3.1

• Globalisation is the increasing connectedness of countries around the world through movement of goods, services, capital and ideas across borders
• Globalisation


  • People and countries have become more connected in four main ways:
  • Transnational Corporations (TNCs) – Companies who operate in many countries producing and selling goods and services
  • Glocalisation – Changing the design of products to meet local tastes or laws
  • Trading blocs – A group of countries and/or organisations that work together for trading purposes
  • Global Connections
• The process of how global connections are made have changed over time

  1. Past global connections were made through trade, Colonialism and co-operation between countries through international organisations

  2. Modern globalisation:
• Modern globalisation


  • Lengthening of connections between people and places, with products obtained from further away than ever before
  • Deepening of connections with the feeling of being deeply connected to other people and places in every aspect of life
  • Faster speed of connections, with the ability to communicate with others in real time using new technologies or travelling quickly between continents
• Global Flows & Interdependence

  • Capital – money flows through the world's stock markets
  • Commodities – valuable raw materials (e.g., fossil fuels, food and minerals) are traded
  • Information – the internet allows real-time communication between countries globally
  • Migrants – the permanent movement of people still face challenges due to border controls and immigration laws
  • Tourists – Budget airlines have made it possible for people to travel further more easily
• These global flows have increased the interconnectedness of places which has increased the interdependence of places
• Developments in Transport & Trade

  • Improvements in transport has led to an increase in the amount and value of trade
  • As countries make a profit through trade, they will invest in developing transport technologies in the hope of increasing their profits
• Important developments in transport in the 19th and 20th century

  • Steam power – steam ships and trains moved goods and armies along trade routes quickly in the 1800s
  • Railways – railway networks expanded globally in the 1800s and remains important for governments globally e.g., the High Speed 2 Railway linking London to northern England which will reduce some journey times by a half
  • Jet aircraft – intercontinental jet aircraft made international travel easier with the arrival of the intercontinental Boeing 747 in the 1960s
  • Container shipping – vital to the global economy since the 1950s (today, the largest container ships carry 24,000 containers)
• The Shrinking World effect


  When places around the world take less time to reach, due to developments in technology, and therefore start to feel closer
• Time-space compression


  The change in perceptions when places around the world take less time to reach
• Developments in ICT & Global Communication

  • Telephone and the telegraph – vital for communicating long distances in real time no longer needing to wait days, weeks, months for responses
  • Broadband and fibre optics – large amounts of data (e.g., in emails, tweets) are carried across the ocean floor by fibre optic cables in real time reducing the cost of communication
  • GIS and GPS – satellites broadcast position and time data continuously all over the world so deliveries can be tracked in real time
  • The internet, social networks and Skype – connects people and places across the world in real time which speeds up business between countries
  • Mobile phones – countries that had limited communication infrastructure have skipped the telephone and moved straight to the mobile phone enabling them to connect with other places more effectively
• International Organisations


  • World Trade Organisation (WTO)
  • International Monetary Fund (IMF)
  • World Bank
• Role of International Organisations in Globalisation

  WTO - Promotes trade liberalisation

  IMF - Transfer loans from HICs to countries that have applied for help, recipients must agree to run free market economies

  World Bank - Lends money on a global scale, gives direct grants to developing countries
• Reason why free trade policies are promoted by international economic organisations

  To reduce trade barriers and taxes/tariffs so global trade can operate as easily as possible, enabling global production and trading of goods/services
• Government Policies that encourage the growth of TNCs


  • Free trade blocs

  Special Economic Zones (SEZs)

  Tax Incentives

  Free-market liberalisation

  Privatisation

  Business start-ups
• Benefits of Free Trade Blocs

  • Companies grow as they gain access to more customers

  A bigger market increases demand of products and services

  Smaller companies can merge to form TNCs reducing production costs
• Privatisation of industries is a government policy that contributes to globalisation
• Free-market liberalisation


  Lifting restrictions for companies and banks reducing the costs for TNCs to locate and operate in these countries
• Privatisation


  Allowing companies to take over important national services e.g., railway and energy supply to reduce government spending. This is attractive to TNCs as they would gain a stake in vital services
• Encouraging business start-ups


  Aims to increase profits for businesses by using strategies such as low business taxes and changes in the law, for example the UK became more attractive to TNCs when Sunday trading was introduced in 1994
• Privatisation of industries


  • This was used by the UK government under Margaret Thatcher
• Internet censorship, increasing tariffs and restricting migration are all incorrect because they limit globalisation
• National governments play an important role in globalisation not just Transnational Corporations (TNCs)
• Special Economic Zones (SEZs)

  The industrial areas, near the coast, where favourable conditions have been created to attract TNCs
• Government subsidies


  An incentive for TNCs to locate in these countries as costs will be reduced
• Changing attitudes to FDI


  Countries working to attract FDI to increase their global presence, for example Saudi Arabia changed its official weekend to Friday-Saturday to be more in line with other countries to be able to participate in the global market
• China's 'Open Door Policy'

  Introduced in 1978 to begin opening up to FDI whilst remaining under a one-party rule
• Rapid urbanisation occurred in China with over 300 million people leaving rural areas which lead to an increase in low-wage factories in urban areas
• SEZs were created in China which attracted TNCs, leading to rapid economic growth
• China is the world's largest economy but is still not entirely open to global flows
• Uneven globalisation


  Globalisation has affected places differently, which is due to a variety of reasons, such as variations in poverty, physical factors such as resource availability and accessibility, and government policies and attitudes for and against globalisation
• KOF Index


  The Swiss Institute for Business Cycle Research produces an annual Index of Globalisation that measures the social, economic and political aspects of globalisation
• AT Kearney World Cities Index

  Ranks cities according to their 'business activity', 'cultural experience' and 'political engagement'
• Development is progress a country makes to improving the standard of living for its population
• Offshoring


  Moving parts of their production process, such as factories or offices, to other countries to reduce costs (e.g. labour)
• Outsourcing


  Contracting with a different company to produce goods and services they need
• Global production networks


  Setting up chains of connected suppliers of parts and materials that contribute to the manufacturing or assembly of consumer goods
• Glocalisation


  TNCs adapting their products to suit local tastes, religion and culture, local interests, laws and lack of natural resources
• Switched-off places


  Places in the world, often LDCs, that remain relatively switched off from the global networks with strong flows of trade and investment with other countries being absent
• Switched-off places


  • North Korea and the Sahel region