Theory

• Strands of globalisation


  Social, economic, cultural, political
• Why do countries trade?

  Individual countries make their own good to trade:

  • increased competition
  • specialisation
  • lower prices
  • interdependences
  • economies of scale
  • product diversity
  • high standards
• Global marketing


  • links with transnational corporations
  • promoting and selling of products and services
  • world viewed as one market
  • global brand will sell one good e.g. Coca Cola
  • good scales of production
  • can use comparative advantage in some areas (specialise in one product to make profit)
  • opposite: glocalisation e.g. Spiderman in India
• Factors affecting globalisation

  • Transport: containerisation and air travel (reduces costs and time, hard to track quantity)
  • Security: contribute and limit
  • Communications: 1960s satellites, social media, submarine communication cables
  • Financial: investors/TNCs/governments e.g. World Trade Organisation, World Bank
  • Systems and relationships: ways of working across borders, requires efficient ordering system (ICT)
  • Management and information systems: making companies different, global supply chains and networks
• Trade agreements - integration of trade agreement differ

  • Free trade area: eliminated internal barrier but maintains independent external barriers
  • Customer union: eliminate internal barrier, one common external barrier
  • Common market: free movement of resources
  • Political union: as above and uniform set of policies

  e.g. NAFTA as free trade area

  EU as customer union/common market/political - more integrated than NAFTA
• Positives of trade agreements

  • Globally: improved global peace, co-operation = all members rely on each other
  • Nationally: competition, remittances, economic migrants (move for better money)
• Negatives of trade agreements

  • NAFTA (now USMCA)
  • labour cheaper in Mexico as wages were cheaper. Factories were set up on the border in Mexico to gain from cheap labour
  • loss of economic migrants - conflicts 'jobs stolen' (technology has caused job losses)