Geo2

• Globalisation


  The process by which the world is becoming increasingly interconnected because of massively increased trade and cultural exchange
• Transnational corporation (TNC)


  A company operating in more than one country
• Primary sector activities


  • Fishing
  • Farming
  • Forestry
  • Mining
• Sectors of the economy

  • Primary
  • Secondary
  • Tertiary
  • Quaternary
• Primary sector


  Involves the removal of raw materials from the ground or sea
• Secondary sector


  Involves making something out of raw materials, usually in a factory
• Tertiary sector


  Describes service industries where manufactured goods are sold, or people provide services to other people
• Quaternary sector


  Industry involved in researching and developing new products, including hi-tech industry and biotechnology
• Globalisation has resulted in: increased international trade; a company operating in more than one country; greater dependence on the global economy; freer movement of capital, goods, and services; recognition of companies such as McDonalds and Starbucks in LEDCs
• Causes of globalisation


  • Transport
  • Freedom of trade
  • Improvements of communications
  • Labour availability and skills
• Transport


  More reliable and faster in the present-day because of modern technology
• Transport improvements


  • Air travel
  • Containerisation
  • Cars, trains, and roads
• Containerisation


  The use of large boxes (called containers) that can be put on heavy goods vehicles, freight trains or ships using cranes
• Freedom of trade


  Organisations like the World Trade Organisation (WTO) promote free trade between countries, which help to remove barriers between countries
• Improvements of communications


  The internet and mobile technology have allowed greater communication between people in different countries
• Labour availability and skills

  Countries such as China and India have lower labour costs and also high skill levels
• Labour intensive industries such as clothing can take advantage of cheaper labour costs and reduced legal restrictions in LEDCs
• TNCs often have HQ offices in HICs/MEDCS and their manufacturing in LICs/LEDCs
• Reason for TNC locations

  TNCs want to make the most money possible per item they make, so they must reduce production costs
• In many LICs, the government needs business there so much that they fail to enforce high working standards (even if the laws exist)
• TNCs can pay employees less if they have their factories in LICs and do not have to worry too much about workers' rights or building regulations
• Sweatshops


  Factories in LICs where workers work long hours in unpleasant conditions without enough breaks
• Although workers in LICs are paid less than they would be in an HIC, they can make a decent living because the cost of living is a lot cheaper in LICs
• In HICs, raw materials are not easily accessible (e.g. oil, coal and gas are in limited supply in the UK). As more and more industries are moved to LICs, this can have a negative impact on some areas in HICs
• Nike have had a sizeable number of factories based in China for many years
• Benefits of Nike in China

  • The jobs that have been brought into China often provide a much better standard of living than other local jobs
  • The global partnership between Nike and China continues to go from strength to strength
  • When massive global TNCs like Nike find success in countries like China, this will encourage other companies to also come and set up factories in China
  • Nike claim that they have been an important force in helping to improve worker conditions, pay and rights within China
• Problems relating to Nike in China

  • Wages in China are still quite low compared with similar jobs in MEDCs
  • Many of the jobs provided require few skills and the workers really do not pick up new skills that could advance the economy of China further
  • Much of the profit generated by the company will not remain in China but will leak out and back to company headquarters in the USA
  • Working conditions are still not great in China compared to what they are in other countries
• Shell is a massive TNC that operates in many countries around the world
• Advantages of TNC in Nigeria

  • TNCs like Shell provide jobs in factories making supplies and in services where the products are available for sale
  • TNCs often have charities to help people in the country they work in
  • TNCs can help countries develop by investing money
  • TNCs pay tax which can be used by the governments of countries to help their people
• Disadvantages of TNC in Nigeria

  • TNC activities can pollute the environment
  • TNCs have been accused of human rights abuses
  • Employees of TNCs in LIC's are working for long hours in poor conditions
  • Employees in LIC's might be paid much less than employees in HIC's for doing higher intensity jobs
  • Some TNCs have even been known to use child labour in their factories
  • jobs in the LIC's are not secure
• Crude oil


  A naturally occurring fossil fuel made up of a mixture of hydrocarbons - hydrogen and carbon atoms
• Economic importance of crude oil

  • The price of crude oil is controlled by oil companies, which means they have a great deal of influence on the global economy
  • Countries that produce oil for other countries hold a great deal of political power as they can essentially 'cut off' other countries from the crude oil supply over any political disagreements
  • War or a political crisis in an oil-producing country can restrict crude oil supplies, which can have a major impact on the global economy
• Environmental issues of crude oil

  • Burning fossil fuels releases carbon dioxide into the atmosphere
  • Oil spillages can have a disastrous effect on the local environment
  • Oil refineries and oil-fired power stations take up a lot of land and so destroy potential wildlife habitats and spoil the countryside
• The production of crude oil is vital to the global economy, as so much of modern society depends on the use of crude oil