1.4.1 -
Globalisation,
networks and Enquiry question: Why are global economic connections increasing?
trade
Globalisation involves widening and deepening global connections and flows
(commodities, capital, information, migrants and tourists).
Globalisation
Globalisation: the increasing interconnectedness and interdependence of countries of the world and their economies; the
increasing interconnectedness and interdependence of countries around the world drawn into a global economy, through the
movement of goods, capital, services and information, as well as culture and ideas, with few or no barriers.
Interconnected: where places are linked due to major global flows
Interdependency: when two places become over-reliant on financial/political connections with each other
- For example, if an economic recession negatively affects a host country which migrants move to, then the economy of the
source country may shrink too, due to a drop in money being sent back (remittances).
- In April 2011, staff at a Honda factory in Swindon had to work only two days a week due to a shortage of parts following the
Japanese tsunami. The German DAX (stock market) lost 1.2% within minutes after the tsunami.
Types of Globalisation
Economic Globalisation
Transnational corporations (TNCs) use international outsourcing and offshoring to lower costs
Industries move to developing countries to save money on labour, brining economic growth and jobs for locals.
Trade blocs create economic integration between states and promote development.
Global transactions of money, e.g. buying something that is shipped from China.
Social Globalisation
International immigration creates multicultural societies where people share and adopt cultures (e.g. food shops).
Social networking allows for interactions between people living in different countries, and access to information.
Global NGOs and charities involved in the improvement of education and healthcare, e.g. the WHO and Amnesty International.
Political Globalisation
Globalisation is Governments form connections to trade, e.g. trade deals and blocs
an old process Western democracies have a global influence on political ideas, e.g. development of market economies in former communist
that has states.
accelerated Deregulation policies (removing state regulation) allow markets to grow with an international reach.
dramatically International organisations exist to harmonise national economies and political relations, e.g. the UN.
Cultural Globalisation
Exposure to media sources, e.g. television and social media, allow for the understanding of other cultures.
Ability to travel internationally lets people experience cultures.
Greater awareness of world events due to education and news sources.
Westernisation: the domination of western cultural traits in non-western areas, e.g. Starbucks in Asia.
How globalisation has changed since the 1940s
Connections are widening/lengthening – products can now be sourced from further away than ever before (e.g. Fiji Water)
New connections are being made between places
Connections are deepening – the number and type of connections has increased, and volume of flows have grown due to
stronger links. Countries are more connected to each other than ever before.
The density of connections between places has increased.
Connections are faster – can connect with people quickly via the internet and can physically get to places faster due to cheaper,
more efficient travel.
Global Flows
Flows What it is How it flows How it has encouraged Costs and benefits
globalisation
Capital Flow of money. Moves daily through In 2013, the total value of Costs
stock markets. transactions was $5 trillion per day. Over-dependence of countries and
Businesses, such as their economies on each other.
investment banks Benefits
and pension funds, More globalised through exchange
buy and sell money of foreign currency.
in different countries
, to make profits.
Commodities The flow of By trade Flows of commodities have Costs
manufactured multiplied in size in recent years, Destroys local businesses who
goods. fuelled by low production costs in cannot compete with international
South Asia, especially China, and corporations with money and
low-waged economies, such as influence, resulting in a loss of local
Bangladesh and Vietnam. These culture.
low production costs and wages People working in factories in LICs
attract TNCs to open factories earn low wages and often work in
there. unsafe conditions.
In 2015, GDP fell just short of Can make developing nations over-
US$80 trillion in value. Of this, dependent on TNCs to manufacture
around 1/3 was generated by trade their products there, however TNCs
flows in agricultural and industrial will leave a host country if cheaper
commodities. labour can be found elsewhere. This
damages the host country’s
economy if they are over-reliant on
one source of employment and
income.
Benefits
Keeps costs of products low, which
earns businesses more revenue.
Connects countries together via
GPNs.
