GLOBAL SYSTEMS AND GOVERNANCE
GLOBALISATION
DIMENSIONS OF GLOBALISATION
Capital Movement of money for the purposes of business production, trade or investment. 4 main regions:
- Core regions: wealthier, developed countries that have more power (movement of capital within
core regions as well e.g. stock markets)
- Periphery regions: less wealthy, less developed / developing regions that have less power
- IMF: to foster global monetary cooperation, financial stability, oversee exchange rate and BoP
problems (perhaps with stabilizing loans)
- World Bank: loans and grants to promote development and reduce poverty.
Labour The movement of people to move to live or work in a different country. Essentially migration -
different types have a different effect on the workforce e.g. economic, refugee, asylum seeker. 3-4% of
the world’s population are international migrants. The majority is to HICs (14.1% of pop whilst LICs only
1.6% of pop).
Products Physical goods that move from areas of production to consumption. Shift in recent decades from
internal product flows to international product flows, due to technological, transport and
communication improvements enabling trade and the benefits of offshoring for TNCs. Therefore
HICs usually outsource production to LICs for the product then to be shipped back. EEs are
increasingly growing and so wealthy and middle class citizens are too and there is more demand
for products in these increasingly consumerist countries (e.g. the first Apple store was in China in
2008, there are now over 40 stores).
Services Services are ‘intangible goods’ and are a footloose industry, meaning they can move easily without
constraints e.g. resources and infrastructure. High level services are normally concentrated in
HICs, and increasingly EEs and global hubs (e.g. financial services in London). Low level services are
usually offshored to reduce costs and take advantage of other benefits (e.g. call centres in India).
Information Flows of information have grown rapidly since the 90s e.g. SMS, the international news. Faster
broadband and connections, real time data, large databases and archives, increased job info and
opportunity to work from home, social media creating interconnectedness amongst individuals and
raising awareness of issues.
Marketing Globalisation has allowed businesses to market (advertise, promote, sell) their products on an
international scale. This has grown many businesses due to increased recognition and profit. A
brand will often create a trademark (legally registered representation such as a logo) so it can be easily
recognised by consumers and they know to trust it, because they may assume success and
popularity to equate to a good product. It is more beneficial for global marketing strategies to be kept
the same (albeit with translation or cultural and religious changes) as changing them can be costly (e.g.
employment costs). As a British company, KitKat appeared in Japan in 1973, since then it has become
extremely popular overseas with unusual flavours which often are popular in Japan. Altering business
practices for local interest is known as glocalisation.
FACTORS IN GLOBALISATION
COMMUNICATIO - Information can now be shared easily and cheaply at any time with an audience of
N billions, with the help of the internet.
- Mobile phone technology is particularly important in LICs as they connect people, markets
and trade.
- Loss of minority languages and cultures.
- Exposure of minority cultures through the internet.
- Raise awareness of issues e.g. deforestation and climate change.
- Increased cultural diversity.
FINANCIAL AND - TNCs have accelerated globalisation through mergers, expansion and shifting
TRADE production areas.
- Banks and financial systems operate across the globe and are linked together by
transmission lines and communications that allow the flow of money across the
, globe.
- Deregulation of financial markets removed government barriers to movements of
finance.
- The collapse of communism allowed for more countries to develop liberal, free market
economies.
- Increased movement of capital.
- Economic growth and development has led to higher incomes and lifted people out of
poverty.
- TNCs are available to avoid paying coropration tax in some countries.
- Local businesses are threatened by large TNCs.
- Exploitation of workers e.g. textile workers in developing countries receiving poor pay in
bad conditions.
- Leakages of money in developing countries to TNCs.
- Destruction of the environment as industrialisation and urbanisation can lead to land
degradation, pollution and loss of biodiversity.
TRANSPORT - Containerisation - before this, hooks were used to unload ships and it took weeks,
TECHNOLOGIES thousands of people worked at ports and dockers life expectancy was very low due to
accidents and labour conditions. In 1995, Malcom Mclean an American trucker worked
with an engineer to create the blueprint and sold them to the industry which allowed for
global standardisation. In the 1960s, freight costs made up 30% of price and today less
than 1%. Along with reduced import tariffs and increased domestic VAT from Margaret
Thatcher, lead to the deindustrialisation of the UK economy (1945 workforce was 50%
manufacturing, today is less than 15%) and an export deficit, but the decline of London
docklands in particular lead to the rise of the service industry (financial hub).
- Increase in aircraft size, computerised logistics networks and high-speed rail
networks.
- Goods can be shipped more quickly and in larger quantities as a result of integrating
several new technologies, easing international trade and making it more efficient and
productive, reducing prices of goods and igniting the consumer revolution.
