Globalisation
Globalization is a term used to describe the increasing
connectedness and interdependence of world cultures and
economies.
Done through FDI, trade and migration.
Characteristics:
Rising number of global brands
Global supply chains and new trade routes
Foreign direct investment
WTO reduces tariffs expanding trade.
USA has GDP of $26.9 T
China has $19.4 T due to exploiting comparative
advantage in low-cost exports due to cheap labour.
The role of TNCs in Globalisation:
Offshoring – Setting up of operations in another country.
E.g. electronic components in Costa Rica. The MNC owns
the plant in the recipient countries.
Outsourcing – A business is paying a 3rd party to do the
work; they don’t own the physical shop. Outsourcing to
India for bookkeeping and accounting.
TNC is registered and operates in more than one country.
It often owns or controls the production.
1) To reduce costs and increase profit margins.
2) To increase efficiency and quality of products
, 3) To expand into new markets
Capital controls:
Direct controls restricts capital transactions and the
transfer of funds through outright prohibitions.
Market based controls include multiple exchange rate
systems taxation of cross-border flows, and other indirect
regulations.
1) Conception of iPhone is in Silicon Valley. High value part of
segment.
2) Touch screen control made in Texas. High skilled value.
3) Application processors in S. Korea. Mid value segment
4) Low value is assembly. Outsourced to Shenzhen, China.
Fewer than 10% of world companies earn 80% of profits in
the world.
TNCs make profit in recipient country and repatriate this
profit back so indigenous country don’t hold onto wealth.
China have been introduced to full-self driving.
TNCs may contribute to the infrastructure of country.
Child labour exploitation – 170 million children are
engaged in child labour. 11% of children global population.
Containerisation is a system of standardised transport is
integral to globalisation.
WTO – Multilateral trading system
WTO Principles:
Globalization is a term used to describe the increasing
connectedness and interdependence of world cultures and
economies.
Done through FDI, trade and migration.
Characteristics:
Rising number of global brands
Global supply chains and new trade routes
Foreign direct investment
WTO reduces tariffs expanding trade.
USA has GDP of $26.9 T
China has $19.4 T due to exploiting comparative
advantage in low-cost exports due to cheap labour.
The role of TNCs in Globalisation:
Offshoring – Setting up of operations in another country.
E.g. electronic components in Costa Rica. The MNC owns
the plant in the recipient countries.
Outsourcing – A business is paying a 3rd party to do the
work; they don’t own the physical shop. Outsourcing to
India for bookkeeping and accounting.
TNC is registered and operates in more than one country.
It often owns or controls the production.
1) To reduce costs and increase profit margins.
2) To increase efficiency and quality of products
, 3) To expand into new markets
Capital controls:
Direct controls restricts capital transactions and the
transfer of funds through outright prohibitions.
Market based controls include multiple exchange rate
systems taxation of cross-border flows, and other indirect
regulations.
1) Conception of iPhone is in Silicon Valley. High value part of
segment.
2) Touch screen control made in Texas. High skilled value.
3) Application processors in S. Korea. Mid value segment
4) Low value is assembly. Outsourced to Shenzhen, China.
Fewer than 10% of world companies earn 80% of profits in
the world.
TNCs make profit in recipient country and repatriate this
profit back so indigenous country don’t hold onto wealth.
China have been introduced to full-self driving.
TNCs may contribute to the infrastructure of country.
Child labour exploitation – 170 million children are
engaged in child labour. 11% of children global population.
Containerisation is a system of standardised transport is
integral to globalisation.
WTO – Multilateral trading system
WTO Principles:
