Dimensions of globalisation
Globalisation
What is Globalisation? Globalisation: The process of becoming more globally connected on a variety of scales. It is the movement of people, knowledge, ideas, goods and money across national borders, leading to theoretically - a ‘borderless world’e to edit. Even our environments are globalised, e.g. pollutants from other countries can affect ourclimate and there are global laws to mitigate climate change.
What is Globalisation? Globalisation: The process of becoming more globally connected on a variety of scales. It is the movement of people, knowledge, ideas, goods and money across national borders, leading to theoretically - a ‘borderless world’e to edit. Even our environments are globalised, e.g. pollutants from other countries can affect ourclimate and there are global laws to mitigate climate change.
Dimensions of Globalisation When countries share things with one another, it’s known as a flow. This is because things are flowing (moving) from one country to another. Flows can be physical like people or products, but they can also be ideas and concepts such as money (capital), services, or information.
The different flows in globalisation are: capital, labour, products, services and information. These flows are the dimensions of globalisation - they are the reason globalisation exists.
The different flows in globalisation are: capital, labour, products, services and information. These flows are the dimensions of globalisation - they are the reason globalisation exists.
flows of capital
flows of labour
Flows of labour are the movement of people who move to work in another country. Essentially, this is migration that will contribute to the workforce.
Today, 3-4% of the world’s population are international migrants. The majority of migration is to high income countries (HICs) - only 1.6% of low income country populations are made up of international migrants.
Today, 3-4% of the world’s population are international migrants. The majority of migration is to high income countries (HICs) - only 1.6% of low income country populations are made up of international migrants.
Highly skilled workers are usually highly trained in jobs that require a great dealofskill, such as in medicine, science, or ICT. Highly skilled workers may move to high income countries as wages are higher for the same job than in lower income countries.
Unskilled workers are those who are underqualified and do not possess ‘expert knowledge’ in their employment. Unskilled workers also move to developed countries for better wages and usually because of high unemployment rates in their countries. This can lead to overpopulation and exploitation, because many workers are still left in underpaid and often illegal work. This means many migrants continue to be low paid and low skilled.
Unskilled workers are those who are underqualified and do not possess ‘expert knowledge’ in their employment. Unskilled workers also move to developed countries for better wages and usually because of high unemployment rates in their countries. This can lead to overpopulation and exploitation, because many workers are still left in underpaid and often illegal work. This means many migrants continue to be low paid and low skilled.
flows of products
Flows of physical goods from one country to another. Globalisation has caused product flows to become international, meaning products are produced by a country and then transported to another country.
● Products used to be produced mainly in HICs as they had money to manufacture (factories, raw materials etc.)
● Products are now traded internationally due to technological advancements, such as better transportation and communication.
● A lot of production has relocated internationally (known as offshoring) especially to low income countries (LICs). These countries often have lower labour costs and reduced taxes, enhancing profits for companies.
● HICs import products from LICs, then sell them at much higher prices to make a profit.
● Emerging economies have increased the flows of consumer products to these countries, as there are more wealthy people.
● Products used to be produced mainly in HICs as they had money to manufacture (factories, raw materials etc.)
● Products are now traded internationally due to technological advancements, such as better transportation and communication.
● A lot of production has relocated internationally (known as offshoring) especially to low income countries (LICs). These countries often have lower labour costs and reduced taxes, enhancing profits for companies.
● HICs import products from LICs, then sell them at much higher prices to make a profit.
● Emerging economies have increased the flows of consumer products to these countries, as there are more wealthy people.
flows of services
Services are ‘footloose’ industries, meaning they can locate anywhere without constraints from resources or other obstacles. Services flow as they can be produced in a different country to where they are received (e.g. international call centres).
There are two types of services, high level and low level.
High level services: activities that generally require a higher skill level, meaning the person delivering the service should be qualified and trained. A prime example of a high level service are financial services; those who give financial services are usually trained and fully qualified as they should be well-informed to make decisions about money. Usually located in HICs, especially as hubs within cities.
Low level services: services that require less training, and are not as important to consumers. These services are mainly customer service based, especially call centres as workers only need basic training to offer advice or to sell products. Low level services are offshoring (moving overseas) in order to take advantage of lower labour costs. Offshoring has developed global connections and accelerated globalisation.
There are two types of services, high level and low level.
High level services: activities that generally require a higher skill level, meaning the person delivering the service should be qualified and trained. A prime example of a high level service are financial services; those who give financial services are usually trained and fully qualified as they should be well-informed to make decisions about money. Usually located in HICs, especially as hubs within cities.
Low level services: services that require less training, and are not as important to consumers. These services are mainly customer service based, especially call centres as workers only need basic training to offer advice or to sell products. Low level services are offshoring (moving overseas) in order to take advantage of lower labour costs. Offshoring has developed global connections and accelerated globalisation.
flows of technology
Any type of information can flow from one place to another via the internet, SMS, phone calls etc. for example, international news.
Information flows occur for different purposes, and occur across many platforms.
● Fast broadband and connections allows news and financial information to be transferred almost instantly, allowing people to be more informed about global current events.
● Social media has allowed people to communicate across countries, and allows people to experience other cultures, making people across the world more interconnected.
● Real time data and data transfers contribute to the ‘knowledge economy’ (quaternary industry). This is essentially the industry that requires information to develop, rather than products such as agricultural produce or manufactured products. The ability to transfer information has created developments in stock markets, high-tech products, the education sector and many other areas of society.
● Large databases and archives can be used for research and education.
● The ability to research allows people to seek better employment opportunities, creating more global connections and allowing online, work-from-home jobs.
Information flows occur for different purposes, and occur across many platforms.
● Fast broadband and connections allows news and financial information to be transferred almost instantly, allowing people to be more informed about global current events.
● Social media has allowed people to communicate across countries, and allows people to experience other cultures, making people across the world more interconnected.
● Real time data and data transfers contribute to the ‘knowledge economy’ (quaternary industry). This is essentially the industry that requires information to develop, rather than products such as agricultural produce or manufactured products. The ability to transfer information has created developments in stock markets, high-tech products, the education sector and many other areas of society.
● Large databases and archives can be used for research and education.
● The ability to research allows people to seek better employment opportunities, creating more global connections and allowing online, work-from-home jobs.
global marketing
Globalisation has allowed businesses to market (advertise, promote and sell) their products on an international scale. This has grown many businesses due to increased recognition and profit.
Global marketing involves different marketing strategies that overall allows the marketing to succeed:
Awareness of the brand: when a brand creates atrademark(a legally registered representation, such as a logo) it can be easily recognised by consumers. A familiar brand is more likely to sell as they are chosen over less well-known competing brands. By keeping this trademark worldwide, consumers in other countries are likely to recognise the brand and trust it.
American brands such as Apple, Coca Cola, and Nike have developed a global awareness of their brand, and are internationally well known. Buyers may assume theirsuccessandpopularity equates to a good product, so the familiar brands are seen as trustworthy and continue to grow.
Keeping the same strategy: To make any changes to a marketing campaign will be costly, e.g. the costs for employment. Global marketing campaigns usually only need to change thelanguage in order to promote their product, but sometimes a marketing campaign may need changed in order to respect cultural differences, such as religion or preferences.
Global marketing involves different marketing strategies that overall allows the marketing to succeed:
Awareness of the brand: when a brand creates atrademark(a legally registered representation, such as a logo) it can be easily recognised by consumers. A familiar brand is more likely to sell as they are chosen over less well-known competing brands. By keeping this trademark worldwide, consumers in other countries are likely to recognise the brand and trust it.
American brands such as Apple, Coca Cola, and Nike have developed a global awareness of their brand, and are internationally well known. Buyers may assume theirsuccessandpopularity equates to a good product, so the familiar brands are seen as trustworthy and continue to grow.
Keeping the same strategy: To make any changes to a marketing campaign will be costly, e.g. the costs for employment. Global marketing campaigns usually only need to change thelanguage in order to promote their product, but sometimes a marketing campaign may need changed in order to respect cultural differences, such as religion or preferences.
Patterns of production, consumption and distribution
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HICs with developed markets dominate automotive products, steel and iron, and agricultural products.
Middle-Eastern emerging economies are large contributors to the oil industry. Russia, Saudi Arabia, UAE, and Qatar are all in the top 10 exporters of fuel and mining products. The textile and clothing industry are concentrated within emerging economies and LICs, especially in Asian regions. China is the world’s biggest exporter of textiles and clothing. Consumer technology (specifically office and telecom equipment) exports are concentrated in emerging economies. China makes up a third of the entire market - the amount of office equipment produced in these regions is likely due to the cheap labour prices, and ability to make and ship products in bulk. |
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In general, HICs consume manufactured products more than LICs. This is because there is a lot less demand for goods in LICs. In developing economies, there is a demand for fuel and minerals due to the rapid industrialisation in these economies, especially Brazil, China, and India.
In the least developed countries, imports are low. Chad and the Democratic Republic of Congo, and two former Soviet states – Georgia and Uzbekistan - importmedicalsuppliesmore than any other country. |
factors affecting globalisation
Factors Affecting Globalisation Globalisation has accelerated and deepened due to different advancements globally. The development of technology, international relationships, and the implementation of systems have helped in creating a more globalised world. These advancements include:
$ New financial technologies and systems
inancial systems Globalisation has created a global financial system, incorporating thousands of institutions and banks; borrowing/investing relationships occur internationally as well as nationally.
The global financial system accelerates globalisation as it makes the world more connected. Banks are now large global institutions that work with millions of people’s money. Countries/companies can invest/lend millions in huge financial institutions like the World Bank.
$ New financial technologies and systems
inancial systems Globalisation has created a global financial system, incorporating thousands of institutions and banks; borrowing/investing relationships occur internationally as well as nationally.
The global financial system accelerates globalisation as it makes the world more connected. Banks are now large global institutions that work with millions of people’s money. Countries/companies can invest/lend millions in huge financial institutions like the World Bank.
Financial technologies Financial technology has made financial information and money easily accessible for people across the world, deepening the connections between countries:
● Communication technology has allowed banks to communicate across the world, allowing for banks to have global branches with customers all over the world. This technology also allows companies to invest offshore, and still manage/collect their profits from overseas.
● The internet is also a type of financial technology, as it allows people to transfer money, be that for buying/selling products, remittances, or investments.
● Cryptocurrency (encrypted digital currency) has been developed, which has created a whole new market for online currency and trading
● Communication technology has allowed banks to communicate across the world, allowing for banks to have global branches with customers all over the world. This technology also allows companies to invest offshore, and still manage/collect their profits from overseas.
● The internet is also a type of financial technology, as it allows people to transfer money, be that for buying/selling products, remittances, or investments.
● Cryptocurrency (encrypted digital currency) has been developed, which has created a whole new market for online currency and trading
✈Transport technologies, systems and relationships
Innovations in transporthave made it easier to transport goods and people faster and in larger quantities. High speed rail, and faster and bigger planes and boats have allowed the world to become more connected and globalised through these connections.
Larger and faster aircraft with increased capacity have reduced travelling times, meaning products can be sold over a larger distance in a shorter space of time. Planes are built for the purpose of transporting goods, known as cargo aircraft. These large planes have accelerated globalisation.
(Source: https://northglennews.co.za/106314/super-jumbo-aircraft -makes-largest-ever-delivery-dube-tradeport/)
Advancements in transport have also allowed people to travel further and easier, which has increased migration. International migration is now crucial to national workforces and relationships with other countries.
Containerisation has also changed how freight (products transported in bulk) can be transported internationally. Containerisation is the process of using large shipping containers to transport goods. Since the production of the large metal containers in the 50s, huge amounts of products have been loaded onto trains, planes and boats and transported. Containerisation makes global transportation cheaper as less trips are needed to transport the same amount of product.
Innovations in transporthave made it easier to transport goods and people faster and in larger quantities. High speed rail, and faster and bigger planes and boats have allowed the world to become more connected and globalised through these connections.
Larger and faster aircraft with increased capacity have reduced travelling times, meaning products can be sold over a larger distance in a shorter space of time. Planes are built for the purpose of transporting goods, known as cargo aircraft. These large planes have accelerated globalisation.
(Source: https://northglennews.co.za/106314/super-jumbo-aircraft -makes-largest-ever-delivery-dube-tradeport/)
Advancements in transport have also allowed people to travel further and easier, which has increased migration. International migration is now crucial to national workforces and relationships with other countries.
Containerisation has also changed how freight (products transported in bulk) can be transported internationally. Containerisation is the process of using large shipping containers to transport goods. Since the production of the large metal containers in the 50s, huge amounts of products have been loaded onto trains, planes and boats and transported. Containerisation makes global transportation cheaper as less trips are needed to transport the same amount of product.
Security technologies and systems
Due to our world being globalised, countries face threats from other countries. Therefore, certain security systems using communication technology and other technology have had to be developed in order to keep countries safe. These include:
● Stricter regulations upon entering a country and transporting goods. International customs is asystem that usestechnologysuch as automatic X-ray analysis. This controls the flow of people and goods in and out of countries to ensure security within the country. This system is put in place to ensure drugs, weapons, human threats etc. do not enter a country and cause harm. (Source: http://ichef.bbci.co.uk/news/976/cpsprodpb/872E/production/_86560643_86558824.jpg)
● Cybersecurity is a global concern, and attacks can originate from anywhere in the world. Technologies are being developed to ensure cyber attacks can be traced, no matter the country they originate from.
● There are global systems put in place to limit disagreement and wars, protecting civilians and ensuring security within countries. The United Nations Security Council, for example, is an international organisation that aims to diffuse disagreements with the intention of maintaining international peace.
Due to our world being globalised, countries face threats from other countries. Therefore, certain security systems using communication technology and other technology have had to be developed in order to keep countries safe. These include:
● Stricter regulations upon entering a country and transporting goods. International customs is asystem that usestechnologysuch as automatic X-ray analysis. This controls the flow of people and goods in and out of countries to ensure security within the country. This system is put in place to ensure drugs, weapons, human threats etc. do not enter a country and cause harm. (Source: http://ichef.bbci.co.uk/news/976/cpsprodpb/872E/production/_86560643_86558824.jpg)
● Cybersecurity is a global concern, and attacks can originate from anywhere in the world. Technologies are being developed to ensure cyber attacks can be traced, no matter the country they originate from.
● There are global systems put in place to limit disagreement and wars, protecting civilians and ensuring security within countries. The United Nations Security Council, for example, is an international organisation that aims to diffuse disagreements with the intention of maintaining international peace.
