Define globalisation
The process of the world’s economies, political systems and cultures becoming more interconnected with each other.
Define world trade
The movement of goods and services across the globe.
What are the 3 main forms/different types of globalisation?
Economic - Long distance flows of goods, services and capital
Social - Spread of ideas, people and information
Political - The interdependence of government policies
What is the KOF Index?
The KOF Index (produced by the Swiss Institute for Business Cycle Research) measures the social, economic and political dimensions of globalisation combining 24 indicators.
Scale of the KOF Index?
What do the values indicate?
1-100
A higher value indicates a more globalised economy
3 examples of the most globalised economies (KOF Index)
Canada, Switzerland, most European countries
3 examples of moderately/more globalised economies (KOF Index)
USA, China, Russia
2 examples of the least globalised economies (KOF Index)
Nepal and Afghanistan
Define global systems + example
Global systems refer to any organisations or activities that link different parts of the world.
TNCs are examples of this as they operate in 2/more countries, linking their economies.
Define global marketing
The process of promoting and selling products/services internationally, treating the world as one single market.
2 benefits of global marketing
- Global marketing can enhance brand awareness as consumers more easily identify the name to increase sales.
- It is cheaper to have one campaign, lowering long run costs to enable economies of scale.
Define glocalisation + example
Glocalisation occurs when marketing is adapted to regional markets due to factors such as different cultural attitudes.
McDonald’s have utilised this to their advantage to sell on the global market.
What are the 5 flows between the different aspects of globalisation?
- Information
- Capital
- Products
- Services
- Labour
How are flows of information changing and making the world more interconnected?
- Flows of information include financial data or news of current events.
- They can be rapidly exchanged in large volumes through the development of the internet, email and social media, allowing people to communicate and work collaboratively from different countries.
- Therefore, increasing flows mean people can learn about the cultures of other nations without leaving their own country, enhancing globalisation.
- For example, the news of the 1st person to climb Mt. Everest took 5 days to reach the UK, which would now travel almost instantly across the world.
How are flows of capital changing and making the world more interconnected?
- Capital is money that is invested and spent on something to produce more profit/income.
- Overtime, capital has shifted from being invested within a country to increased FDI.
- This has been facilitated by improvements in ICT and investment by TNCs into developing economies.
- For example, global FDI increased from around $400 bn in 1996 to nearly $1500 bn in 2016, mainly from HICs to less developed countries.
How are flows of products changing and making the world more interconnected?
- Flows of products include raw materials and manufactured goods.
- Traditionally, manufacturing industries were located in developed nations and goods produced would be sold within that country.
- However in recent decades, manufacturers have moved overseas due lower labour costs with more goods being exported to HICs where consumption remains high.
- For example, Dyson is a UK based vacuum cleaning manufacturer that moved its production to Malaysia in 2002, but still sells the bulk of its products in the UK and other European countries.
Raw material flows are mainly from where to where?
Raw material flows are mainly from less developed countries to more developed, but patterns of trade have become more complex as developing countries invest in manufacturing activity.
How are flows of services changing and making the world more interconnected?
- Services are economic activities that are not based on producing any material goods e.g. banking.
- During the 1980s, the deregulation of financial markets meant it was easier for banks and other services to expand into different countries.
- Technological advancements have also allowed services to locate anywhere in the world when previously they were limited to serving customers within one country.
- Companies are increasingly relocating low-level services to less developed countries where labour is cheaper while high-level services tend to concentrated in developed nations.
How are flows of labour changing and making the world more interconnected?
- Flows of labour are movements of people who participate in the workforce from one country to another.
- The promotion of free trade increased international migration by over 40% between 2000 and 2015.
- Many migrants move to developed countries in search of better wages and living conditions, integrating aspects of their culture into society.
- For example, the free movement of labour in the EU allows workers of various skill levels to travel and bring new ideas between countries.
What are flows of information?
Flows of information include financial data or news of current events.
What is capital?
Capital is money that is invested and spent on something to produce more profit/income.
What are flows of products?
Flows of products include raw materials and manufactured goods.
What are services?
Services are economic activities that are not based on producing any material goods e.g. banking
What are flows of labour?
Flows of labour are movements of people who participate in the workforce from one country to another.
