Globalisation

Globalisation: The Shrinking World

• Globalisation is the increasing interdependence of countries through flows of capital, trade, goods, services, culture, and ideas. LEDCs are becoming more involved in global markets, and MEDCs are increasingly interdependent.

Causes of Accelerating Globalisation

• Economic*

• Transnational corporations (TNCs) have significantly increased in volume and influence, often having incomes exceeding the GDPs of many nations.

• Online cross-border shopping is becoming more prevalent.

• Stock trading and foreign direct investment (FDI) are expanding globally.

• Financial institutions (e.g., pension funds, investment banks) actively trade currencies internationally.

• Political*

• Trade blocs (e.g., NAFTA, EU) have become more powerful, reducing tariffs and protectionist measures.

• International governmental organizations (IGOs), such as the IMF, WTO, and World Bank, aim to harmonize economies and promote democratic ideals.

• Global media outlets (e.g., BBC, Fox, CNN) disseminate political views and ideologies across the globe.

• Migration*

• Increased international migration fosters global family networks, spreading culture and finance through remittances.

• International tourism has grown due to lower transportation costs.

• Cultural*

• Americanization and Westernization are impacting many countries, especially developing ones.

• Flow of Commodities*

• Increased interdependence between nations arises from easy imports of goods.

• Production in low-cost countries (e.g., Bangladesh, Vietnam) has rapidly increased the volume of manufactured goods.

• Technology*

• The internet facilitates the dissemination of information and knowledge globally.

• Social networking sites are prevalent, allowing the spread of culture, ideology, and opportunities for migration and tourism.

• Large server farms (e.g., Microsoft data centers) store extensive data globally.

Dimensions of Globalisation

• Globalisation relies on different flows: capital, labour, products, services, and information.
• Capital:* Investment, trade, and business production.
• Labour:* Movement of people for work in other countries.
• Products:* Physical goods transfer between nations.
• Services:* "Footloose" industries located globally, produced and consumed in different places.
• Information:* Spread of all kinds of information via the Internet, phones, etc.

Governance and Decision Making Influences Globalisation

• Switched-off areas are countries excluded from the global exchange of trade, capital, labour, and information and thus are often left behind by global trends.
• Factors hindering globalisation:*
• Environmental:* landlocked countries, poor natural resources.
• Political:* political agendas, anti-migration policies, conflicts like terrorism.
• Economic:* low financial resources, unstable markets

Intergovernmental Organizations (IGOs)

• International organizations like the IMF and World Bank provide loans to developing countries but often on conditions that promote market opening and privatization which can be controversial as critics argue they increase LEDC debt.
• The World Trade Organisation (WTO) aims to liberalize trade but has been criticized for not preventing protectionism by developed countries.

Attitudes and Actions of National Governments

• Free Market Liberalisation: Governments sometimes adopt the view that market intervention hinders economic growth.

• Privatisation: Privatisation of previously state-run industries is used to raise funds.

• Encouraging Business Start-ups: Incentives can attract investments.

• Foreign Direct Investment (FDI):*

• Offshoring

• Foreign Mergers

• Foreign Acquisitions

• Transfer Pricing

• Restricting Globalisation:*

• Censorship: Governments restrict information and knowledge to limit exposure to foreign cultures.

• Limiting Migration: Controls on border crossings.

• Trade Protectionism: Subsidies, tariffs, and quotas are used to protect domestic industries.

Free Trade Blocs

• Benefits: Increased market potential, revenue, and overall business activity. Reliable access to essential goods and services, potentially lower economic risks.
• Disadvantages: Focus on internal trade bloc interests, potentially excluding foreign competitors, potential for unequal treatment of members.

Uneven Globalisation: Winners and Losers

• Measures of Globalisation: Indices like the KOF Index and AT Kearney Index assess globalisation, considering various factors. Other measures include GNI, PPP, income per capita, GDP.

• Economic Sector Balance: A country's progress can be demonstrated through the evolution of various economic sectors like primary, secondary, tertiary, and quaternary.

• Gender Inequality Index (GII & HDI): Assess a country’s social development.

Winners and Losers - TNCs

• Transnational corporations (TNCs) drive globalisation and can have large political influence.

• Benefits of TNCs: Generate jobs, invest in countries, and contribute to cultural exchange. They also help reduce production costs (e.g., sourcing raw materials, outsourcing labor, and offshoring).

• Drawbacks of TNCs: Potential environmental exploitation, unsafe working conditions in some locations, and the loss of jobs in source countries.

• Glocalisation: Adapting products and services to local tastes and needs.

Winners and Losers - Economic Change

• The Global Shift: Manufacturing and industrial activity has shifted from developed to developing countries (e.g, from western Europe and US to China and India).

• Outsourcing to India:*

• Benefits: Middle-class wages in India, increased spending by Indian consumers in businesses and services

• Costs: Exploitation of workers, demotivation, and increased inequality.

• Outsourcing to China:*

• Benefits: Cheaper labor, local economic development

• Costs: Exploitation of workers, environmental damage (pollution), deindustrialization.

Deindustrialisation

• Impact: Dereliction, unemployment, population decline, and increased poverty in affected areas.

Migration

• Rural → Urban Migration: People move from rural areas to cities due to factors like job opportunities, services, and infrastructure.
• Pull Factors (urban):* employment, services, infrastructure.
• Push Factors (rural):* poverty, conflict, land reform, agricultural modernization.
• Challenges of Growing Cities:* Strain on services, overcrowding, crime, sanitation issues, space limitations.

International Migration

• Elite International Migrants: Wealthy or skilled individuals move to global hubs

• Economic International Migrants: Workers fill skills gaps in various sectors.

• Costs and benefits for host and source countries: Host: skilled labor, cultural diversity, remittances. Source: brain drain, reduced economic activities

Culture and Social Globalisation

• Cultural imperialism/Erosion: The emergence of a global culture is being shaped by media, migration, TNCs, and social media
• Examples of Cultural Change:* Changes in diet (e.g., increased meat consumption in China), the Paralympic Games impacting attitudes towards disabilities.

Resisting Cultural Change

• Examples: France restricting foreign language media, China’s “Great Firewall”, Iran banning Barbie dolls.

Widening Inequality Gap

• Global inequality has widened due to differing economic growth rates between nations. Income per capita rose for most continents since the 1950s but some African countries experienced slow or negligible growth.

Globalisation Causing Growing Conflict & Degradation

• Globalization has sometimes increased conflicts and tensions related to resource disputes (rivers e.g., Mekong) and competing national interests

Sustainability and Localism

• Countermovement against globalisation
• Localism: A focus on locally-sourced goods and services to protect local economies and the environment
• Transition Towns: Communities trying to reduce consumption , waste, and environmental impact, potentially using local currencies.

Fairtrade

• Aims to provide better compensation to producers and growers in developing countries for goods like coffee, cocoa, and bananas.