Communication technologies
The ability to communicate globally has allowed flows of information, services and capital to accelerate. For example:
● Satellites and fibre-optic communication enabled the growth of internet and mobile phone systems, in turn allowing information and money to be transferred internationally.
● Corporations can communicate with overseas factories quickly and easily, meaning the negatives of moving production overseas to low income countries are reduced.
● Services can be accessed through the internet or on the phone (e.g. call centres), allowing for thousands, if not millions of jobs to be created that can be accessed through communication technology alone.
● The global availability of smartphones and the vast number of apps, such as global positioning service (GPS) apps, and social groups, have added a new dimension to migration, allowing people to move with less restraints
● Relationships can be maintained even from great distances. This has deepened global connections and may also increase flows of labour as people are more likely to move if they can still communicate with their families abroad.
The ability to communicate globally has allowed flows of information, services and capital to accelerate. For example:
● Satellites and fibre-optic communication enabled the growth of internet and mobile phone systems, in turn allowing information and money to be transferred internationally.
● Corporations can communicate with overseas factories quickly and easily, meaning the negatives of moving production overseas to low income countries are reduced.
● Services can be accessed through the internet or on the phone (e.g. call centres), allowing for thousands, if not millions of jobs to be created that can be accessed through communication technology alone.
● The global availability of smartphones and the vast number of apps, such as global positioning service (GPS) apps, and social groups, have added a new dimension to migration, allowing people to move with less restraints
● Relationships can be maintained even from great distances. This has deepened global connections and may also increase flows of labour as people are more likely to move if they can still communicate with their families abroad.
Management and Information Systems
There are common systems in the majority of global companies to make the management of companies more efficient.
1. Economies of scale: The concept of increasing profits by producing a larger amount of products, as overall the average price to manufacture each product is lowered. Companies save money by upscaling their production, e.g. buying and shipping in bulk to save money.
2. Global supply chains: The organised management of product flows, from when they are manufactured to when they are delivered to consumers. Due to the ability tocommunicate information and transport products, companies can now have different stages of production in different countries, which saves money.
3. Outsourcing: Hiring other companies to complete company tasks that are essential, but are not necessary to complete by the company itself (e.g. call centres, final manufactures, advertising etc.). Outsourcing saves money if done in low income countries due to lower labour costs.
4. Offshoring: Relocating a company process abroad, usually saving money due to lower taxes, lower prices of materials, and lower labour costs.
There are common systems in the majority of global companies to make the management of companies more efficient.
1. Economies of scale: The concept of increasing profits by producing a larger amount of products, as overall the average price to manufacture each product is lowered. Companies save money by upscaling their production, e.g. buying and shipping in bulk to save money.
2. Global supply chains: The organised management of product flows, from when they are manufactured to when they are delivered to consumers. Due to the ability tocommunicate information and transport products, companies can now have different stages of production in different countries, which saves money.
3. Outsourcing: Hiring other companies to complete company tasks that are essential, but are not necessary to complete by the company itself (e.g. call centres, final manufactures, advertising etc.). Outsourcing saves money if done in low income countries due to lower labour costs.
4. Offshoring: Relocating a company process abroad, usually saving money due to lower taxes, lower prices of materials, and lower labour costs.
Trade Agreements
Globalisation has accelerated due to trade agreements across the world. Countries trade products to different countries; millions of products are imported and exported into and out of countries every year. Trade agreements have made globalisation deepen and accelerate as they make international trading less expensive and easier.
Trading products is expensive due to the controls and restrictions put on imports and exports. These restrictions are include: -
To lower the costs of trade, countries can enter trade agreements, which work to benefit all parties that are involved. In trade agreements, certain restrictions can be removed or lessened in return for another country doing the same. All trade agreements are overlooked by the World Trade Organisation (WTO) to ensure they are fair.
Interdependence
Interdependence is the theory that nations depend on each other economically, politically, socially and environmentally. Many contemporary societies are now classed as interdependent as they rely heavily on the decisions of other countries, meaning they would struggle and be detrimentally affected without them.
Globalisation has accelerated due to trade agreements across the world. Countries trade products to different countries; millions of products are imported and exported into and out of countries every year. Trade agreements have made globalisation deepen and accelerate as they make international trading less expensive and easier.
Trading products is expensive due to the controls and restrictions put on imports and exports. These restrictions are include: -
- tariffs (a tax for importing and exporting goods);
- - non-tariff barriers (NTBs), such as quotas (a limit/fixed number of goods) or requirements;
- - and outright bans on products or country import/exports.
To lower the costs of trade, countries can enter trade agreements, which work to benefit all parties that are involved. In trade agreements, certain restrictions can be removed or lessened in return for another country doing the same. All trade agreements are overlooked by the World Trade Organisation (WTO) to ensure they are fair.
