Globalisation
A process in which geographic distance becomes of factor of diminishing importance in the
establishment and maintenance of cross border economic, political, and socio-cultural relations.
A process which began in late 1970s by the shift in world economy from an international to a more
global one, good are till traded internationally but the markets are regulated by nation-states.
Dimensions of globalisation
Flows of capital
Capital flows can refer to any physical resource that can be regarded as man-made aid for
production e.g. buildings, factories, machinery etc. However its mostly used in reference to money –
investment, trade, or production.
Deregulation – removal of government rules, regulation, and laws from the operation of business.
Since the late 20th century deregulation of the world financial markets = increase in capital flows
between countries as banks and financial institutions aren’t confined to national boundaries.
Types of capital flow:
1. Foreign direct investment (FDI):
Investment made by a gov or large company into a physical capital or assets of foreign
enterprise.
Developed countries dominate both inflows and outflows of FDI (EU and N. America
dominate).
Reports show that FDI grew 64% in 2021, reaching nearly $1.6 million.
Developing economies FDI outflows are slowly rising.
Graphs show fluctuations with clear dips at the 2008 crash and 2020-2021 COVID crisis.
Developing economies receive a lot of FDI inflows.
2. Repatriation of profits
Where profits made by companies abroad are returned to the home country
This is sometimes referred to as leakage as money is leaving the country.
E.g. US companies owning hotels in UK cities.
3. Aid
Financial support for poorer countries, mainly from rich countries. Can be in many forms:
Multilateral aid – provided through one institution such as UN and is made from
contributions from HICs, known as Official Development Assistance.
Bilateral aid – from one gov to another sometimes with mutual co-operation
conditions applied.
Voluntary aid – from NGOs and is often tech, expertise, food, and relief in disasters.
Examples: Red Cross – Canada Alberta – cash card
In 2012, Kenya received $2654 million in foreign aid from govs and world bank – 11 th largest
recipient of aid.
4. Remittance payments
Transfers or money made by foreign workers to family in their home country.
This is now the 2nd most important form of income for developing countries.
The world bank found that global remittance in 2020 was $702 billion and $540 billion of
that was to LICs and MICs
Developed countries also receive remittance – France and Germany are in the top 10
receivers for 2020 but is typically less important to their GDP.
Countries most reliant on remittance inflow according to world bank: Tonga (37.7% of GDP),
Somalia (35.3% of GDP) and Lebanon (32.9% of GDP).
Flows of Labour
,Not as free flowing as money flow due to restriction on immigration
In recent years there has been a large increase in flows of people in look for better employment etc
Despite increase in cross-border movement many migrants travel short distances within the same
region or neighbouring regions.
North America, Europe and the Gulf Countries in western Asia attract migrants from furthest afield.
Most of economic migrants moving between continents are not poorest but are those with some
education and financial means.
Largest regional flow of labour in world is in Asia, between 2005 and 2010 around 5 million workers
moved from south Asia to west Asia.
Mexicans and other central America countries mainly move to the US -> agricultural wage in US is
twice as much an hour than the wage for a day in Mexico.
In 2000 the number of detentions along the US-Mexico border peaked at 1.53 million with most
returned to Mexico
Flows of products
Containerisation – a system of standardised transport that uses large standard sized steel containers
to transport good. Containers can be transferred between ships, trains and lorries enabling cheaper,
efficient transport.
Reduction of transaction costs – reduced due to improvements in flows of data and the ease of
money transfer, makes moving and selling products worldwide easier.
Improvements in transport – containerisation has allowed easier and more complex transportation
of products so does air travel.
WTO – reduced tariffs in global trade
Flows of services
1. High level services:
Services to businesses e.g. finance, investment, and advertising
Can be located anywhere (footloose) – advanced technology etc.
Concentrated in HICs e.g. London, New York, Tokyo, but financial hubs are now growing in
east Asia too.
Conglomerates- different companies belonging to a parent company – extend influence on a
global scale.
2. Low level services:
Services to consumers e.g. banking, travel, customer call centres or communication services
Many have been decentralised to middle- or lower-income countries e.g. call centres have
moved from UK to India where labour costs are generally 10-20% lower than UK.
Flows of information
Information flows are governed by the movement of people through migration and by the speed of
data and communication transfers.
Responsible for transfers of cultural ideas, language, industrial tech etc
Digitization and satellite tech have transformed these flows of info which are supported by:
Improvements to global phone networks, making communication cheaper and easier.
Mobile telecommunication tech
Email and the internet
Live media coverage
They contribute to knowledge-intensive goods and services e.g. those in R&D components are good
and services that use highly skilled and educated labour. In R&D flows of information and ideas are
necessary.
, Global marketing
The process of promoting, advertising, and selling products or services. When a company becomes a
global marketer, it views the world as one single market and creates products that fit in the various
regional marketplaces.
Usually develops a recognisable brand and employ one marketing strategy to advertise the products
to customers all over the world.
Coca-Cola – one single product with minor changes to match country – recognisable bottle shape but
size is changed to fit with each country’s standards.
Patterns of production, distribution, and consumption
Types of jobs and their changes:
Primary sector e.g. fishing, farming, forestry decreased around the industrial revolution
manufacturing took over.
Secondary sector e.g. manufacturing peaked at the industrial revolution.
Tertiary sector e.g. services – doctors, teachers etc
Quaternary sector e.g. R&D, technology a new sector which emerged in the post-
industrial era.
Globalisation brought a new international division of labour – highly skilled vs unskilled.
Many LICs have become NICs with development of own industries.
History of NICs
Newly industrialised countries
1st generation:
1960s
The Asian Tigers – Singapore, Hong Kong, South Korea, Taiwan.
2nd generation
Driven by search for lower prices (wage levels etc)
EU, US and Japanese TNCs invested in other countries e.g. Malaysia.
Asian Tigers also invested.
3rd generation
China and India
Since 1990s
Due to increase of FDI causing manufacturing (China) and services (India) to grow.
BRICs – Brazil, Russia, India, China
More recently MINTs – Mexico, Indonesia, Nigeria, Turkey
CIVETS – Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (next generation of tiger
economies)
Production:
Developing countries become NICs by developing their own industries and TNCs.
This started with the 4 Asian Tiger economies.
In 1954 95% of manufacturing was in W.EU, N. America and Japan and consumed by these
countries.
Deindustrialisation due to FDI investment by TNCs into developing countries due to lower land
and wage costs.
Distribution and consumption:
