Globalisation 1 of 23
Enquiry question 1: What are the causes of globalisation and why has it accelerated in recent
decades?
Key words:
A T Kearney Index- measures how globalised a country has become.
Capital- money or assets.
Capitalism- a belief in a market economy, where people are free to set up businesses and keep
their profits (subject to taxes), and where supply and demand determine the prices of goods and
services.
Commodities- raw materials.
Commodity traders- people who trade raw materials in financial centres, thus guaranteeing the
supply, price and delivery date of the product months ahead.
Communism- a belief in communal wealth where property is owned communally and wealth is
distributed equally. The State owns or controls most land, as well as the banks, natural resources
and the media.
E-tailer- an electronic online retailer
Export Processing Zones- the term now used by China instead of ‘Special Economic Zones’
which describes areas set up by national governments to offer financial or tax incentives to attract
FDI, which differ from those incentives normally offered by a country.
Foreign Direct Investment (FDI)- investment made by an overseas company or organisation into
a company or organisation which is based in another country.
Free enterprise- when companies operate in competition with each other, with minimal
governmental control.
Free market liberalisation- means ending monopoly provision of some services like telephones,
broadband, gas and electricity, so you choose your supplier based on quality and price.
Futures market- a market where traders can buy and sell futures contracts, in which contractors
agree to supply and deliver goods at an agreed price at a time in the future.
Globalisation- the process by which people, culture, finance, goods and information transfer
between countries with few barriers.
Heavily Indebted Poor Countries Initiative (HIPC)- 38 of the least developed countries with the
greatest debts which, since 1996, have been eligible to have their debts with the IMF and the
World Bank wither cancelled or rescheduled.
Inter-Governmental Organisations (IGOs)- organisations which comprise of two or more
countries working together, examples include the EU and the UN.
International Monetary Fund- a global organisation whose primary role is to maintain
international financial stability.
Just in time- the means by which the time gap between product and delivery to the customers is
sharply reduced- cutting warehousing and storage costs.
KOF index- an annual index of globalisation where a score is calculated for each country by
assessing economic, social and political globalisation.
Liberalism- the idea that the government’s role in business and the economy should be minimal,
to allow individual decision-making, a free market and open competition between companies.
Neo-liberalism- a belief in the free flows of people, capital, finance and resources. Under Neo-
liberalism, State interventions in the economy are minimised, while the obligations of the State to
provide for the welfare of its citizens are diminished.
New economy- where GDP is earned more through expertise and creatively in services such as
finance and media than from the manufacture of goods.
Off-shoring- when a company does work overseas, either itself or using another company.
Outsourcing- when work is contracted out to another company (known as off-shoring when that
company is overseas).
Quotas- a fixed level indicating the maximum amount of imported goods or persons which a
state will allow in.
Shrinking world- the concept that the world is becoming metaphorically smaller because the
time it takes to trade and communicate globally has been massively reduced.
Special Economic Zones (SEZ)- set up national governments to offer financial or tax incentives
to attract FDI, which differ from those incentives normally offered by a country.
Subsidies- grants given by governments to increase the profitability of key industries.
Tariffs- a tax that is paid on goods coming into or going out of a country.
, Globalisation 2 of 23
Time-space compression- the concept that communication technologies have massively
reduced the time it takes to trade and communicate globally, therefore even though the physical
distances are unchanged, the time taken to cross them is significantly lower.
Trade- the exchange of goods and services between people and companies, and is increasingly
cross-border between countries rather than just within a country.
Trade liberalisation- the removal of trade barriers such as subsidies, tariffs and quotas.
Trade protectionism- the use of methods such as tariffs and quotas to attempt to boost a
country’s exports or reduce its imports.
Trading blocs- when countries have grouped together to promote free trade between them. The
EU is an example of a trading bloc.
Transnational companies (TNCs)- companies that operate in several different countries.
World Bank- a global organisation which uses bank deposits placed by the world’s wealthiest
countries to provide loans for development in other countries.
World Trade Organisation (WTO)- a global organisation which looks at the rules for how
countries trade with each other.
