Globalisation (Cambridge (CIE) IGCSE Geography)

Globalisation

• Globalisation is where the world has become more interconnected through the processes of economics, culture, politics, trade and tourism

• Environmental globalisation can also be considered part of the interconnection as can be seen with the impacts of global warming

• Globalisation is nothing new; trade between people, businesses and countries has always existed

• Whereas trade would have taken weeks, months or even years in the past, modern transport and communications have made trading and interaction almost instantaneous - time-space compression 

• Globalisation has effectively removed the political borders of countries which makes countries more interdependent on each other, with the more powerful countries and business empires affecting decisions in other parts of the world 

• This has led to a rise in global inequality

• These improvements and developments in communication and transport have made globalisation what it is today - a shrinking world

• Overall, connections around the globe are: 

  • Faster - faster speeds for talking, travel, money exchange etc

  • Deeper - connecting lives with faraway places

  • Longer - connecting links between places are further apart

• These connections are considered as network flows to places and populations through four significant developments:

  • Appearance of large transnational corporations (TNCs)

  • Growth of regional economics and trading blocs 

  • Development of modern transport networks

  • Advances in IT and communications, particularly the WWW and the internet

Production chain

• These developments have led to the global economy

• Almost every country in the world has 'networked' in one way or another

• There are five different network flows:

  • Trade - import and export of raw materials, food goods and services through the reduction of trade barriers

  • Aid - most aid is economic either through receiving or donating, allowing developing countries to invest in education, health, infrastructure and trade

  • Foreign investment - either directly or indirectly through business opportunities e.g. Shell oil investing in Niger 

  • Labour - important to the working of the global economy and labour migration fuels this market either with a specialist or cheap labour

  • Information - fast data transfer and communication are vital to the global economy

• The global production, supply or commodity chain pulls these flows together to produce goods or commodity

• At each stage of the flow, value is added to the emerging product

• Despite the miles involved and the number of countries involved; the product is still cheaper to produce in various stages

• This is known as the Economies of Scale - the cost per item reduces when operated on a large scale

• Transport improvements through large container ships mean that costs are reduced and moved further quicker

• Labour costs are cheaper in emerging and developing countries and there are usually reduced legal restrictions

Global investment

• Investment is not just monetary (economic), although this is a large part of it

• Investment can be in people, research or products

• Foreign investment is where individuals or firms from abroad invest in another country:

  • Call centres can be located anywhere e.g. India

  • Investment is made in the country through building the call centre, paying taxes etc.

  • Local people are employed and trained

  • Service is provided to the donor country - the UK

• Moving manufacturing from developed to developing or emerging countries

  • China is the main area for manufacturing goods from around the world

  • Investment is made in China to produce goods

  • Completed goods are shipped back to the original country e.g. Germany

• Investment in people either for cheap labour or for their expertise

  • A specialist surgeon from the USA to Australia

  • Investment in developments that attract cheap labour—the construction of Dubai attracts many Indian migrants

  • Research and development investment—motor car industry to build more fuel-efficient motoring—Elon Musk's Tesla electric cars

• Investment can be from aid for rebuilding after a disaster; Ukraine will need aid after the war with Russia ends

  • Aid can be funds sent to the government to use as necessary, although this can often lead to corruption and funds not going where they should

  • Aid can be in the form of goods and services directed to the affected area—refugee camps or after a natural hazard such as a tropical storm or earthquake

Transnational corporations (TNCs)

• Transnational Corporations (TNCs) operate in foreign countries individually and not through a centralised management system

• TNCs and countries are the two main elements of the global economy

• Governments and global institutions set the rules for the global economy, but the main investment is through TNCs

• TNCs involve themselves in all economic sectors and impact the global economy, with the largest TNCs representing the biggest percentage of total global production

• TNCs directly invest in one country and later expand to other nations (usually developing countries) to take advantage of lower labour costs and incentives 

• They may not be loyal to the operating country's values and will only look to the expansion of their business as they have no connection to the country they operate in

• It is the process of moving manufacturing around the globe that has resulted in the development of emerging countries such as China, India and Brazil

Impacts of globalisation on people

• Globalisation has generated benefits and costs for many people but at different levels

• Some have benefitted more than others, with the poorest tending to be the losers

• However, it can be argued that without globalisation, the poorest would be worse off than they are now, as they would lose job opportunities and income from inward investment from TNCs

• Countries such as China, Brazil and India have transformed themselves from developing to emerging economies, which has directly benefitted their population

• The gender gap within individual countries is generally lower in more globalised countries

• Skilled workers are in demand and benefit from globalisation more than unskilled workers

Benefits and costs of globalisation at a local level

Benefits and costs of globalisation at a national level

Benefits and costs of globalisation at an international level

Impacts of globalisation on countries

• TNCs are key in globalisation

• They link raw materials with manufacturers, research and development opportunities and products with global markets

• Global marketing establishes TNCs as 'the brand' to have 

• However, TNCs answer to shareholders and need to maximise their profits, usually at the cost of their workers

• TNCs therefore, can impact countries positively or negatively

Benefits and Cost of Globalisation to Countries at a Variety of Levels

Case Study - Nike

• Make sure you know your case study of the global operation of a TNC 

• You need to be able to identify the costs and benefits to the host country as well as to the TNCs own country of origin

• For example, you could produce something along these lines on the USA-based company Nike 

• Remember to keep it simple and use facts and figures to keep it 'real' and not a generic case study