globalisation

• what is globalisation ?

  Integration and interdependence of countries through the exchange of goods, services, information, and ideas.
• the key features of globalisation

  economic, political, cultural, social
• how has globalisation evolved ?

  connections are lengthening, deepening, and becoming faster, mostly due to advancing technology
• TNC example: Disney

  • 6 production companies

  • 728+ shops worldwide

  • 5 theme parks
• new economy

  providing a service rather than a physical thing (eg: technology or ideas)
• just in time production

  making things due to demand to avoid waste
• TNCs - Transnational Companies

  firms with operations spread across the world operating in many nations and countries, bring cultural and economic change (eg: McDonalds)
• evolving transport

  • boeing 747 in the 1960s made international travel more common

  • growth of flights like easyjet and ryanair

  • growth in container shipping from the 1940s, there are now 200 million individual container movements per year
• evolving computer and internet technology

  • computer aided design (CAD) and manufacturing (CAM) have revolutionised manufacturing

  • ICT allows TNCS to keep in touch and expand easier
• international organisations

  • eg: the IMF, the World Bank, and the WTO

  • NGOs: Oxfam
• evolution of markets

  • on the rise globally

  • major stock markets are very influential

  • china had estimated 30 million affluent customers in 2007
• what is time-space compression ?

  concept describing how advancements in technology and transportation have reduced the perceived distance between places.
• what does ‘global village‘ mean ?

  interconnectedness makes places feel smaller
• transport and time-space compression

  • railways

  • steam engines and ships - cheaper travel encourages usage

  • jet aircraft - easyjet owned 2 planes in 1995, and by 2014 they owned 290

  • containerisation - dramatically lowered costs to transport goods
• ICT and time-space compression

  • mobile phones and social media connects people

  • electronic banking - revolutionises banking for companies and less developed countries

  • fibre optics - cables under the sea increase volume and speed of data transmission
• Rostows model of development

  • counteract the threat of rising communism after WW2, the USA created the model that countries could adopt to help prevent communism

  • traditional society -> transition stage -> take off -> drive to maturity _> high mass consumption
• Limitations of the Rostow model

  • biases the western world and assume all countries are the same
• Bretton Wood conference

  • 1944

  • resulted in the formation of the IMF and the WB

  • introduced rules and procedures

  • reduced taxes and tariffs to outlaw competition and encourage consumption
• International Monetary Fund

  • works to achieve sustainable growth and prosperity for all its 190 member countries

  • aims for monetary cooperation

  • poorer countries have very little influence and creates dependency on the IMF
• World Bank

  • works with policy makers to develop markets and economies to be stable and efficient

  • pursues low carbon energy and provides safe water and sanitation

  • projects have failed due to lack of cultural understanding
• World Trade Organisation

  • located in Geneva, Switzerland
  • established in 1995
  • 164 member countries
  • handles trade dispute and monitors national policies
  • disregards labour right and is unaware of the environmental implications
• President Reagan and Margaret Thatcher

  believed that wealth would trickle down to lower members of society
• Thatcher's attitudes to globalisation:

  • if industries rely on subsidies and grants then they should be closed
  • refused to support industries who were facing oversea competition
• Privatisation

  government owned services like gad were sold to private investors to save the gov money
• types of FDI:

  1. offshoring (organic)
  2. foreign acquisitions (inorganic)
  3. foreign members
  4. transfer pricing
• Trade Blocs

  voluntary international organisations that exist for bringing economic strength and security. internal tariffs are reduced to create freer trade
• Why do countries join trade blocs?

  Access to free trade. This can help secure economies of scale, as well as making trade more accessible.
• Advantages of trade bloc memberships:

  • bigger markets with no bigger taxes
  • merging of national firms to create TNCs
  • protection from foreign competitors
• Disadvantages of trade bloc membership:

  • loss of sovereignty
  • interdependance
  • compromise and concession
• European Union - 1993

  • evolved from a simple trade bloc to a multi-governmental organisation
  • members eligible for EU structural funds and farm subsides
  • grants all citizens freedom of movement
• ASEAN - 1967

  • 10 member states
  • eliminates tariffs in favour of free trade
  • pledged not to own nuclear weapons
• NAFTA - 1994

  • North American Free Trade Agreement
  • eliminate restrictions on trade between USA, Canada and Mexico
• NAFTA on the USA

  • set up firms in Mexico
  • less environmental laws
  • profits made in Mexico returned to US shareholders
  • however, unemployment has increased as jobs go to Mexico
• NAFTA on Canada

  • Visible trade with the USA has increased by 80% in the first 5 years
  • more than 1 million jobs created since 1994
  • environmental groups concerned about the damage
  • jobs lost to Mexico
• NAFTA on Mexico

  • companies forced to adopt higher standards
  • keeps Mexico politically modern
  • dependent on the USA for 88% of their exports
  • employees live in squalor - Maquiladoras
• how many Maquiladoras are there?

  there are over 3,000 maquiladora manufacturing/export assembly plants in northern Mexico
• how many Mexicans are employed in Maquiladoras?

  over 1 million
• what are Maquiladoras?

  sweatshops owned by the US, Japan or European countries, employed young women working for as little as 50 cents an hour, up to 10 hours a day for 6 days a week
• Maquiladoras in recent years

  due to the NAFTA trade bloc, some maquiladoras conditions have been vaguely improving, and some workers in garment plants are paid $1 - $2 an hour, in air conditioned facilities
• Cost of living in Northern Mexico border towns

  is about 30% higher than Southern Mexico, meaning Maquiladora women are forced to live in shanty towns that lack electricity and water