3.1- Globalisation is a long-standing process which has accelerated because of rapid
developments in transport, communications and businesses
(a) Globalisation involves widening and deepening global connections, interdependence and
flows (commodities, capital, information, migrants and tourists)
Economic Cultural globalisation Political globalisation Demographic Environmental
globalisation globalisation globalisation
- The growth of TNCs, - Unifying and - Spreading - Increasing migration - Agreements (Paris)
which have a global diversifying ideologies and tourism makes - Species being
brand image and - People are using - Globalisation (e.g. population more fluid spread to others
presence similar food, clothes, the UN) and mixed - Global warming is a
- The spreading of music, values - The dominance of global threat that
investment around western requires a global
the works democracies in solution
- Rapid growth in political and
world trade economic decision
making
- Spreads the view
that democratic,
consumerist
societies are the
most successful
Globalisation increases interdependence
• The success of one place depends on the success of other places
• Economic problems in one country can quickly spread to its trading partner and quickly affect
people in distant places
- April 2011, staff at a Honda factory in Swindon only had to work two days a week due to a
shortage in parts following the Japanese tsunami.
Increase in flows
• Commodities are often made or grown in other countries- goods and services
• Flows of money between people, banks, businesses and governments- capital
• Migrants and tourists- people
• Dara transferred between businesses and people- information
(b) Developments in transport and trade in the 19th century (railways, telegraph, steam-ships)
accelerated in the 20th century (jet aircraft, containerisation), contributing to a ‘shrinking world’
, Globalisation 3 of 23
• Globalisation has been accelerated by developments in transport technology, which has
encouraged growth in trade as transporting goods and people around the world has become
easier and cheaper over time. Created a ‘shrinking world’.
• The speed and ease of moving around the world has reduced the friction of distance between
places.
19th century
- Railways: faster steam trains replaced horse-drawn and canal transport. (invented in 1802 and
public railways 1830s).
- Telegraph: electric telegraph was the first long distance instant communication technology
(1830s). The Trans-Atlantic telegraph cable in the 1860s replaced a 3 week boat journey/
- Steam-ships: replaced sail ships and increase speed and cargo capacity dramatically (1840s).
20th century
- Jet aircraft: Boeing 747 (1960s) lowered the cost of international air travel, reduced travel time,
brung international tourism within the purchasing capabilities of the middle class, replacing
steam ships.
- Containerisation: sped up goods trade and reduced costs, making consumer goods cheaper.
Containers are easily moved and transported from ships to lorries or railways.
Shrinking world
The physical distance between places remains unchanged, but new technologies reduce the time
taken to transport goods/people/communicate information.
- The process of time space compression- the effect of increased connectivity with mote distant
place, and an affect of the shrinking world.
- There is also more widespread knowledge about distant places, so they feel less exotic. The
friction of distance has been reduced.
- In the 1700s, the fastest transport was a three-masted frigate (HMS Dolphin) which took two
years to navigate the globe.
- In the 1930s, propeller aircraft (the Lockhead Vega) took 8 days.
- In the 1990s jet aircraft (Concorde) took 31 hours.
(c) The 21st century has been dominated by rapid development in ICT and global communication
(mobile phones, internet, social networking, electronic banking, fibre optics), lowering
communication costs and contributing to time-space compression
• The late twentieth and early twenty-first centuries have been dominated by developments in ICT
and mobile technology.
• Developments have been very rapid from the 1990s onwards, which have lowered
communication cost and contributed to time space compression.
Mobile phones Internet Social networking Electronic banking Fibre optics
- Became widespread - Became - E.g. skype allow people to - Mobile phones can - Global network
from the mid 1990s common from communicate instantly and be used for of land-based
- Common even in many the mid-1990s, without charge economic banking, and subsea
developing countries followed by fast - Development of social media revolutionising life fibre optic
- Smart phones, tablets broadband enabled much cheaper for individuals and cables has
and watches in the - Almost 50% of communication between businesses allowed instant
2000s extended their the world’s friends and family than - Allowed money to be global
information flows to population uses landlines transferred quickly communication
locations beyond the internet - Led to time space and easily between
landline networks compression where the cost firms and people
- Reduced mobile phone of communicating over
costs expanded usage distance has fallen rapidly so
allowed e-tailers to people can calculate
expand regardless of distance.
