and economically
Tallinn in Estonia was a destination accessible at £40. Small capital of 400,000 people was then frequently visited as a 'stag and hen destination however, reported rise in STD's and social disruption
example of interdependency on international organisations
The World Bank lent Laos US $1B to build a dam in on the Nam Then River, generating sustainable HEP and now earns US $2 B annually from selling to its neighbour Thailand, increasing GNI, paid loan and helps Thailand
Globalisation
The process of increasing integration of economies, people and places around the world through the movement of goods, services and capital across borders
example of political interdependence
Thomas Friedman proposed the 'Golden Arches' theory of conflict prevention - 2 countries w/McDonalds restraints won't wage war as they have interlinked economies
what do tourist flows occur via
budget airlines like AIRASIA and East Africa's FastJet (increased access to pleasure periphery destinations)
commodity
a raw material or primary (unmanufactured) agricultural product that can be bought and sold, such as copper or coffee
countries that join the WTO are required to.... (+ example)
achieve sustained reductions in average import tariffs after WTO entry in July 2012. Russia's average import tariffs declined from 9.4% to 6.4% on industrial goods and from 15.6% to 11.3% for agricultural goods
how does free trade accelerate globalisation?
allows transmission of multilateral and bilateral economic flows between countries (of services and goods) integrating and making countries interdependent
communication technology is an accelerator of globalisation bc it acts as...
an efficient and effective channel to exchange and distribute information on a global scale (over long distances)
which region is highly engageed in e-banking
asian-pacific region
19th+ 20th and 21st century improvement to steam ships
the steam engine was essential for bringing globalisation to a larger scale, bought reliability to transport 19th and 20th century: in early 1800's, trade routes depended on wind patterns in other to navigate clippers (wind powered ships.) Introduction in late 1800s of steam ships reduced shipping time and costs as they could travel at consistent speeds. Steam ships could quickly move goods and armies into Asian and African countries 21st Century: from the 1980;s, gas turbines and diesel engines replaced steam engines but steam powers all nuclear ships.
liberalism
the theory or practice of reducing trade barriers such as import tax, quotas, tariffs, export and import subsidies etc. intended to encourage international trade and the formation of a global economy
protectionism
the theory or practice of shielding a country's domestic industries from foreign industries by taxing imports
political factors facilitate...
the transmission of global flows into countries
what is involved in capital flows? (+ example)
the transmission of money - globally, major capital flows are routed daily through stock markets, like investment banks and pension funders buy and sell money in different currencies to make profit - in 2013, foreign exchange transactions equated to $5 trillion daily
how is globalisation becoming 'faster'
through advancements in technology, i.e. real time technology and speedy travels using jet aircrafts
trade.... between.....
trade TRIPLED between 1870 and 1913
what are commodity flows heavily impacted by
trade quotas, tariffs, other restrictions
how do developments in transport contribute to a 'shrinking world'
transport becomes more efficient and faster (i.e. w/removal of obstacles such as weather problems for clippers in the 1800's) the perception of time and distance changed. so improved transport contributed to time-space compression which is the drive behind a shrinking world
example of environmental interdependence
use of global commons such as the atmosphere and the oceans. mutual survival, must rely on other states to work toward shared goals of climate change mitigation and biodiversity protection
what is the WTO
world trade organisation, oversees rules and laws and regulates international trade
