Globalisation - answers The growing interdependence of countries, people and cultures
worldwide through increasing connections including trade in goods and services and
flows of capital, technology and ideas/
Shrinking world - answers Although physical distances around the world are
unchanged, technology has massively reduced the time it takes to trade, travel, and
communicate globally.
Transport developments for globalisation - answers - Railways
- Aircraft
- Containerisation
ICT developments for globalisation - answers - Mobile phones/telephones
- The internet
- GIS/GPS
- Broadband/fibre optics
Political and economic organisations - answers 1. World bank
2. International monetary fund (IMF)
3. World Trade Organisation (WTO)
Why were political and economic organisations needed post WW2? - answers Following
the second-world-war, the economically weak western nations wanted to prevent the
spread of communism from the east, which they saw as a threat. These organisations
were established for economic development, and to control and oversee international
agreements.
Trade restrictions - answers - Tariffs
- Quotas
- Embargo
- Subsidies
Tariffs - answers A tax placed on goods that are imported from other countries
Quotas - answers A limit placed on the number of goods that are imported from other
countries
Embargo - answers A ban placed on certain goods imported from other countries
Subsidies - answers A sum of money granted by the government to help an industry or
business keep the price of goods low
WTO goal - answers The WTO wants to eradicate barriers to trade
,Free Trade - answers Trade without any restrictions
Free Trade process - answers 1. Governments take away barriers that make trade more
difficult and costly.
2. As coasts are reduced, TNCs will see a profit and want to invest in nations.
3. TNCs will bring new ideas, products, cultures, etc. to a nation
4. Also the TNC will generate wealth.
5. Their wealth and development will increase standard of life and demand for foreign
products.
6. As an economy has more TNCs, they become more interconnected and
interdependent for each other.
Trading Blocs - answers Countries which group together to improve their economic
interest and trading patterns. They often do this by placing barriers to trade with
countries outside the group.
NAFTA - answers North American Free Trade Agreement
- USA, Mexico, Canada
- Population = 472m
- Combined GDP (PPP) = $20.2 tn
EU - answers European Union
- Population = 508m
= GDP (PPP) $19 tn
MERCOSAR - answers Southern Common Market
- Six full members
- Population = 289m
- GDP (PPP) $4 tn
- South America
OPEC - answers Organisation of petroleum exporting countries
- A group of 12 major oil producing countries
- African, South American, and Middle Eastern members
- Control around 2/3 of global oil reserves
- They can make sure they get a fair price from oil consuming countries
ASEAN - answers Association of South East Asian Nations
- 10 countries formed in 1967
- Combined population of 625 million
- Combined GDP (PPP) = $3.6 tn
- Seventh largest economy in the world
Social positives of trading groups - answers - Withing social and political unions people
are often free to live and work in the country of their choice within the union.
- Living standards go up as trade prospers
,Social negatives of trading groups - answers - With relaxed borders it is easier for illegal
immigrants to move around within the bloc
- Legislation can limit workers as well as protect them
Economic positives of trading groups - answers - Trade blocs protect the are'as
economy from competition
- Free trade within the bloc
- Market access and trade creation
- Economies of scale
- Jobs may be created as a consequence of increased trade between member
economies
- Firms inside the bloc are protected from cheaper imports from outside.
- Inefficient producers within the bloc can be protected from more efficient ones outside
the bloc.
- Being within a trading bloc encourages FOREIGN DIRECT INVESTMENT from TNCs
- Trading blocs can help companies grow
Economic negatives of trading groups - answers - The benefits of global free trade can
be lost as countries concentrate trade withing their trade area or bloc
- Trade blocs cost money
Environmental positive of trading groups - answers Social and economic unions can set
high environmental standards
Environmental negative of trading groups - answers Trading blocs increase food miles
as the cheapest product within the bloc will be the most traded.
Political positives of trading groups - answers - Weaker disadvantaged peripheral
regions can be supported by the stronger areas.
- The incentives of trade and political cooperation help to reduce the chances of violent
conflict.
- Giving smaller, individual countries greater political influence when dealing with other
nations.
Political negatives of trading groups - answers - Trade wars
- Non-member countries of the trade bloc will be ostracised
- Loss of some financial controls to a central authority
- Trading blocs add another layer of government which costs money and add
complications for countries making their own decisions
- Loss of sovereignty
- Some smaller regions don't like big government and this has led the drive to
SEPERATISM
Foreign Direct Investment (FDI) - answers an investment made by a company based in
one country, into a company based in other countries (money, people...)
, Types of foreign direct investment - answers - Offshoring
- Foreign Merging
- Foreign Acquisition
- Transfer Pricing
Offshoring - answers Some TNCs build their own production facilities in 'offshore' low-
wage economies.
Foreign Merging - answers Two firms in different countries join forces to create a single
entity
Foreign acquisitions - answers When a TNC launches a takeover of a company in a
different country.
Transfer Pricing - answers Some TNCs have sometimes channelled profits through a
subsidiary company in a low-tax county.
Government policies encouraging globalisation - answers - Neoliberalism
- Privatisation
- Enterprise Zones
New Global Regions - answers Developing/emerging economies
Privatisation - answers Allowing foreign investors to gain a stake in privatised national
services and infrastructure.
Neoliberalism beliefs - answers - Government intervention is markets impedes
economic development.
- As wealth increases, trickle down will take place from the richest to the poorest.
Open Door Policy (1978) - answers Deng realised that China needed Western
technology and investment, and opened the door to foreign businesses who wanted to
set up in China.
SEZ - answers Special Economic Zones in China, similar to UK enterprise zones.
Open Door Policy timeline - answers 1. In 1978 Deng Xiaoping Began the open door
policy.
2. The first reforms were in rural areas - agricultural communes were dismantled and
farmers were allowed to make a small profit.
3. At the same time (around 1979) the One Child Policy was also introduced. This
curbed the rapidly growing population.
4. Industrialisation grew rapidly.