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Globalisation And Deindustrialisation Notes

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HUMAN GEOGRAPHY REVISION Theme: Globalisation Definition The generic term for the process of integration in the realms of trade, economic relations and finance and is not new. It involves aspects of social relations, knowledge, culture and politics. Globalisation has been aided by the ICT revolution which had destroyed space and time.

The Global Shift It is a consequence of the latter stages of globalisation. Global shift is the physical movement of economic activity from MEDCs, originally to NICs and now to RICs. Initially the shift involved labour intensive manufacturing, but increasingly it has involved all sorts of manufacturing and services.

Causes of Globalisation CAUSE Economic

Production lines

TNCs

Product Cycle

New

International Division of Labour

Technological

EXPLANATION The global shift reverts to the physical movement of economic activities from MEDCs, originally to NICs, then to RICs and LEDCs. Initially the shift involved labour intensive manufacturing but increasingly it has involved all sorts of manufacturing and services including tourism. An example of this can be seen from the increase of Trans National Corporations which have offloaded aspects of production to low-wage sites, especially in the developing countries. The use of production lines means that companies are able to produce goods cheaply and quickly. The new international division of labour has allowed the continuation of TNCs to exploit wage differences between companies and regions by moving low grade tasks to less unionised and lowed paid jobs. Female labour is playing a major role in expanding the global economy in manufacturing leading to a feminisation of the labour press. The direct investment that occurs across national boundaries when a TNC sets up a branch or invests in a form in another country is described as Foreign Direct Investment. This significant economic passage can provide a means of development for LEDCs as it can buy capital, technology, developing skills and providing employment. The first means of global communication came with the emergence of the telegraph in the 1850s, followed by an array of revolutions in the technology

Transport

Communication

world. Since then, these developments in technology have made the distance and time between nations seem almost insignificant. The span of telephones and mobiles, as well as the internet broadband, email and the ability to have internet conferences has enabled companies to function in multiple locations. Technology is now quick, easy to use and cheap. Researching information and sharing knowledge can be transferred at speed across the world, interlinking nations and creating relations. Television and radio play a vital role in connecting societies whilst also advertising and promoting companies. The early 20th century witnessed the advert of mechanised air transport. Airmail services began in 1918 and the first non-stop transatlantic flight took place in 1919. Although progress was slow and expensive, we can see how the transport industry has developed immensely and has provided a huge foundation in encouraging the expansion of companies. Large companies such as Coca-Cola and Heinz regard their success due to when the ability to transport packaged goods across the globe came, as they could profit from new and excited populations. Transport, whether that being by sea, air, road or rail, has become safer, cheaper and much more available. Companies are able to transfer products quickly and reliably across the world.

Political

Foreign

Direct Investment

Trading blocs

WTO

Collapse of

Communism 1989

Socio-cultural

Hollywood/films

Food

Clothes

Media

With the improvement of foreign relations and the increase of stable governments, political elements to globalisation are equally as significant as the technological and economic. Foreign direct investment wouldn't work without the co-operation between countries. Now, figures show that there are more than 60,000 TNCs controlling over 750,000 foreign affiliates. Although 60% of FDI is between MEDCs, it is important to consider how it influences the development of poorer nations. The WTO (World Trade Organisation) is the only global international organisation dealing with the rules of trade between nations. Its role is to help producers of goods and services, exporters and importers conduct their business. Through this organisation, governments can communicate about trading and reach agreements. World trading blocs such as the EU and NAFTA allow countries to import and export goods with customised tariffs, whilst applying different regulations to those outside of their line. Although trade blocs threaten free trade, they are used to manage and promote trade activities within a specific global region which enhances security and protects from competitors.

Our social and cultural environments unconsciously influence the development and changes of our day to day lives. In regards to globalisation, this can be seen by the influence the western media has on nations- people share the same clothes preferences, food choice and follow similar daily routines. Often swamped by the need to conform, people have followed trends thus globalising cultural variations. The film industry has also lead to further globalisation- people see incredible places in films and want to travel to these remote areas themselves. For example, James Bond and The Beach opened up Thailand to the rest of the world as people were inspired by the blue skies and beautiful beaches shown in the films.

Summary of CAUSES
Economic

-

Production line: Companies produced goods cheaply and quickly on a production line e.g. cars, clothes

-

TNCs: Foreign Direct Investment (FDI) is made by companies in different countries than the home country. This investment has been made in order to lock into cheaper production costs due to cheaper raw materials, operating costs, labour or environmental costs.