Enquiry question 1: What are the causes of globalisation and why has it accelerated in recent
decades?
Key words:
A T Kearney Index- measures how globalised a country has become.
Capital- money or assets.
Capitalism- a belief in a market economy, where people are free to set up businesses and keep
their profits (subject to taxes), and where supply and demand determine the prices of goods and
services.
Commodities- raw materials.
Commodity traders- people who trade raw materials in financial centres, thus guaranteeing the
supply, price and delivery date of the product months ahead.
Communism- a belief in communal wealth where property is owned communally and wealth is
distributed equally. The State owns or controls most land, as well as the banks, natural resources
and the media.
E-tailer- an electronic online retailer
Export Processing Zones- the term now used by China instead of ‘Special Economic Zones’
which describes areas set up by national governments to offer financial or tax incentives to attract
FDI, which differ from those incentives normally offered by a country.
Foreign Direct Investment (FDI)- investment made by an overseas company or organisation into
a company or organisation which is based in another country.
Free enterprise- when companies operate in competition with each other, with minimal
governmental control.
Free market liberalisation- means ending monopoly provision of some services like telephones,
broadband, gas and electricity, so you choose your supplier based on quality and price.
Futures market- a market where traders can buy and sell futures contracts, in which contractors
agree to supply and deliver goods at an agreed price at a time in the future.
Globalisation- the process by which people, culture, finance, goods and information transfer
between countries with few barriers.
Heavily Indebted Poor Countries Initiative (HIPC)- 38 of the least developed countries with the
greatest debts which, since 1996, have been eligible to have their debts with the IMF and the
World Bank wither cancelled or rescheduled.
Inter-Governmental Organisations (IGOs)- organisations which comprise of two or more
countries working together, examples include the EU and the UN.
International Monetary Fund- a global organisation whose primary role is to maintain
international financial stability.
Just in time- the means by which the time gap between product and delivery to the customers is
sharply reduced- cutting warehousing and storage costs.
KOF index- an annual index of globalisation where a score is calculated for each country by
assessing economic, social and political globalisation.
Liberalism- the idea that the government’s role in business and the economy should be minimal,
to allow individual decision-making, a free market and open competition between companies.
Neo-liberalism- a belief in the free flows of people, capital, finance and resources. Under Neo-
liberalism, State interventions in the economy are minimised, while the obligations of the State to
provide for the welfare of its citizens are diminished.
New economy- where GDP is earned more through expertise and creatively in services such as
finance and media than from the manufacture of goods.
Off-shoring- when a company does work overseas, either itself or using another company.
Outsourcing- when work is contracted out to another company (known as off-shoring when that
company is overseas).
Quotas- a fixed level indicating the maximum amount of imported goods or persons which a
state will allow in.
Shrinking world- the concept that the world is becoming metaphorically smaller because the
time it takes to trade and communicate globally has been massively reduced.
Special Economic Zones (SEZ)- set up national governments to offer financial or tax incentives
to attract FDI, which differ from those incentives normally offered by a country.
Subsidies- grants given by governments to increase the profitability of key industries.
Tariffs- a tax that is paid on goods coming into or going out of a country.
, Globalisation 2 of 23
Time-space compression- the concept that communication technologies have massively
reduced the time it takes to trade and communicate globally, therefore even though the physical
distances are unchanged, the time taken to cross them is significantly lower.
Trade- the exchange of goods and services between people and companies, and is increasingly
cross-border between countries rather than just within a country.
Trade liberalisation- the removal of trade barriers such as subsidies, tariffs and quotas.
Trade protectionism- the use of methods such as tariffs and quotas to attempt to boost a
country’s exports or reduce its imports.
Trading blocs- when countries have grouped together to promote free trade between them. The
EU is an example of a trading bloc.
Transnational companies (TNCs)- companies that operate in several different countries.
World Bank- a global organisation which uses bank deposits placed by the world’s wealthiest
countries to provide loans for development in other countries.
World Trade Organisation (WTO)- a global organisation which looks at the rules for how
countries trade with each other.