Interdependence
Interdependence is the theory that nations depend on each other economically, politically, socially and environmentally. Many contemporary societies are now classed as interdependent as they rely heavily on the decisions of other countries, meaning they would struggle and be detrimentally affected without them.
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Issues associated with Interdependence Interdependence can cause issues for dependent countries due to unequal flows.
The global flows of people (labour), money (capital), ideas, and technology are not equal around the world, sometimes countries give more, sometimes countries receive more. Unequal flows can be beneficial to a country as they can bring benefits socially and economically. However, unequal flows can also cause inequalities, and in some cases can lead to injustice or conflict. |
unequal flows of people
In general, migration occurs from low income countries to high income countries. This is due to there being more opportunity in high income countries (better employment, more freedom etc.). Therefore, the flow of people globally is unequal.
unequal flows of money
As previously mentioned, the majority of money flows are in to low income countries. Foreign Direct Investment, aid, remittances all flow into low income countries, whereas the flows of money into high income countries are majorly repatriation of profits/product sales. These flows of money bring both benefits and issues.
unequal flow of ideas
High income countries usually dictate ideas of how countries should be run, and how trade should be carried out. This is mostly down to these countries having more money, thus more power over less developed countries.
unequal flows of technology
There are flows of technology both ways between HICs and LICs/NEEs. However, these flows are unequal as different types of technology flow between countries.
HICs and companies invest technology in lower income countries that will make profit (e.g. manufacturing equipment, components for assembly etc.) This type of technology does not flow from LICs to HICs because there are less companies based in LICs that wish to invest in HICs (as there are less benefits, including higher wages). In contrast, a lot of consumer technology is manufactured in lower income countries, only to be distributed to HICs.
HICs and companies invest technology in lower income countries that will make profit (e.g. manufacturing equipment, components for assembly etc.) This type of technology does not flow from LICs to HICs because there are less companies based in LICs that wish to invest in HICs (as there are less benefits, including higher wages). In contrast, a lot of consumer technology is manufactured in lower income countries, only to be distributed to HICs.
unequal power relations caused by independence
In general, richer, more developed countries are the more powerful countries. These countries have more money and technology, as well as deeper relations with othercountries, meaning they are able to influence global systems to their advantage.
In contrast, low income countries that lack money and technology have less influence over geopolitical events. This is problematicfor these countries, as they rely on the decisions made by richer countries, and only have the power to respond to the events rather than directly intervene.
Richer countries have control in global environmental law and trade, and they are more represented in global institutions. This means LICs may be affected negatively by the choices of richer countries, but do not have the power to respond, i.e. they cannot impose sanctions on other countries as they are too poor to, even if they disagree with the decisions of the countries.
In contrast, low income countries that lack money and technology have less influence over geopolitical events. This is problematicfor these countries, as they rely on the decisions made by richer countries, and only have the power to respond to the events rather than directly intervene.
Richer countries have control in global environmental law and trade, and they are more represented in global institutions. This means LICs may be affected negatively by the choices of richer countries, but do not have the power to respond, i.e. they cannot impose sanctions on other countries as they are too poor to, even if they disagree with the decisions of the countries.
international trade
Trade and Investments in a Globalised World Volume: International trade is occurring more than ever before. Globally, the amount of exports has been steadily increasing. The only time trade has decreased was during the Global Financial Crisis. World exports of manufactured goods has increased from US$8 trillion in 2006 to US$ 11 trillion in 2016. The amount of global investments occuring is also rising. FDI has risen from $400 billion to $1500 billion in 20 years.
Patterns
● Trading and investments used to be heavily concentrated within the most developed countries.
● Investments - HICs investing into LICs; emerging economies invest in LICs
● Trade - HICs largest exporters; emerging economies also becoming large exporters (currently make up 41% of world merchandise trade) LICs trading more, but growth show (less than 1% of global merchandise andcommercial services exports.)
● International trade is also changing due to new international relationships, these include:
○ Fair trade: Foundation to ensure producers receive better trading conditions and are not exploited because of their underdeveloped markets.
○ Trade blocs: Groups of countries in a trading agreement, allowing them to have certain advantages over other countries, such as reduced tariffs or higher quotas.
Patterns
● Trading and investments used to be heavily concentrated within the most developed countries.
● Investments - HICs investing into LICs; emerging economies invest in LICs
● Trade - HICs largest exporters; emerging economies also becoming large exporters (currently make up 41% of world merchandise trade) LICs trading more, but growth show (less than 1% of global merchandise andcommercial services exports.)
● International trade is also changing due to new international relationships, these include:
○ Fair trade: Foundation to ensure producers receive better trading conditions and are not exploited because of their underdeveloped markets.
○ Trade blocs: Groups of countries in a trading agreement, allowing them to have certain advantages over other countries, such as reduced tariffs or higher quotas.
