GLOBALISATION CONTENT SUMMARY
EQ1
Transnational: Extending or operating across national boarders
Corporation: A large company or group of companies authorised to act as a single entity and are recognised as such
in law.
Gross Domestic Product (GDP): The total value of goods produced, and services provided in a country over the
course of one year.
Emerging economies: An economy that has some characteristics of a developed market but does not fully meet its
standards.
Remittances: A sum of money sent in payment or as a gift.
Interdependency: The dependence of two or more people or things on each other.
Globalisation is the process by which ideas, knowledge, information, goods, and services are spread around the
world.
‘The increasing integration of economies around the world, particularly through the movement of goods,
services, and capital across borders. There are also broader cultural, political, and environmental dimensions
in globalisation.’
More people’s lives connect with faraway places, e.g., purchasing commodities/ cheaper travel. Due to
globalisation, it is not just the wealthy who ‘live globally’. New links are being formed between places that are
increasingly further apart, and the faster speed of these connections means people are able to talk to one another
in real time or travelling quickly between continents using jet aircraft.
Over the last 30 years, TNCs have emerged as major global forces, exercising economic and political power in an
unprecedented and unaccountable way. They reap exorbitant profits. Many have taken over policymaking in
government and act with impunity despite the devastating social and economic impacts of their operations.
The worlds rich tend to employ the world’s poor, this can result in benefits for both parties, however the
rich in the end profit.
TNCs have allowed the spreading of social networks and services such as social media and streaming and
online shopping services, however this has brought social issues regarding privacy, extremism, and
misinformation. Capitalism has spread as countries trade with each other, particularly to formerly
communist nations. This has resulted in more free markets and a reduction in communist regimes as a
result, however it can be argued that capitalism is, like communism, fundamentally flawed.
, The Global
Digital Divide:
This map
shows the
distribution of computers per person per
country. Computers are concentrated in
the Northern hemisphere, particularly in
the West in areas such as North America
and Western Europe, as well as
developed countries such as Japan and
South Korea. The majority of computers
are found in developed countries. This
special pattern impacts the level of
development because in the modern
world, connectivity impacts the wealth
and oppertunities, meaning it can greatly
impact development.
The distribution of internet users is
similar to the computer distribution
across the world. In countries such as
the Central African Republic, less than
10% of the population are connected
to the internet. Countries such as
Norway have over 80% of their
population connected to the internet.
More developed countries have
greater connectivity.
, The same patterns can be observed with
the amount of high-speed internet cables
throughout the world. Developed countries
re very interconnected, whereas less
developed ones are not. Without the
internet, many aren’t connected to online
markets, further disadvantaging them.
Despite being so remote, New Zealand is
very developed and interconnected,
however, it isn’t connected to less
developed countries such as those in Africa
and less developed ones in Asia.
Submarine Cable Map:
Shows how interconnected countries are
to the internet and each other. There is a
noticeable disparity between Asia,
Europe and North America compared to
the African continent, acting as a marker
for comparable development.
A shrinking world:
Developments in transport and trade
have accelerated in the 19th and 20th
centuries.
- Transport improvements allow value of trade to increase. Major trading powers (e.g., the USA) have sought
to maintain competitive edges through continual transport innovation.
Time – Space Compression:
Heightened connectivity changes our
perception of time, distance, and
potential barriers to the migration of
people, goods, money, and
information. This perceptual change
is called time-space compression. As
travel times fall, different places feel
closer to each other, making
everything feel closer than in the
past. This is known as the shrinking
world effect.
The shift from railways and
telegraphs to the internet and jets
has contributed to this.
, Tariff: A tax imposed on imports
Subsidy: Financial assistance given to a business by a government to make it competitive or prevent collapse
Quota: A limit on the quantity of a good a country allows to be imported
Protectionism: Policies to protect businesses and workers in a country by restricting/ regulating trade with foreign
nations.
Free-market Economy: A market economy based on supply and demand with little to no governmental control.
Free trade: A policy where a government does not interfere with imports or exports by applying tariffs, subsidies, or
quotas.
Privatisation: Transferring ownership of a public service/ agency/ property into private ownership and run for profit.
Neo-liberalism: A political philosophy of free-trade, privatisation, and increasing the role of businesses in society,
while decreasing that of the government. It is thought to make trade easier, meaning there will be mire of it, and in
theory increasing the overall wealth of a country and ideally reducing poverty.
IGOs: E.g., IMF, WTO, and the World Bank. They work to increase cooperation between economies, while
simultaneously promoting democratic ideology, aka, Capitalism.
Foreign Direct Investment (FDI): There are several types of FDI, all of which involve the ever increasing economic or
industrial activity of a TNC within a country, usually one of alternative origins to the TNC in question:
- Offshore: Production facilities are outsourced to developing countries, which have larger, cheaper
workforces. An example would be Bangladesh. An effect of this is deindustrialisation of developed countries
– the North of England.
- Foreign Mergers: TNCs from different countries often join to form a larger company to increase influence,
often resulting in a monopoly. An example of companies behaving similarly to states.
- Foreign Acquisitions: A TNC acquires another company, often through hostile means, wit a lack of concern
for local job loss and damage to the environment. Different to foreign mergers in the sense that a TNC
acquires another company or industry as an asset as opposed to forming a partnership, similar to
colonialism.
- Transfer Pricing: TNCs will often channel their profits through subsidiaries in tax havens such as Ireland or
the many Caribbean islands. TNCs will often have their official ‘head offices’ located in these tax havens with
little to no staff in order to avoid taxes on their profits. (Tax avoidance differs from tax evasion in that it is
legal whereas tax evasion is not).
Trade blocs: E.g., the EU, NAFTA, have increased in influence and often reduce tariffs and other protectionist
measures between member states. There are pros and cons:
▪ Businesses have a larger potential market, and therefore larger potential revenue.
▪ As businesses cater to increasing demand in the volume of their production, other businesses can benefit in
terms of supply chains, providing outsourcing oppertunities and management, among others. May have
created a positive feedback loop as the more businesses profit, the more others will as well.
▪ Trade of essential materials and goods becomes more reliable as trade routes become more stablished and
there are less economic risks.
▪ The interests of countries within major blocs are usually focused on themselves. Outside countries in regard
to trading could become exclude, making it very difficult for them to join in. Foreign industries such as
suppliers can be directly harmed as a result of the competition or lack of trade oppertunities.