3.1- Globalisation is a long-standing process which has accelerated because of rapid
developments in transport, communications and businesses
(a) Globalisation involves widening and deepening global connections, interdependence and
flows (commodities, capital, information, migrants and tourists)
Economic Cultural globalisation Political globalisation Demographic Environmental
globalisation globalisation globalisation
- The growth of TNCs, - Unifying and - Spreading - Increasing migration - Agreements (Paris)
which have a global diversifying ideologies and tourism makes - Species being
brand image and - People are using - Globalisation (e.g. population more fluid spread to others
presence similar food, clothes, the UN) and mixed - Global warming is a
- The spreading of music, values - The dominance of global threat that
investment around western requires a global
the works democracies in solution
- Rapid growth in political and
world trade economic decision
making
- Spreads the view
that democratic,
consumerist
societies are the
most successful
Globalisation increases interdependence
• The success of one place depends on the success of other places
• Economic problems in one country can quickly spread to its trading partner and quickly affect
people in distant places
- April 2011, staff at a Honda factory in Swindon only had to work two days a week due to a
shortage in parts following the Japanese tsunami.
Increase in flows
• Commodities are often made or grown in other countries- goods and services
• Flows of money between people, banks, businesses and governments- capital
• Migrants and tourists- people
• Dara transferred between businesses and people- information
(b) Developments in transport and trade in the 19th century (railways, telegraph, steam-ships)
accelerated in the 20th century (jet aircraft, containerisation), contributing to a ‘shrinking world’
, Globalisation 3 of 23
• Globalisation has been accelerated by developments in transport technology, which has
encouraged growth in trade as transporting goods and people around the world has become
easier and cheaper over time. Created a ‘shrinking world’.
• The speed and ease of moving around the world has reduced the friction of distance between
places.
19th century
- Railways: faster steam trains replaced horse-drawn and canal transport. (invented in 1802 and
public railways 1830s).
- Telegraph: electric telegraph was the first long distance instant communication technology
(1830s). The Trans-Atlantic telegraph cable in the 1860s replaced a 3 week boat journey/
- Steam-ships: replaced sail ships and increase speed and cargo capacity dramatically (1840s).
20th century
- Jet aircraft: Boeing 747 (1960s) lowered the cost of international air travel, reduced travel time,
brung international tourism within the purchasing capabilities of the middle class, replacing
steam ships.
- Containerisation: sped up goods trade and reduced costs, making consumer goods cheaper.
Containers are easily moved and transported from ships to lorries or railways.
Shrinking world
The physical distance between places remains unchanged, but new technologies reduce the time
taken to transport goods/people/communicate information.
- The process of time space compression- the effect of increased connectivity with mote distant
place, and an affect of the shrinking world.
- There is also more widespread knowledge about distant places, so they feel less exotic. The
friction of distance has been reduced.
- In the 1700s, the fastest transport was a three-masted frigate (HMS Dolphin) which took two
years to navigate the globe.
- In the 1930s, propeller aircraft (the Lockhead Vega) took 8 days.
- In the 1990s jet aircraft (Concorde) took 31 hours.
(c) The 21st century has been dominated by rapid development in ICT and global communication
(mobile phones, internet, social networking, electronic banking, fibre optics), lowering
communication costs and contributing to time-space compression
• The late twentieth and early twenty-first centuries have been dominated by developments in ICT
and mobile technology.
• Developments have been very rapid from the 1990s onwards, which have lowered
communication cost and contributed to time space compression.
Mobile phones Internet Social networking Electronic banking Fibre optics
- Became widespread - Became - E.g. skype allow people to - Mobile phones can - Global network
from the mid 1990s common from communicate instantly and be used for of land-based
- Common even in many the mid-1990s, without charge economic banking, and subsea
developing countries followed by fast - Development of social media revolutionising life fibre optic
- Smart phones, tablets broadband enabled much cheaper for individuals and cables has
and watches in the - Almost 50% of communication between businesses allowed instant
2000s extended their the world’s friends and family than - Allowed money to be global
information flows to population uses landlines transferred quickly communication
locations beyond the internet - Led to time space and easily between
landline networks compression where the cost firms and people
- Reduced mobile phone of communicating over
costs expanded usage distance has fallen rapidly so
allowed e-tailers to people can calculate
expand regardless of distance.