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In general, economies with more money invest into those with less money in order to develop lower income countries. This generates economic growth in the LIC, and allows HICs to take advantage of the lower labour costs. This is why HICs especially send capital goods to lower income countries - these goods can create consumer goods, generating a profit. Emerging economies produce consumer goods for HICs, e.g. the garment industry in Eastern Asia and the Pacific.
access to markets within international trade
All countries have differential access to markets. Access to markets refers to a nation or company’s ability totrade within the international market. A country’s access to market is limited by any barriers that limit a country’s imports and exports. If access to markets is poor, a country is likely to be negatively affected. Economically, a country would be missing out on profits from exports, and societally, a country may miss out on products (and the poor economy may also negatively affect societal well-being).
Factors Impacting Access to Markets Trade Agreements (such as trade blocs)
● Improved access to markets by trade agreements, as relationships between countries are created that allow more trade to occur. E.g. LICs being encouraged to trade where they would otherwise not be able to afford tariffs etc.
● Reduced access to markets as trade agreements disallow countrieswithinthemto trade as well with other countries.
● Countries left out of trade agreements must pay tariffs when those in trade agreements do not. Countries like Kenya struggle to get a good price for the food they sell to European markets, due to the tariffs placed on non-EU agricultural produce as an attempt to protect EU farmers. This has weakened LICs access to markets.
Other Agreements
● Special Economic Zones (SEZs): areas within a country that do not have the same trading regulations as the country they are located in. The regulations within the SEZs are usually less strict, with lower tariffs and lower taxes, increasing access to markets. ● Special and Differential Treatment (SDT) agreements: put in place by the WTO to help specifically developing markets with poor access to markets. Includes reduced tariffs and taxes, priority in trading etc.
Wealth
● HICs can afford to pay for higher tariffs on exports and imports, increasing access to markets.
● HICs also increase their access to markets through FDI into foreign markets
● LICs may struggle to pay for high tariffs, and cannot save money through offshoring and outsourcing as they do not have the funds. Poorer access to markets.
● Improved access to markets by trade agreements, as relationships between countries are created that allow more trade to occur. E.g. LICs being encouraged to trade where they would otherwise not be able to afford tariffs etc.
● Reduced access to markets as trade agreements disallow countrieswithinthemto trade as well with other countries.
● Countries left out of trade agreements must pay tariffs when those in trade agreements do not. Countries like Kenya struggle to get a good price for the food they sell to European markets, due to the tariffs placed on non-EU agricultural produce as an attempt to protect EU farmers. This has weakened LICs access to markets.
Other Agreements
● Special Economic Zones (SEZs): areas within a country that do not have the same trading regulations as the country they are located in. The regulations within the SEZs are usually less strict, with lower tariffs and lower taxes, increasing access to markets. ● Special and Differential Treatment (SDT) agreements: put in place by the WTO to help specifically developing markets with poor access to markets. Includes reduced tariffs and taxes, priority in trading etc.
Wealth
● HICs can afford to pay for higher tariffs on exports and imports, increasing access to markets.
● HICs also increase their access to markets through FDI into foreign markets
● LICs may struggle to pay for high tariffs, and cannot save money through offshoring and outsourcing as they do not have the funds. Poorer access to markets.
tnc's
Transnational Corporations (TNCs)
TNCs: Companies that operate across multiple countries.
Spatial Organisation
1. The Headquarters of TNCs are usually located in high income countries. HQ is responsible for the big decisions, such as investments, meetings with global organisations etc.
2. Research and Development (R&D) are the facilities in which customer research, software developing, plans for manufacture etc. is carried out. There are usually R&D facilities in the country where the TNC operates from, but there may also be multiple facilities in different countries, so that research can be varied and specific to the target market.
3. Manufacturing and production facilities are mainly concentrated in lower income countries due to increased profits. Lower costs for labour, lower material costs, and lower taxes/tariffs all contribute to the global shift in manufacturing. The production of TNC products is usually organised and complex, allowing the greatest profits possible to be achieved.
TNCs: Companies that operate across multiple countries.
Spatial Organisation
1. The Headquarters of TNCs are usually located in high income countries. HQ is responsible for the big decisions, such as investments, meetings with global organisations etc.
2. Research and Development (R&D) are the facilities in which customer research, software developing, plans for manufacture etc. is carried out. There are usually R&D facilities in the country where the TNC operates from, but there may also be multiple facilities in different countries, so that research can be varied and specific to the target market.
3. Manufacturing and production facilities are mainly concentrated in lower income countries due to increased profits. Lower costs for labour, lower material costs, and lower taxes/tariffs all contribute to the global shift in manufacturing. The production of TNC products is usually organised and complex, allowing the greatest profits possible to be achieved.
Production
TNCs use global management systems in order to maximise their profits. These systems of production, as previously mentioned, are:
● Economies of scale: TNCs usually have a large revenue, meaning they can afford to upscale their production. This allows profits to increase as less is spent in production.
● Global supply chains: TNCs use global supply chains in order to increase profits. HQ and R&D are in HICs, whereas the production often occurs globally, especially with TNCs that operate within the secondary industry sector.
