Inequality (W2)

• production and income between countries is highly uneven
• GDP (gross domestic product) is the total value of production over one year (measured per person)
• GNI (gross national income) is the income flow into a country from production that occurs anywhere in the world
• GDP is highest in North America, the Gulf states, western Europe and Australia, while lowest in sub-Saharan Africa
• globalisation occurs in 5 forms: cultural, environmental, technological, political and economic
• economic globalisation is the flow of goods, services, capital and labour between countries
• economic globalisation is occurring in markets with increase in customer bases and in production
• Multinational Corporations (MNC) are companies who's ownership, operations and administrations transcend national boarders
• MNC's are the primary movers and shapers of the global economy
• the largest MNC's have market powers in line with the top 10 countries economies
• 16 of the top 20 countries have their headquarters based in the USA
• Global value chains increase inequality with the high economic values of the chain (research, design and marketing) occurring in more developed countries and the lower values (resources and production) occurring in less developed countries
• there are four factors of production: land, labor, capital and entrepreneurship
• geography plays a major role in the high inequality between countries due to the uneven distributions of energy (oil & coal), minerals and cultivable land across the earth's surface
• a countries ability to access important land factors of production can be a result of geography, governance (political instability) and history (exploitation)
• trade occurs when firms or consumers or the government in one country purchase goods or services that are produced in other countries
• Exports are the produce countries sell to foreign markets and imports are the goods and services produced outside the country but purchased and consumed in the country
• Increasing trade is often linked to environmental pollution and climate change
• first golden age of trade: 1890-1913 marked by a rapid opening of international borders to flows of goods, capital and people due to improvements in transport
• global economies are good for providing a greater variety of goods and services, lower prices and wider markets. However the costs of globalisation (eg. loss of local jobs and environmental damage) are not evenly distributed evenly
• the spread of supply chains across countries is largely determined by the time and cost of transport
• factors that influence the location of production include: costs, quality, reliability of delivery, transport and transaction costs
• local supply chains are able to respond quickly to market changes but at a higher production cost however the ability to quickly replenish helps balance this
• when manufactured products are basic or predictable, production chains tend to spread around the world
• the place of manufacture is determined not only by cost but by opportunity, punctuality and quality
• reductions in air transport costs has minimised the impact of location in considering the distance between production and the consumer.
• Inequality among the spread of global supply chains is due to geography, governance and history
• goods with unpredictable demand may be produced closer to a final market as the increased production cost is offset by the ability to react quickly to demand
• As transport technology improves distance becomes less of a barrier to trade allowing the supply chain to spread out