-

Product life cycle

-

New International Division of Labour: TNCS exploit wage differences between countries and regions by moving low grade tasks to less unionised and lower paid locations e.g. LEDCs; An increased opportunity for women to undertake paid work; A strong gender diversion of labour

Technological

-

Communication

Fax, phone, TV, internet

1850s + technological evolutions

Late 19th century = telephone  international communication

WWW speed up flow of communication and information

Efficient, easy, cheap

-

1965: 150 million fixed lines  1998: 851 million

Made possible by the replacement of copper wire with fibre optic cabling and satellite communications

Transport

Steam, road, air, containerism

Allowed the movement of goods and people

Travel further

Cheaper, comfort, convenience

Air transport: Early 20th century

First non-stop transatlantic flight took place in 1919

Fuel cheaper, technological advancements = faster, bigger better planes etc

Rail: faster due to investment in technology e.g. Eurostar

Road: Cheaper due to vehicles from production lines in NICs

Sea: Rise of containerism and bulk carrying = cheaper

All reduced friction of distance and enabled countries to move beyond initial countries = world market

Political

-

Trading blocs: E.g. EU. These weild global power in trading matters. They set quota and tariffs on goods entering their area

-

Collapse of Communism 1989

-

WTO: Has been trying to negotiate between nations and to reduce anti-competitive tariffs which restrict the integration and the flow of goods and services between countries. Similar to a trading council and offers one main communication point.

Social/Cultural

-

Hollywood/films

-

Food Clothes Media Influence the development and changes of our day to day lives around the world

How have countries globalised and shifted location?
TNC  Trans National Corporation Corporations that possess and control means of production or services outside the country in which they were established. Where were the HQs for the top 20 TNCs located?
 MEDCs: North America How can we measure the size of a TNC?
 Revenues, market Capitalism, employees

Microsoft

The Coca-Cola Company

Type: Public Industry: Computer software Founded: Albuquerque, New Mexico (April 4, 1975) Founders: Bill Gates, Paul Allen Headquarters: Washington, USA

Type: Beverage Manufacturer: The Coca-Cola Company Country of origin USA Introduced: 1892 Ranking: They own 4 of the world's top 5 nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Sprite and Fanta Company Associates: 139,600 worldwide (2010) Operational Reach: 200+ countries Consumer Servings (per day): 1.7 billion Beverage Variety: They offer more than 3,500 products including diet and regular sparkling beverages, and still beverages New York Stock Exchange Ticker Symbol: KO Founders: John Pemberton and Asa Candler Head-quarters: Atlanta, Georgia, USA Area served: Worldwide Key People: Muhtar Kent (Chairman and CEO) Revenue: US$ 35.119 billion Operating income: US$ 08.449 billion Net income: US$ 11.809 billion Total assets: US$ 72.921 billion Employees: 139,600

TOP TNCs

1. Royal Dutch Shell

2. Exxon Mobile

3. Wal-mart Stores Out of top 500 TNCs…
140 are from USA, 68 Japan, 39 Germany, 37 China, and 26 Britain

Why have these TNCs moved location?

What is outsourcing and offshoring?

Global Manufacturing Shift

Outsourcing or offshoring is the global shift of services from MEDCs to NICs, RICs and LEDCs.

TNCs have invested in NICs

NICs have TNCs that are investing in MEDCs

Availability of a large and disciplined workforce

Skilled workforce

Suitable infrastructure

Political stability

Government incentives (example, LG)

India has become a common destination for outsourcing due to:

Commonwealth links with the UK

Higher levels of English skills

Strength of IT education

Lower communication costs

Lower wages

Lower capital costs

Large domestic market

IMPACT?
The impact of outsourcing and offshoring is simply more profitable returns for the companies which participate in these activities. They can maintain employment in the quaternary jobs in the home country and in the manufacturing/services jobs in the production counties.

Globalisation: A process of world change The pattern of world trade has changed: 1955 Europe

40%

North America

25%

Asia

20%

South America

10%

Africa

5%

Total world value: US $95 billion

(Share of merchandise trade by region)

2005 Europe

45%

North America

15%

Asia

30%

South America

5%

Africa

5%

Total world value: US $10,431 billion

 World trade has increased dramatically
 Major shifts between which countries and which types of country import/export

How do patterns of world trade highlight the process of globalisation?

Outsourcing and offshoring

MEDCs have remained relatively similar in their % since 1950s whereas countries with resources and labour have grown

Growth of Asia

Example of TNCs moving to areas with cheaper materials, labour, factory, transport etc costs

Shows liberalisation of trade and finance

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