As an example, Boeing is an American aircraft TNC. Different components are manufactured in different countries, which overall gives the best product. This type of global supply chain happens throughout TNCs.
Products that are made for consumer audiences, such as smartphones, use global supply chains as a way to spend less money on manufacturing. TNCs may often invest in the source of raw materials also in order to save money in the supply chain. E.g. many TNCs that provide food (like fruit) invest in plantations to lower the cost and remove the ‘middle man’.
● Outsourcing: TNCs that provide tertiary industry products (services) will often outsource tasks to other companies in order to save money and time. TNCs like Apple outsource their manufacturing process so that profits can be maximised.
● Offshoring: Companies that make manufactured products will often have their factories in LICs due to lower labour costs, better taxes, weaker regulations for workers and weaker environmental regulations. This leads to much dispute about the ethical issueswith TNCs exploiting poorer citizens in order to maximise their products.
Linkages
TNCs create links between countries and with other companies. Linkages are created in order to benefit the TNC, and often includes expanding the company.
● Links through FDI: TNCs create links with other countries by investing in them, which benefits the country as this creates jobs and contributes to the economy.
TNCs can be investments into a factory, for example, but they may also take the form of:
○ Mergers: TNCs join to form one larger company, helping to form foreign links if the TNC is from a foreign country.
○ Acquisitions: A TNC buys another company in order to expand (usually a smaller company). Acquisitions are frequently associated with local job loss as a large TNC will take full control.
● Links through integration: TNCs often expand their company by creating linkages between other companies. There are two types of integration:
TNCs use global management systems in order to maximise their profits. These systems of production, as previously mentioned, are:
● Economies of scale: TNCs usually have a large revenue, meaning they can afford to upscale their production. This allows profits to increase as less is spent in production.
● Global supply chains: TNCs use global supply chains in order to increase profits. HQ and R&D are in HICs, whereas the production often occurs globally, especially with TNCs that operate within the secondary industry sector.
As an example, Boeing is an American aircraft TNC. Different components are manufactured in different countries, which overall gives the best product. This type of global supply chain happens throughout TNCs.
Products that are made for consumer audiences, such as smartphones, use global supply chains as a way to spend less money on manufacturing. TNCs may often invest in the source of raw materials also in order to save money in the supply chain. E.g. many TNCs that provide food (like fruit) invest in plantations to lower the cost and remove the ‘middle man’.
● Outsourcing: TNCs that provide tertiary industry products (services) will often outsource tasks to other companies in order to save money and time. TNCs like Apple outsource their manufacturing process so that profits can be maximised.
● Offshoring: Companies that make manufactured products will often have their factories in LICs due to lower labour costs, better taxes, weaker regulations for workers and weaker environmental regulations. This leads to much dispute about the ethical issueswith TNCs exploiting poorer citizens in order to maximise their products.
Linkages
TNCs create links between countries and with other companies. Linkages are created in order to benefit the TNC, and often includes expanding the company.
● Links through FDI: TNCs create links with other countries by investing in them, which benefits the country as this creates jobs and contributes to the economy.
TNCs can be investments into a factory, for example, but they may also take the form of:
○ Mergers: TNCs join to form one larger company, helping to form foreign links if the TNC is from a foreign country.
○ Acquisitions: A TNC buys another company in order to expand (usually a smaller company). Acquisitions are frequently associated with local job loss as a large TNC will take full control.
● Links through integration: TNCs often expand their company by creating linkages between other companies. There are two types of integration:
Trading and Marketing Patterns
● The majority of TNCs trade with HICs due to demand
● Rapid increase in demand for popular brands in emerging economies, increasing TNC trade links
● In the lowest income countries, there is a lack of TNC-made consumer products, as few people have a disposable income to buy these products.
As TNCs are usually large companies with a lot of revenue, they can afford to take advantage of global marketing. Many TNCs use the same marketing strategy as it creates a trademark, but they also have the money toadjust their marketing strategy to different countries to maximise profits.
● The majority of TNCs trade with HICs due to demand
● Rapid increase in demand for popular brands in emerging economies, increasing TNC trade links
● In the lowest income countries, there is a lack of TNC-made consumer products, as few people have a disposable income to buy these products.
As TNCs are usually large companies with a lot of revenue, they can afford to take advantage of global marketing. Many TNCs use the same marketing strategy as it creates a trademark, but they also have the money toadjust their marketing strategy to different countries to maximise profits.
global governance
Global Governance - the process of multiple nations working together to manage matters that affect the whole world.
Global governance works on a variety of scales, from local to global. In short, decisions made by global institutions affect all scales, including local. This can be seen in many scenarios. Trade agreements set by the WTO (a global institution) affects how trading happens internationally, for example in the EU (an international institution).
In turn, the Department for International Trade (a national institution) decides what products the UK imports from where.
A regional institution, such as a warehouse, receives the international products and distributes them.
