Globalisation

Question 1

What is globalisation

Answer 1

The process by which countries around the world become increasingly interdependent on one another; this is primarily an increased interlinkage of national economies but also of political systems and cultures

Question 2

What is the global economy

Answer 2

the increased interdependence of national economies within a single worldwide capitalist economic system, sometimes called the global market

Question 3

What is capitalism

Answer 3

a political ideology and an economic system in which businesses are run for profit by private enterprises rather than controlled by the government for the nation

Question 4

What is a production/commodity chain

Answer 4

A series of stages that go into the development of a product, from extracting and processing raw materials, to manufacturing products from processed materials, to distribution of the finished product to retail. Value is added to the product at each stage, and the different stages are spread around the world depending on where they can be performed most profitably

Question 5

What is a transnational corporation (TNC)

Answer 5

a company that operates in at least two countries, is a major driver of globalisation

Question 6

What are five key flows that allow the global economy to function

Answer 6

-Trade
-Aid
-Foreign direct investment
-Labour
-Information

Question 7

What is trade

Answer 7

the import or export of raw materials, food, finished goods or services

Question 8

What is aid

Answer 8

Assistance in the form of money or goods from a donor country to a recipient country. Aid from one government directly to another is bilateral aid but if it goes via an intermediary such as the UN it is multilateral aid. It’s purpose may be to provide support following a war or natural disaster (emergency aid) or to promote long term development (development aid.

Question 9

What is foreign direct investment

Answer 9

TNC’s invest money in countries around the world (e.g infrastructure construction projects) so that they can exploit economic opportunities here

Question 10

What is labour

Answer 10

A workforce is essential to the functioning of the global economy, people can often move freely between countries in search of employment (economic migration), and TNC’s are keen to locate their operations where they can access cheap labour

Question 11

What is information

Answer 11

Th easy transfer of data and information around the world is essential for the efficient functioning of the global economy-for example by allowing TNC’s to control operations in multiple countries simultaneously

Question 12

What are the four main causes of globalisation

Answer 12

-trading blocs
-transnational corporations
-modern transport technology
-advances in communications technology

Question 13

How are trading blocs a cause of globalisation

Answer 13

-individual countries have grouped together into regional trading blocs such as the European Union
-the political and economic alliances are designed to promote free trade between member nations and strength within the global economy
-in trading blocs there is often a removal of protectionist policies such as import tariffs which encourages more imports and exports
-trading blocs also negotiate trade deals with external countries and other trade blocs and as they are bigger than individual countries they are more powerful
-by reducing barriers, global trade is encouraged

Question 14

How is the development of modern transport technology as cause of globalisation

Answer 14

-the development of modern transport technology on land (e.g motorways, railways), seas (e.g container ships), and air (e.g jet aircraft)
-these have allowed the movement of commodities and people, cheaply, quickly and efficiently
-this reduces the friction of distance resulting in a “global village’ or a ‘shrinking world’

Question 15

How have transnational corporations caused globalisation

Answer 15

-the emergence of large transnational corporations with diverse business interests spread around the world had drawn national economies and workers in different countries closer together in the global economy

Question 16

How have advances in communications technology technology cause globalisation

Answer 16

-they have enables the instantaneously flow of information around the world
-this has also served to reduce the friction of distance as one TNC can monitor its operations across many countries and transmit decisions without actually being there, enabling profits to be made in the global economy

Question 17

What two things have reduced the friction of distance

Answer 17

-transport innovations
-communication innovations

Question 18

What are global institutions

Answer 18

organisations operating on a worldwide scale in ways that increase global interconnectedness.

Question 19

What are the 6 main global institutions

Answer 19

-world trade organisation
-international monetary fund
-world bank
-non-governmental organisations
-trading blocs
-trans-national corporations

Question 20

What is the world trade organisation (WTO) and how does it affect the global economy

Answer 20

-its goal is to promote fair and free trade between countries within the global economy
-it does this be helping countries/ trading blocs to negotiate trade deals acting as a referee if there are trade disputes between countries and creating a set of rules for international trade
-it tries to remove protectionist policies such as import tariffs from national economies so imports and exports flow more easily
-it has 164 member countries which between them account for 98% of international trade

Question 21

What is a disadvantage of the world trade organisation

Answer 21

-its rules favour developed countries by putting developing countries in direct competition with them
-for example economies such as Ghana are flooded with cheap, government subsidised rice from the USA which puts local farmers out of business

Question 22

What is the International Monetary Fund (IMF) and how does it affect the global economy

Answer 22

-its main role is to ensure that currency exchange rate between nations remain stable
-if a country faces economic difficulties of even collapse, the IMF has a pool of money contributed by member countries which it can lend to countries to support them
-this can stop the collapse of national economies which would have wide reaching impacts

Question 23

What is a disadvantage of the IMF

Answer 23

-bail outs often come with strings attached e.g enforced austerity leading to a cut back in spending on services such as schools and hospitals
-rich countries that contribute more money to the pool have greater influence over policy

Question 24

What is the world bank and how does it affect the global economy

Answer 24

-sister organisation of the IMF
-provides low-interest loans and technical support to developing countries to fund projects designed to promote development
-e.g investment in education, healthcare, agriculture and infrastructure
-its aims are to reduce poverty and help development

Question 25

What are non-governmental organisations (NGOs)

Answer 25

-these include institutions such as Oxfam international and the Red Cross and Red Crescent -their efforts are targeted at reducing poverty -this may involve providing emergency aid in the aftermath of a natural disaster or conflict as well as providing longer term support with development projects

Question 26

What are transnational corporations

Answer 26

-companies that operate in multiple countries around the world -large TNCs are common in a number of economic sectors including: -technology, communications, oil and gas, cars, retails