Information The flow of Flows through the Allows for real-time Costs
communication. internet and is communication between distant Can make people over-dependent
stored in server places, allowing goods and services on information technology as the
farms, such as the to be bought at the click of a world becomes increasingly digital.
Microsoft Data button. Benefits
Centre in Social networks have increased in Allows people to connect with
Washington State size and influence, with Facebook others easily and efficiently, allowing
and Facebook’s data gaining 1.5 billion users in 2015. people from around the world to
centre in Lulea, On demand TV has further communicate even when they are
Sweden. increased data usage. far apart. This enables migration and
TNCs to outsource their production.
Tourists The flow of Flows via transport, Budget airlines have brought a Costs
people for mostly aircraft. ‘pleasure periphery’ of distant Can make nations over-dependent
travelling for places within reach for tourists of on tourism.
leisure. high-income nations. Increasingly, Benefits
people from emerging economies Tourism boosts the economy of
travel abroad as well, using budget countries as tourists spend money
airlines such as AirAsia or East during their trip.
Africa’s Fastjet.
China is the world’s biggest
spender on international travel,
with 120 million outbound trips
made in 2014.
Migrants The flow of Flows via transport, Faces the greatest number of Costs
people mostly aircraft. obstacles due to border controls Can make a migrant’s source country
permanently and immigration laws. Most dependent on the host country as
moving from governments have a ‘pick and mix’ migrants send remittances back
one country to attitude towards migration: they home.
another. embrace trade flows but attempt If there is an economic recession in
to resist migrant flows unless there the host country, the source
is a special need (e.g. Qatar’s country’s economy will also be
encouragement of Indian affected.
construction workers to help build Benefits
the World Cup stadiums). Despite Migrants benefit their host country
restrictions, record flows of as most lack the education required
migrants are recorded every year. to work high-paying jobs, so work
The combined number of economic
, migrants and refugees worldwide low-skilled and low-paying jobs that
reached almost ¼ of a billion in others in the host country may not
2013; in 2013, $500 billion was want to do.
sent out of the USA in remittances. Social globalisation.
Degree of globalisation varies by country and can be measured using indicators and
indices (AT Kearney index, KOF index). (8)
The Dependency Theory – Uneven Globalisation
As a result of the unequal distribution of power and resources, some countries have developed at a faster pace than others.
Dependency Theory is the idea that resources flow from a “periphery” of poor and underdeveloped states to a “core” of wealthy
states, enriching the latter at the expense of the former.
Core Periphery
Makes the most decisions about the global economy, Owns and consumes 20% of global goods and services,
e.g. what goods are produced. while containing 75% of the world’s population.
Provides most global investment. Earn low incomes – 2.5 billion people live on less than $2
Owns and consumes 80% of global goods and services. per day.
Manufacturing has fallen in the core, but profit has Manufacturing has risen as the periphery offers cheaper
risen as the core dictates to the new production lines. labour, which leads to outsourcing and FDI.
Earns the highest incomes. Provides very little global investment.
Makes very few decisions about the global economy.
How do groups have differential access to globalisation?
1. LICs (e.g. Malawi, Sudan)
Poor people still suffer isolation from global factors/lack of access.
Some links via cash crops, NGO projects or receiving aid donations.
2. MICs (e.g. Brazil, India, China)
Poor people may work for foreign TNCs (e.g. BT in India).
people have cultural links (e.g. sports, music and films).
Political awareness
3. HICs (e.g. the UK, USA, Japan)
More access and exposure.
Most people are consumers of global culture and products (e.g. iPhones, Netflix, Facebook).
Most people travel overseas.
Proportional Flow/Symbol Maps
Shows the real size of flows.
The size of the arrow is representative of the volume of the flow.
Indicators
Flows (e.g. a higher volume of international trade, more migration of people, more FDI)
Technologies (e.g. increased internet usage, flows of information, telecommunications)
Movements (e.g. increased international air traffic)
Media (e.g. the spread of global advertising, publishing, music, TV and film)
These indicators improve connects, which are the basis of globalisation. The more connected places become, the small the
differences between them will be. Distances between places will ‘shrink’ and the best-connected places will become ‘switched
on’.