SECURITY - Border security has been relaxed in some areas of the world allowing for easier trade but
increasing security concerns.
- Schengen Area, an area comprising of 26 European states that have officially abolished
passports and all other types of border controls at their mutual borders.
- Online security breaches.
- A more peaceful world since the rise of globalisation, fewer wars and conflicts.
- The UN uses peacekeeping troops to restore order.
- Rise of terrorism in Kenya and Nigeria as they are against ‘western values’ e.g.
consumerism and female emancipation.
MANAGEMENT - Computer technology makes information storage more efficient while also making it
AND transferable to other areas.
INFORMATION - High speed electronic trading systems mean financial transactions between importers and
SYSTEMS exporters can be completed quickly and securely.
- Manufacturing system in which materials or components are delivered immediately before
they are required to minimize storage costs.
GLOBAL SYSTEMS
FORM AND NATURE OF INTERDEPENDENCE IN THE CONTEMPORARY WORLD
Interdependence is the theory that nations depend on each other economically, politically, socially and
environmentally. Many contemporary societies are now classed as interdependent as they rely heavily on the
decisions of other countries, meaning they would struggle and be detrimentally affected without them.
Economic: countries are dependent on flows of labour (e.g. Qatar), goods and services entering the country in order for
the economy to grow. Labour provides a workforce, products and services mean countries can develop and make more
money. Remittances sent home to home countries can generate as much as 40% of GDP in some countries (e.g.
Tajikistan). Some UK sectors are highly reliant on Eastern European migrants, when the UK voted to leave the EU in
2016, the value of the pound fell and overnight the value of remittances sent home dropped by 10%.
, Political: international political issues require working together to solve issues, issues raised must have a unanimous
decision from nations. Countries rely on other countries to intervene if there is political unrest e.g. many nations
intervened when there was Serbian State sponsored ethnic cleansing of Kosovo Albanians eventually leading to Kosovo’s
independence.
Social: migration has caused social interdependence as there are now diasporas all over the world that are dependent on
the place they live in. Also a reliance for leisure activities e.g. TV.
Environmental: all countries are affected by greenhouse gas emissions and nuclear waste etc. meaning all countries rely
on each other to protect the environment (as a result of global commons). E.g. Nuclear fallout from the Chernobyl disaster
in Ukraine reached the UK and France.
ISSUES OF UNEQUAL FLOWS
Unequal flows of people
In general, migration occurs from LICs to HICs due to more employment opportunities and freedoms.
- Addresses important skill and labour shortages e.g. the UK recruiting nurses from the Far East.
- Some workers return to their origin country with new skills and ideas.
- Reduced unemployment in places which lack job opportunities.
- If fleeing conflict, migrants can enjoy improved QOL.
- Workers send remittances back to home countries.
- Countries find it hard to retain their best talent who are attracted by higher wages abroad - ‘brain drain’.
- The loss of skilled workers can also cause a training gap.
- Risk of disease pandemics.
- Overpopulation, stress on services and tensions between locals and migrants.
- Home countries can become dependent on remittances e.g. Estonia’s economy shrank by 13% when the
UK entered recession in 2009 and building projects were cancelled.
- Host countries become dependent on migrants for labour, e.g. problems with potato crop in Jersey due to
Polish migrants.
E.g. Qatar - exploitation
- The largest regional migration in the world is from south-east Asia to the Middle East, driven largely by the
huge, oil-driven, construction boom occurring on the Arabian Peninsula.
- Qatar has the highest proportion of migrant workers to the domestic population in the world, many of
whom are working to build 9 football stadiums for the World Cup, new roads, a high speed rail network, hotels
and airports.
- However, many migrants that travelled to Qatar borrowed a lot of money to afford the transport, only to find
themselves indebted to recruitment agencies (paying back loans with up to 35% interest), and the
conditions of their employment altered.
- During 2012 and 2013, nearly 1000 workers from Nepal, India and Bangladesh died whilst working in Qatar,
partly as a result of the working and living conditions.
- Of the 3000 North Korean workers, the Korean government reportedly takes 70% of wages, leaving
workers with only 10% of their raw wage after living costs.
An Amnesty International investigation revealed:
- Evidence of forced labour on World Cup infrastructure projects.
- Passports and ID confiscated - leading to an illegal status meaning they are in fear of leaving.
- Overcrowded accommodation.
- Poor access to drinking water.
- Salaries withheld so workers could not leave.
Unequal flows of money
The majority of money flows are into low income countries, through the form of foreign direct investment, aid and
remittances. Higher income countries also receive money flows from repatriation of products and sales.
- FDI provides higher income and therefore living standards.
