Globalisation Revision Notes:
- International trade gives rise to a world economy, demand, supply and prices are
affected by global events
Key Terms:
Capital Flows: The movement of money for the purpose of investment, trade or to produce
goods/services
Globalisation: Processes by which national economies, societies and cultures have become
increasingly integrated through the global network of trade, communication, transportation
and immigration
International trade: The exchange of capital, goods and services across international
borders
Labour: The aggregate of all human capital used to create or provide goods and services
Dimensions of Globalisation:
Form of globalisation Process caused by: Characterised by:
Economic Increase in free trade, growth of Long distance flows of
TNC’s, technological advances, goods, capital and services
global marketing
Cultural/social Migration, global communication, Spread of ideas, info and
westernisation images
Political Impact of Western democracies on Diffusion of govn policy and
LIC’s, decline of communism market economies
developed in previous
communist states
Flows of Capital:
- Late 20th century saw deregulation of financial markets therefore banks,
insurance/investment firms were no longer bound to their national boundaries
, - Diagram above shows how global power is concentrated in the hands of relatively
small group of developed countries – core
- Countries which have been exploited, less developed and suffer from lack of
investment, leakages and out migration are periphery countries
- But the model is almost outdated due to BRIC and MINT countries developing at a
rapid rate
Flows of Money:
FDI: Investment mainly by TNC’s based in one country into capital or assets of a foreign
enterprise
Repatriation of profits: TNC’s investing in overseas production will usually take profits back
into the home country – where economies tend to be more stable
Aid: Financial support for poor countries – can be multilateral (from the UN), bilateral (one
govn to another) or supplies from NGO’s
Migration: Majority of out migration is from poor to rich countries – exacerbates disparities
as the LIC lose their most skilled workers who will pay taxes in another country and exercise
skills in another country
Remittance Payments: Transfers of money made by foreign workers back to family in their
home country – India receives more from diaspora than any other country
, Key Terms:
BRIC: Brazil, Russia, India, China – economies which have rapidly grown since 1990
MINT: Mexico, Indonesia, Nigeria and Turkey – Recently emerging economies
Diaspora: Large group of people with similar homelands/heritages who have moved and
settled in different locations
Case Study: Remittance dilemma in Somalia – 2012
- 40% of Somalians rely on remittance payments to meet basic needs
- They contribute to 50% of GNI and 80% of all investment in the country
- In 2012 there were concerns the money was going into terrorist groups – this led to
many US/UK banks refusing to provide the remittance payments
Flows of Labour:
- Labour markets are not as free flowing as financial markets – immigration
restrictions
- In recent years migration has risen because of better employment opportunities
- The largest regional flow of labour in the world is south Asia to West Asia – 2005-10
5 million migrants
Flow of products:
International movement of products is facilitated especially for developing countries by
reductions in trade costs (tariffs, transports and time costs)
- Transaction: Improvements in flows of data and ease that capital can be transferred
- Transport and time: Process of containerisation has enabled long distance flows of
products – air transport has also reduced delivery time
- WTO: The WTO have reduced protectionist measures
Flow of services:
Can be divided into
1. High level services: Services to businesses – finance, investment and advertising
2. Low level services: Services to consumers – banking, travel/tourism, customer call
centres
- Services like banking, insurance and advertising are footloose – they can locate
anywhere and advancing technology means they can still serve customers
Higher level services = concentrated in developed world and cities which have global
industrial/financial control
- Growing number of conglomerates have emerged
- Decentralisation of low level services have moved from developed to developing
countries – call centres from UK to India where costs are 20% lower
- International trade gives rise to a world economy, demand, supply and prices are
affected by global events
Key Terms:
Capital Flows: The movement of money for the purpose of investment, trade or to produce
goods/services
Globalisation: Processes by which national economies, societies and cultures have become
increasingly integrated through the global network of trade, communication, transportation
and immigration
International trade: The exchange of capital, goods and services across international
borders
Labour: The aggregate of all human capital used to create or provide goods and services
Dimensions of Globalisation:
Form of globalisation Process caused by: Characterised by:
Economic Increase in free trade, growth of Long distance flows of
TNC’s, technological advances, goods, capital and services
global marketing
Cultural/social Migration, global communication, Spread of ideas, info and
westernisation images
Political Impact of Western democracies on Diffusion of govn policy and
LIC’s, decline of communism market economies
developed in previous
communist states
Flows of Capital:
- Late 20th century saw deregulation of financial markets therefore banks,
insurance/investment firms were no longer bound to their national boundaries
, - Diagram above shows how global power is concentrated in the hands of relatively
small group of developed countries – core
- Countries which have been exploited, less developed and suffer from lack of
investment, leakages and out migration are periphery countries
- But the model is almost outdated due to BRIC and MINT countries developing at a
rapid rate
Flows of Money:
FDI: Investment mainly by TNC’s based in one country into capital or assets of a foreign
enterprise
Repatriation of profits: TNC’s investing in overseas production will usually take profits back
into the home country – where economies tend to be more stable
Aid: Financial support for poor countries – can be multilateral (from the UN), bilateral (one
govn to another) or supplies from NGO’s
Migration: Majority of out migration is from poor to rich countries – exacerbates disparities
as the LIC lose their most skilled workers who will pay taxes in another country and exercise
skills in another country
Remittance Payments: Transfers of money made by foreign workers back to family in their
home country – India receives more from diaspora than any other country
, Key Terms:
BRIC: Brazil, Russia, India, China – economies which have rapidly grown since 1990
MINT: Mexico, Indonesia, Nigeria and Turkey – Recently emerging economies
Diaspora: Large group of people with similar homelands/heritages who have moved and
settled in different locations
Case Study: Remittance dilemma in Somalia – 2012
- 40% of Somalians rely on remittance payments to meet basic needs
- They contribute to 50% of GNI and 80% of all investment in the country
- In 2012 there were concerns the money was going into terrorist groups – this led to
many US/UK banks refusing to provide the remittance payments
Flows of Labour:
- Labour markets are not as free flowing as financial markets – immigration
restrictions
- In recent years migration has risen because of better employment opportunities
- The largest regional flow of labour in the world is south Asia to West Asia – 2005-10
5 million migrants
Flow of products:
International movement of products is facilitated especially for developing countries by
reductions in trade costs (tariffs, transports and time costs)
- Transaction: Improvements in flows of data and ease that capital can be transferred
- Transport and time: Process of containerisation has enabled long distance flows of
products – air transport has also reduced delivery time
- WTO: The WTO have reduced protectionist measures
Flow of services:
Can be divided into
1. High level services: Services to businesses – finance, investment and advertising
2. Low level services: Services to consumers – banking, travel/tourism, customer call
centres
- Services like banking, insurance and advertising are footloose – they can locate
anywhere and advancing technology means they can still serve customers
Higher level services = concentrated in developed world and cities which have global
industrial/financial control
- Growing number of conglomerates have emerged
- Decentralisation of low level services have moved from developed to developing
countries – call centres from UK to India where costs are 20% lower
