Understanding Globalization

Defining Globalization

• Globalization is the increasing interconnectedness of the world's economies, political systems, and cultures.
• Without globalization, there would be no interaction between different countries.
• Complete globalization would result in the entire world acting as a single community.
• Globalization is driven by the movement of information, capital, products, services, and labor between countries.

Five Factors Promoting Globalization

• Flows of Information: The rapid spread of information through the internet has allowed for easier communication and collaboration across the globe. This increases understanding between countries and cultures.
• Flows of Capital: The movement of capital has increased significantly, with foreign direct investment rising from $400 billion in 1996 to $1.5 trillion in 2016. Improvements in ICT facilitate this movement.
• Flows of Products: Manufacturing has shifted to countries with lower labor costs. There has been an increase in international trade of manufactured goods.
• Flows of Services: Improvements in ICT have enabled the globalization of services. Deregulation in the 1970s and 1980s opened up financial markets.
• Flows of Labor: The movement of people to participate in the workforce has increased, including both skilled workers seeking better wages and unskilled workers moving to HICs for opportunities. International migration increased by over 40% between 2000 and 2015.

How Flows Affect Globalization

• Information: Facilitated by the internet, information spreads quickly, enabling collaboration and cultural exchange.
• Capital: ICT improvements have accelerated capital flows, increasing economic interdependence.
• Products: Lower labor costs drive companies to relocate production, boosting international trade.
• Services: ICT and deregulation have globalized industries like banking and insurance.
• Labor: International migration has increased due to opportunities and necessity, leading to cultural integration.

Negatives of Flows

• Information: Can lead to the spread of fake news, decreased tourism due to a lack of financial security, and an increase in cybercrime.
• Capital: May increase income inequality, tax evasion, and economic leakage.
• Products: May cause environmental degradation, increased carbon footprint due to transportation, and exploitation through sweatshops.
• Services: May result in job insecurity, lower service standards, and outsourced jobs.

Marketing

• Marketing is the process of promoting and selling products or services.
• It has become global as products/services are sold worldwide.
• Global marketing treats the world as one market using a single strategy. This creates global brand awareness and economies of scale, providing a cheaper alternative.
• Adaptation to regional markets is necessary due to varying laws and cultures.

New Systems

• Globalization is a result of new systems, technology, and relationships.
• New systems have resulted in globalization through new ways of working, procedures, methods, and organisation.
• New systems, like just-in-time manufacturing systems, allow a particular function to be carried out.
• Technology has advanced rapidly through IT and transport, enabling global access to information and efficient transportation.
• Relationships have resulted in globalization through trade-based agreements and common rules.

Global Financial System

• Governs the flow of capital between countries.
• Financial systems, based on Investment Banks, help companies raise capital.
• New financial products, government deregulation, and IT advancements in the 1980s made the financial system more global.

Technology on Global Scale

• Internet provides access to information while aeroplanes transport people and goods swiftly.

Trade Agreements

• Remove barriers to trade and the global trade system governs the flows of products between countries.
• Governments can regulate trade through tariffs, non-tariff barriers, and product bans. Trade agreements aim to reduce such controls, benefiting companies and consumers.

Transport and Communication Systems

• Improved transportation systems have increased globalization and allow products to get around the world easily
• Uniform metal containers introduced in the 1950s made loading and transferring goods quick and easy.
• Communication satellites launched in the 1960s provided cheap wireless communication, connecting remote areas.
• Optic fiber cables use light signals to transmit more data quickly.
• Management and information systems have increased company efficiency, enabling them to make products more cheaply.

Supply Chains and Economies of Scale

• Supply chains have contributed to globalisation as suppliers often are in a different country than the factory, and also the research takes place in yet another country.
• Economies of scale made reducing average costs in each item possible, allowing companies to lower raw materials.
• Working practices changed as casual and temporary contracts allowed for companies to save money through fixed yearly wages.

Security Threats

• Globalization is able to prevent security threats through new trading relationships. A new trading rlationship creates interdependence.
• Increased Interdependence prevent countries from wanting to fight

Dangers

• Conflict is more likely
• Developed countries may intervene to secure resources

Social Media on Global Scale

• Spreads culture
• Motivates investment and participation

Negatives of Social Media on Global Scale

• Easyu to lure population in scams
• Misleading population to believe fake news

Global Economy

• Characterized by global interdependence and interconnectedness

The KOF Index

• Measures the level of globalization in a country.
• It is divided into economic, social, and political globalization.
• The KOF Index was Introduced in 1996
• It is Calculated by combining 3 measured dimensions
• Economic globalization measures the volume of international trade, the number of multinational corporations, and the openness of a country's capital markets.
• Social globalization measures international phone calls, tourists, and foreign students.
• Political globalization measures international agreements signed and the number of international organizations a country belongs to.

Negatives of the KOF Index

• Many countries have large numbers of illegal foreign migrants not counted
• Internet users based on those with internet access, but this cannot be found accurately
• Smaller countries are overrepresented at top ranks while Uses readily available data Allows comparisons between diff categories

Goals of Marketing

• Attracting new and existing customers by delivering customer value.

Glocalization

• Globalized production of service adapted on a national scale to fit and meet a local market and demand.
• Meeting demand of target population creates local customers to become attracted to products suiting their needs, inclined to invest.
• Standardised system for preparing and serving food results in replicability in many locations, otherwise know as a scalable business model.