Question 27

What 5 key flows within the global economy do TNC’s promote

Answer 27

-trade -aid -foreign direct investment -labour -information

Question 28

How do TNC’s promote trade within the global economy

Answer 28

-TNCs are responsible for 80% of global trade; in their pursuit of maximum profit they set up production chains that bind national economies into a global network or imports and exports -this works due to development in transport technologies in particular, container ships which carry 80% of global trade -it is also helped by trading blocs and the WTO which break down trade barriers and promote free trade

Question 29

How do TNCs promote aid within the global economy

Answer 29

aid is the one flow that is not significantly affected by TNCs

Question 30

How do TNCs promote foreign direct investment within the global economy

Answer 30

TNCs invest money in countries around the world e.g for infrastructure projects so that they can exploit economic opportunities there

Question 31

How do TNCs promote labour within the global economy

Answer 31

-one of the key factors that affects TNC’s depictions to locate operations is access to cheap labour -the presence of TNC operation in a country and the job opportunities it creates can be a powerful pull factor encouraging immigration

Question 32

How do TNCs promote information within the global economy

Answer 32

-to run global operations in a efficient and profitable way, TNCs must send vast quantities of informations around the world every day -this is possible thanks to developments in communication technology, including email and video call platforms

Question 33

What are the four reasons why TNCs spread their operation across multiple countries, creating production chains

Answer 33

-To take advantage of government incentives -To sell inside trade barriers -profit -to be close to major markets

Question 34

How do TNCs spreading operations across multiple countries take advantage of government incentives

Answer 34

-many governments offer subsidies and other financial incentives to TNCs to establish operations in their countries in order to boost national economic growth -e.g The UK gov has subsidised Nissan’s operations in Sunderland through tax breaks, cheap land and paying for research centra as it wants to create jobs in a deprived part of the country

Question 35

How do TNCs spreading operations across multiple countries make them able to sell inside trade barriers

Answer 35

-if a TNC is in a location where it is inside a trading bloc e.g Nissan in UK in the EU, they do not have to pay import tariffs -cars made in the UK could be sold to countries such as France without Nissan having to pay import tariffs to bring cars made outside the EU into the trading blocs

Question 36

Why do TNCs spread operations across operations across multiple countries for profit

Answer 36

-TNCs are nearly all capitalist enterprises, chasing maximum profit -they will therefore extract natural resources where they are cheapest and set up manufacturing/services where labour costs are lowest

Question 37

Why do TNCs spread operations across multiple countries to be closer to major markets

Answer 37

-even with improvements to transport technology making global trade cheaper and more efficient, TNCs like to set up operations close to large markets to it is easy to distribute goods and services to them

Question 38

What are three advantages of globalisation/TNCs to people in developing or emerging countries

Answer 38

-helps to kick start economic growth resulting in reduced poverty and increased quality of life -investment in infrastructure such as roads and railways improves access -creation of jobs and chance of regular wages and associated income security

Question 39

What are three disadvantages of globalisation/TNCs to people in developing or emerging countries

Answer 39

-exploitation of workers under ‘sweatshop’ conditions- long hours, low pay, poor health and safety conditions, use of child labour -highly paid managerial roles rarely go to local people, but are given to executives from the TNC HQ country -little regard for workers’ rights

Question 40

What are three advantages of globalisation/TNCs to people in developed countries

Answer 40

-easy access to cheap consumer products thanks to global production chains -increased immigration leads to greater economic productivity, the chance to fill skill gaps in the workforce and increased tax revenue for the government -higher profits for TNCs meaning greater wealth for executives and shareholders

Question 41

What are three disadvantages of globalisation/TNCs in developed countries

Answer 41

-loss of jobs in developed countries as TNCs take advantage of cheap labour elsewhere -dependence on imports from countries where production costs are shearer reduces self sufficiency -increased immigration may result in higher competition for jobs

Question 42

What is one advantage of globalisation/TNCs for environmentalists

Answer 42

-increased political interdependence allows for the global climate change COP summits and global media gives campaigners such as Greta Thunberg a platform

Question 43

What are three disadvantages of globalisation/TNCs for environmentalists

Answer 43

-unsustainable extraction of resources to meet demand for products within the global market -carbon emissions associated with global trade and aviation contribute to climate change -little regard for the environment with high rate of resource extraction, environmental degradation and air/water pollution

Question 44

What are two advantages of globalisation/TNCs for miscellaneous

Answer 44

-increased opportunities for global migration, allowing people from developing/emerging countries to move for better jobs elsewhere -increased exposure to different cultures-more diverse foods eaten, music listened to etc

Question 45

What are two disadvantages of globalisation/TNCs for miscellaneous

Answer 45

-primarily benefits those countries and companies that are already rich and powerful (and who create rule of global trade) therefore increasing inequality -loss of autonomy, a reduced ability for individual countries to make their own political and economic decisions e.g in a trading bloc

Question 46

What are two advantages of the TNC Coca Cola manufacturing in India

Answer 46

-foreign Direct investment- Coca Cola has invested $1 billion over 30 years to build factories and other infrastructure -job creation- Coca Cola India directly employs 25,000 people with many tens of thousands of other jobs indirectly dependant on the company

Question 47

What are three disadvantages of the TNC Coca Cola manufacturing in India

Answer 47

-economic leakage- a lot of the profits made by Coca Cola India leave the country and go to the USA where Coca Cola is based -extraction of water from aquifers for use in factories has led to a depletion of groundwater and farmers wells running dry so they cannot produce crops driving many to poverty -most jobs hat have been created for Indians are relatively unskilled and lower paid as the well paid managerial jobs often go to Americans or other foreign workers