Measuring Globalisation
AT Kearney index KOF index
Measures globalisation of cities by a London firm. It considers Measures globalisation of countries for political, economic and
political, communication, technology and personal indicators. social indicators, on a scale from 1 to 100, where 100 is the most
Calculated index value on a scale from 0 to 1.0. globalised.
The AT Kearney Index calculated its index using four main factors: The KOF index is an index of globalisation produced by the Swiss
political engagement; technological connectivity; personal Economic Institute. It is based on three major factors: economic
contact; economic integration. globalisation; social globalisation; political globalisation.
Political engagement Economic globalisation (37% weighting on overall score)
A country’s participation in international treaties and Volume of cross-border transactions (imports and
, organisations, and peacekeeping operations. exports)
Technological connectivity Volume of FDI
The number of internet users, hosts, and secure Social globalisation (24% weighting on overall score)
servers. Cross-border contacts (phone calls, letters, tourists,
Personal contact foreign residents)
Telephone traffic Information flows (internet/TV/press)
Travel and tourism Political globalisation (39% weighting on overall score)
Remittances Number of foreign embassies
Economic integration Membership of international organisations and trade
The volumes of international trade and FDI. blocs (e.g. EU, WTO, IMF)
Participation in UN activities
Participation in international treaties
Top 10 Cities in 2021 Top 10 Countries in 2021
1. New York, USA 1. The Netherlands - 90.91
2. London, UK 2. Switzerland - 90.45
3. Paris, France 3. Belgium - 90.33
4. Tokyo, Japan 4. Sweden - 89.44
5. Los Angeles, USA 5. UK - 89.31
6. Beijing, China 6. Germany - 88.73
7. Hong Kong, SAR 7. Austria - 88.61
8. Chicago, USA 8. Denmark - 87.80
9. Singapore 9. Finland 87.68
10. Shanghai, China 10. France - 87.63
Pros Pros
Uses more holistic indicators (e.g. the number of web servers Distinguishes between de facto (actual international flows and
rather than internet communications) and volumes of trade as activities) and de jure globalisation (policies and conditions that
well as FDI. enable flow and activities).
Looks into more specific branches to judge globalisation and
includes internal connections.
The overall ranking is worked out using a complex points and
weighting system for the four individual rankings.
Cons Cons
Use of value judgement, such as triple weighting to FDI and Overall scores are not averaged, as some factors (e.g. volume of
double weighting to trade volumes. FDI) carry more weight.
Unreliable data due to methodological problems for individual Top countries are relatively small in geographical size, so
measures and crude averaging. international interactions are of a high volume. Larger countries,
e.g. China and the USA, have more internal links.
Developments in transport and trade in the 19th century (railways, telegraph, steam-
ships) accelerated in the 20th (jet aircraft, containerisation), contributing to a ‘shrinking
world’.
Developments in Transport and Trade
Developments in transport during the 19th and 20th centuries led to an increase in trading between countries, resulting in the
biggest trading powers seeking to improve transport standards. Improvements in transport have also led to the expansion of
TNCs, especially being able to outsource to sites of cheaper labour. This is turn increases trade.
Transport and Shrinking World
communicatio
The time-space compression is a change in perception of how we view time, distance and barriers to the movement of money,
ns are a key
people, goods, and information due to better connections. Travel time is falling due to new inventions, so places approach each
part of
other in space-time and feel closer than in the past.
globalisation
19th Century
Steam Power Allowed UK to grow in 1800s.
Steam trains and boats allowed for the movement of goods more easily.
Allowed trade routes to Asia and Africa to develop.
Had large impact when invented as it connected countries and continents with each other, enabling
global trade.
No impact now as has been replaced by more efficient modes of transport.
Railways Train networks expanded across globe in 1800s.
In 1904, the Trans-Siberian railway stretched over 9000 km, from Moscow, through China to Japan.