Coca-Cola Economy of Scale

• Simplified product using syrup and one product needed.
• Lower costs of marketing -> higher profit

Trading Blocs

• Limit international trade by allowing countries to provide special deals for trade.
• Host countries benefit from tariffs as it helps invest money

Advantage of Trade Blocs

• Attracts foreign investment ->all countries invest with each other

Disadvantage of Trade Blocs

• May impact negatively on LICs
• Can create an unhealthy amount on reliance

NIC and BRICS

• NIC is a Newly industrialised country
• BRICS are the Combined economies of brazil, russia, india, china and south africa e.g. large land areas, mineral wealth and large populations

MINT Countries

• MINT countries are Mexico, Indonesia, Nigeria, Turkiye which have Potential to realise fast economic growth.

Supply and Demand

• Supply and demand determine production, distribution and its price

History of Development

• Until world war II, Countries produced their own products
• Until world war II, LICS had lower demand and consumption. This was because they could not afford products

Global Production and Consumption of LICS

• LICs produced their own products while HICs had an increase in demand+consumption of products, produced more of them (INDUSTRIALISATION) Manufacturing and industrialisation.
• Today, Many LICs developed economically ove rthe psat 20 years production of goods and exporting them to HICs where in high demand. Became NICS...
• When LICS become richer, education+higher skilled consumption of products began to increase (disposable income)

Deindustrialisation

• Happens after previous rapid and succesful industralisation
• Developed economie are more likely to undergo deindustrilisation

Technology and Deindustrialisation

• Is dominant in HICs, incresad access by NICs key to their development
• Technology production is efficient high quality products at low cost+fast time as well as a growing global market for tech

Industria Revolution

• Greater demand, demand for coal for steam engines and factories tech advancemenets e.g. steam pump and efficient for deep mining

Global Scale Production Timeline

• Max output uk reached peak coal production, supplying europe Nationalism Industry
• shifted from heavy industry reduced coal

Global Systems

• Tech
• Communication
• Financial
• Transport
• Security
• Trade

Technology

• Massive change in communication e.g. Video Calls (skype), WWW (World wide web), Telephone calls

Tech Examples on Scale

• Easier to reach others worldwide
• Better transport
• Share activities with others
• Easier to stay in contact with friends + family

Drawbacks from Tech

• Increased cyber crime
• Fake news
• cyberbullying

Financial System Statistics

• 4.72 BILLION internet users 60% internet users 93% internet access
• It enabled Long-distance lending and borrowing of capital
• What is the eurozone // financial systems? Currency union of 20 member EU

Eurozone

• Benefits increased trade, Travel easier
• Drawbacks of high unemployment

Benefits of Trade System

• Foreign exchange rates encouragement to tourism

Drawbacks of Trade System

• Limits economic success

Advantage of Trade Systems

• Transport easier and cheaper through fast shipping

Drawbacks of Trade System

• Trade Imbalances

Trade Threats

• Terrorism
• War

Low Light tech

• Radar and long range cameras enhance ability to spot

Benefits and Drawbacks of Leaks

• Leaks help cybersecurity
• But it disrupts economy

Trade

• Trade has increase peace by improving global trade

EU

• Trade block enhances global representation

World Bank

• Promotes economc growth

World bank requirements

• To adopt trade policies
• Open up FDI

WTO

• trade organization reducing trade barriers

IMF

• Financial stability reducing trade liberalisation

Three Tiers of Global Systems

• Core
• Semi periphery
• Periphery

Core

• core tier are HICs with GNI of 3.697 trillion dollars.

Unequal wealth and inequality

• What are structural conditions? Things that can be objectively measured and contribute to social inequality
• (Asia) dippEd to 700M, rose in 2020 due to covid scarcity of resources.

Causes of Inequality

• Economic Factors, Colonisation, Natural disasters

Positives and drawacks of flow of people

• Most skilled and educated workers migrate
• Some countries expereince war famine so seek refuges
• Requires visas

Benefits and DRawkbacks of Global Trade

• Cheaper goods and reduced conflict
• Private conflict, bad conflict Conflcit with human rights

Qatar 2022

• Migrant Labour: Construction. Limited Local Voice
• foreign Investment
• Unequal flow of ideas and unequal flow of technology

African Cash Crops

• Bananas
• Coffee
• Tobacco
• Rice

Export Issues

• Most goods exported are cheap rather than processed

Dumpting

• Sening cheaper goods to new markets

Fair Trade Benefits

• Improvved living and fair conditions

Economic Policies

• Key advocates of free trade? WTO, World Bank, IMF, many other nations
• What is a quota? Limited quantity of a product which under official controls can be produced, imported or exported

Sum of Money

Sum of money grated by the state or public body, to help and business keep the price down

The Implications of Free Trade

• Lower prices result to buy more for their money Economies of scale produces

Employment with Free TRade

Employment may increase when increased export occurs

Trade Concerns With Skilled Labour

• Traditinonal skills and crafts may be lost when replaced with technology

TNC

• Large companies operating in at least 2 countries with products worldwide
• Bring cash and expertise
• Worker expoloitation and environmental concerns

Negative and Positive to Local Country

• Benefits economy idrectly and indirectly -> catalyst for development.

APPLL

• Employees have harsh conditions working in dangerous conditions with bad pay

Global Common

• Global Common is Areas that are not owned by any one country or organisation - they belong to everybody.