A local shop buys the international products from the warehouse.
The effects of global governance on a variety of scales occurs in different respects, such as the environment. Nations sign global agreements, which affects, for example, how much CO2 localities can emit.
Global governance maintains global systems (e.g. the environment, politics, economics etc.) through global societal norms, global laws, and global institutions.
Global governance works on a variety of scales, from local to global. In short, decisions made by global institutions affect all scales, including local. This can be seen in many scenarios. Trade agreements set by the WTO (a global institution) affects how trading happens internationally, for example in the EU (an international institution).
In turn, the Department for International Trade (a national institution) decides what products the UK imports from where.
A regional institution, such as a warehouse, receives the international products and distributes them.
A local shop buys the international products from the warehouse.
The effects of global governance on a variety of scales occurs in different respects, such as the environment. Nations sign global agreements, which affects, for example, how much CO2 localities can emit.
Global governance maintains global systems (e.g. the environment, politics, economics etc.) through global societal norms, global laws, and global institutions.
Norms in Global Governance
Norm: A social norm; normal and therefore accepted behaviour.
Although norms differ between countries, global governance has worked to develop global norms, mainly concerning the unfair treatment of people. Countries may disagree with societal norms in other countries, but there is little that can be done to globally govern a country’s norms and ideologies, which is where international laws are helpful.
Laws in Global Governance International laws are legally binding, unlike a norm, meaning failure to comply with this law can result in prosecution. Anything from trading sanctions to attacks can result from countries not respecting international laws.
Global Institutions In order for countries and people to be governed globally, there are certain international institutions that have been developed to oversee the maintenance of global systems. These institutions aim to represent all nations, as well as protect these nations. This can include the development and enforcement of laws, dealing with law breaks, keeping international peace, and promoting equality. The majority of global institutions are Intergovernmental Organisations (IGOs), as global governance should obviously include members from around the globe, so that all opinions are fairly expressed.
Global institutions have positive and negative effects. This is especially true of the United Nations, which will be discussed in more detail in a separate case study.
Norm: A social norm; normal and therefore accepted behaviour.
Although norms differ between countries, global governance has worked to develop global norms, mainly concerning the unfair treatment of people. Countries may disagree with societal norms in other countries, but there is little that can be done to globally govern a country’s norms and ideologies, which is where international laws are helpful.
Laws in Global Governance International laws are legally binding, unlike a norm, meaning failure to comply with this law can result in prosecution. Anything from trading sanctions to attacks can result from countries not respecting international laws.
Global Institutions In order for countries and people to be governed globally, there are certain international institutions that have been developed to oversee the maintenance of global systems. These institutions aim to represent all nations, as well as protect these nations. This can include the development and enforcement of laws, dealing with law breaks, keeping international peace, and promoting equality. The majority of global institutions are Intergovernmental Organisations (IGOs), as global governance should obviously include members from around the globe, so that all opinions are fairly expressed.
Global institutions have positive and negative effects. This is especially true of the United Nations, which will be discussed in more detail in a separate case study.
the global commons
‘The Global Commons’ is the concept of an area that does not belong to a single country. Rather than belonging to nobody, the commons are supposed to belong to everybody, meaning every country has a right to benefit from the Global Commons.
Protection
Although every country has a right to use the commons to develop, it is now recognised that this development must be sustainable. In order for the use of the commons to be sustainable, there are measures in place to ensure it is protected.
● Global Institutions have been created to directly manage issues associated with the global commons so that these issues can be solved in a fair and sustainable way. For example, between 1973 to 1982 the United Nations developed The United Nations
Convention on the Law of the Sea (UNCLOS), a treaty designed to tackle marine pollution, overfishing and competing territorial claims between states.
● International laws are now effective within the global commons, although these laws are usually set by institutions like the UN, so any non-member countries will not be prosecuted under these laws. There are several treaties in action to protect outer space, including the Convention on Registration of Objects Launched into Outer Space (Registration Convention), which ensures countries protect outer space by documenting their launchings etc.
● NGOs campaign to protect the commons, by spreading awareness as well as raising money for their protection.
Although every country has a right to use the commons to develop, it is now recognised that this development must be sustainable. In order for the use of the commons to be sustainable, there are measures in place to ensure it is protected.
● Global Institutions have been created to directly manage issues associated with the global commons so that these issues can be solved in a fair and sustainable way. For example, between 1973 to 1982 the United Nations developed The United Nations
Convention on the Law of the Sea (UNCLOS), a treaty designed to tackle marine pollution, overfishing and competing territorial claims between states.
● International laws are now effective within the global commons, although these laws are usually set by institutions like the UN, so any non-member countries will not be prosecuted under these laws. There are several treaties in action to protect outer space, including the Convention on Registration of Objects Launched into Outer Space (Registration Convention), which ensures countries protect outer space by documenting their launchings etc.
● NGOs campaign to protect the commons, by spreading awareness as well as raising money for their protection.
