What is globalisation?
Process by which economies, societies and cultures become inter-connected.
Made possible by a global network of trade, communications and migration.
What are the 6 dimensions of globalisation?
- Flows of capital
- Flows of labour
- Flows of products and services
- Flows of information and ideas
- Global marketing
- Global distribution of production and consumption
What is meant by flows of capital?
Refers to all money that flows between countries which is used for investment.
Global financial institutions such as the world banks and the international monetary fund provide finance and mechanisms by which capital can flow around the globe.
Also flows due to foreign direct investment and remittance payments.
What is meant by flows of labour?
Refers to the migration of people in search of better employment and opportunities.
- Seen 40% rise between 2000-2012.
- Mostly from periphery to core regions.
What is meant by flows of products and services?
Products can now easily flow around the world due to containerisation and a reduction in protectionism.
Services are also able to freely flow globally, these can be divided into high-level and low-level services.
What is meant by flows of information and ideas?
Globalisation means that ideas and information can flow globally, has been made possible by:
- International migration
- Improvements in technology
Advantages and disadvantages of flows of information and ideas?
- Valuable ideas can be spread which allows us to make medical advances.
- Enables TNCs to operate efficiently which boosts economies and creates jobs.
- Enables ideas such as democracy to spread.
- Spread of extremist views can happen on a much wider scale.
- Spread of the ability to reach contraband
- Potential for data to be hacked and leaked e.g. government information.
What is meant by global marketing?
This enables companies to promote and advertise the same product in the same way across the globe.
What is meant by the global distribution of production and consumption?
Global distribution refers to the spread of products and services across the globe.
Global shift is the transfer of manufacturing industries from HICs to NIC/LICs. It is directly linked to de-industrialisation.
How has distribution changed?
Production:
- De-industrialisation in developed countries so less production in HICs.
- Global shift has seen manufacturing outsourced to LICs.
Consumption:
- Consistent demand in HICs while demand in NICs is rising rapidly.
- Increasing due to increasing wealth and population.
Why has distribution changed?
Production:
- HICs+NICs becoming wealthier so are outsourcing to LICs in order to maximise profits and gain comparative advantage.
- Also encouraged to outsource due to government incentives in LICs.
Consumption:
-TNCs provide employment in less wealthy countries so they boost economy and individuals have money to spend on goods and services.
What are the consequences of these changes?
Production:
- De-industrialisation lead to job losses in HICs, leads to urban decline, tax falls and this has a NME.
- Creates jobs in NICs and LICs which boosts their economy.
Consumption:
- LICs increased jobs, tax increased and the economy improves, PME.
- Negative effect om the environment.
- Opportunities for TNCs in HICs to provide financial services elsewhere in the world.
Why has globalisation increased in pace?
- New financial systems
- New systems of trade
- New systems of communication and transport
- New management and information systems
- New security systems
What are new financial systems?
- Financial institutions now operate globally, which means they can move money quickly and easily.
- De-regulation of these institutions means government controls have been reduced which also improve this flow.
What are new systems of trade?
- Trade barriers are now far lower than in the past, so it can flow more easily, WTO overseeas 97% of trade.
- Trading blocs are groups of countries which agree to eliminate trade barriers between them.
What are new systems of communication and transport?
- Improvements in transport has made the flow of people and goods easier.
- Cost of shipping goods fallen by 70% since 1920.
- Improvements in electronic communications have made the flow of services, information and ideas much quicker.
What are new management and information systems?
- Make it possible for goods and services to flow globally and much easier.
- TNCs have to invest in new systems of management and production in order to stay to be efficient.
Now use JIT systems of production. Also need to have highly capable managers to organise and maintain systems.
What are new security systems?
- Traditional border security has become less important which eases the flow.
- Cyber security has become increasingly important as TNCs and governments seek to protect data and information.
