Global systems & governance

• globalisation


  increasing interconnectedness of people and places
• LDCs (Least Developed Countries)


  The very poorest countries facing major development obstacles. Highly vunerable to econmic and enironmental shocks

  Examples: Ethiopia, Nepal
• LEDCs/LICs (Less Economically Developed Countries)/(Low Income Countries)


  More developed than LDCs (slightly better education + employment oppurtunities) but still relatively poor

  Examples: Peru, Kenya
• CPEs (Centrally Planned Economies)


  State-controlled economies characteristics depend heavily on the decisions of their governments

  Examples: North Korea, Cuba
• FCCs (Former Communist Countries)


  Previously CPEs up to the 1990s so only have developed paths to democracy and capitalism more recently

  Examples: Bulgaria, Lithuania
• RICs/NEEs (Recently Industrialisng Countries)/(Newly Emerging Economies)


  Have gone through rapid economic growth since 1980/90s but still have high inequality

  Examples: India, Thailand
• OPEC (Organisation for Petroleum Exporting Countries)


  Oil rich but very unequal and often with poor levels of human rights

  Examples: Saudi Arabia, Venezuela
• NICs (Newly Industrializing Countries)


  Countries that experienced rapid economic growth around 1960-70s. They have a significant influence on world economy

  Examples: South Korea, Taiwan
• MEDCs/HICs (More Economically Developed Countries)/(High Income Countries)


  Wealthy countries with a historic influence on the world economy. HQ of many TNCs, high standards of education, healthcare and many high-skilled jobs

  Examples: UK, USA
• Core

  North America, Europe, Japan

  Owns/consumes 80% of global goods and services

  Highest income

  Decision making power

  Source of global investment

  Tertiary and Quarternary industries
• Semi-periphery


  Transitional area i.e. emerging economies

  Growing levels of industrialisation

  Supplies core with manufactured goods

  Secondary industries
• Periphery


  Most of Africa, parts of South and South East Asia, South America

  Owns/consumes 20% of global goods and services

  Low income (2.5 billion on less than $2 a day)

  Make few decisions and provide little investment

  Primary Industries
• Core-Periphery Model VS Brandt Line

  Brandt line classifies countries as more or less developed while core-periphery has a developing category. In Brandt line Northern Countries (+ Australia and New Zealand) are more devloped while everywhere else is less developed but with core-periphery US, Canada, Western Europe, Australia and Japan are core and everywhere else is divided into periphery and semi-periphery
• Foreign Direct Investment (FDI)

  By TNCs (mostly) into foreign businesses e.g. through buying shares
• Repatriation of profits


  TNCs take profit back to the country where they are headquatered, "economic leakage" or "loss of income"
• Aid


  Takes many forms e.g. unilateral from UN (from ODA (Official Development Assistance)), bilateral (govt-govt), disaster relief (NGOs)
• Migration


  The majority of out-migration of labour takes place from poorer to richer countries, icreasing disparities as the less developed nations lose their most skilled and talented labour who will pay taxes and spend most of their earnings in their destination country
• Remittance payments


  Transfers of money made by foreign workers to family in their home country (2nd most important source of income in developing countries)
• Pattern of flows of capital

  Traditionally capital has flowed between core countries as products were made and consumed in those countries. As TNCs have invested in emerging economies such as China and Vietnam, capital now flows into these semi periphery countries from the core countries as FDI. Capital also now flows from peripheral and semi peripheral countries back to the core countries in the form of profits.

  As labour flows have increasedfrom peripheral to core countries, capital has flowed back to the peripheral countries in the form of remittances.

  Capital in the form of aid normally flows from core to periphery countries

  Capital flows occur between the core and periphery countries via the World bank and IMF in the form of loans
• Deregulation of financial markets


  removed regulations including fixed commission on trades, seperation of dealers and more leading to more competition, more mergers and takeovers and the opening of the London financial market to international banks
• Development of technology


  made it much easier to transfer money and also quicker
• Remittances


  foreign workers send money they make back to their family in their home country. More forgein workers mean more remittances and so increased flow of capital
• TNCs


  TNCs take their profits back to their headquater country
• How might flow of capital change in the future

  There could be more flows to less developed countries as they develop more and produce more products

  In the next decade global flows could triple, powered by rising prosperity and participation in the emerging world
• Pattern of labour flows

  There are many flows within continents like Africa and Asia but the majority of flows between two continents are from poorer continents to richer continents like from Africa to Europe.

  The largest inter-regional flow of labour is in Asia with around 3 million workers having moved from South Asia to West Asia. The second largest inter-regional flow is from Latin America to West America
• Why have flows of labour increased

  People from developing coutries wish to seek better employment oppurtunities and due to developments in transport it is now easier to travel across the world
• Why are labour flows less free flowing than capital flows

  There are restrctions on immigration which causes people to move less easily around the world than money
• How might labour flow change in the future

  As countries become more developed they may have less migration out of the country as better jobs become available in that country
• Flow of products


  Traditionally, primary products were traded between core countries or from peripheral areas to the core. In the 20th century, secondary products were traded between core countries as the production facilities werre located in these regions. In more recent decades, manufactured goods are increasingly produced in emerging economies, rather than the traditional core, and sold within these areas and exported to wealthier regions. The flows are becoming larger and more global as wealth increases and therefore demand for new products now comes from a much wider range of countries
• Transaction costs


  have been reduced by the improvements in flows of data and the ease with which capital can be transferred to pay for transactions
• Transport & time


  containerism has enabled more complex and long distance flows of products causing costs to be reduced while air transport has speed deliveryand reduced costs of more valuable and perishable cargo
• Reduced tarrifs


  tarrifs are the most obvious regulatory barriers to trade but thanks to the World Trade Organisation they have generally been reduced in global trade
• Trading blocs


  provide tarrif free trade or other favourable conditions to fellow member nations within the bloc
• How might product flow change in the future

  As poorer countries become more developed and richer there will be increased demand for products causing the flow to increase. If further advancements in transport are made the costs will be reduced further encouraging greater movement of products
• Services


  Economic actiities that are traded without the production of material goods i.e. financial or insurance services
• High level services


  Services to businesses such as finance, investment and advertising
• Low level services


  Services to consumers such as banking, travel and tourism, customer call centres or communication services
• flow of services


  there is a large flow between the US and Western Europe with small flows between other regions
• Why have flows of

  Services like banking, insurance and advertising depend on communication and the transfer of informatio. They are footloose and can locate anywhere and advancing technology means they can still serve the needs of customers worldwide. Technology means more people/businesses can access these services which has caused the flow of services to grow
• How might flow of services change in the future

  More flows from semi periphery to core as those areas become more developed and start to take produce services not just products