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Globalisation - Coggle Diagram
Globalisation
Global coffee trade
Fun facts
standard bag of production= 60kg
1 600 00 cups consumed each day worldwide
3/5 can’t live without coffee
USA and then Europe as top consumers
Production
80% produces by 25 million smallholders
2nd only to oil as the world's biggest trade commodity
Beans not only for coffee but for caffeine in other drinks, pharmaceuticals and cosmetics
Production for 2018/19 forecast to be 11.4 million bags higher than previous years at record of 171.2 million mainly due to Brazil’s record output
Grown in almost 50 countries from Central America to southeast Asia
Brazil is the world’s largest coffee producer with an output of over 49 million 60kg bags in 2013 according to International Coffee Organization
Consumption
In 20127/18 around 161.74 million 60kg bags were consumed world wide with 158 million the year before
Europe is the largest market for coffee drinkers representing 30% of the global coffee market
Per capita coffee consumption is also the highest at 3.3kg annually
Stable coffee consumption is expected throughout Europe through 2025 and beyond
Coffee is a strictly tropical crop that is consumed largely in the temperate belt
High consumption in Europe and the americas
Low in Africas and Asia
However consumption varies in the middle east
Change over time
Production
Production increased significantly since 1963 by approx. 45 million bags to over 140 million
Much of the gain is due to
South America increasing production (from 25 mill - 66 mill)
Asia and Oceania increasing production (1 mill- 40 mill)
Been fluctuation particularly in SA region
Production in Central America and Mexico remained fairly constant between 1963 and 2012
Africa is the only place where there have been dips and a reduction is evident
Consumption
Asia plays a key role in the growth of global coffee market
3/5 of the fastest growing coffee markets are in asia
Overall the global coffee market continue to grow steadily with expected retail volume growth of 2.7% in 2016 following a 2.5% rise in 2015
Issues of interdependence
Promotes Stability, growth and developments
Uganda
among the largest coffee producing and exporting countries in the world
coffee heavily contributed to both domestic and foreign earning in the country
product serves as primary source of labour especially for rural farmers
duplicated across many African countries
Rwanda
Coffee is one of the fastest growing sectors and has fueled the countries economic growth
women are part of this growth and have taken on more leadership roles within this sector
Causes inequalities, conflicts and injustices for people and places
According to UN stast
ratio between a farmer in the 1970s and a retailer was 1:3
Now is about 1:8 or 1:10
Farmers receive on average around a dollar or 2 for their beans yet the retail price is around 20 or more
Income inequality gap has expended over the years
Price Fluctuations
Until 1989 the coffee market was regulated by the International Coffee Agreements (ICAs) that were intended to manage supply and price stability
System collapsed and since 1990 the coffee market has been subject to the free market forces of supply and demand
Price levels during regulated period were relatively high
Free market has had 2 periods of low prices 1989-93 and 1999-2004
In 2001 coffee prices were just 1/3rd of their 1960 levels (all time low $0.45)
Prices recovered in 2004 and in 2011 and reached a 34 year high
Reasons for low prices
growth in suppliers and increased market access
e.g Veitnam became a major producer and exporter which increased production by 1400%
Reasons for high prices
Coffee plants are susceptible to a range of diseases e.g bacterial blight and rust leaf
Coffee berry disease causes dark spots to appear on the coffee and destroys them in days (berry bad for the beans :( )
Insects and other pests too
Weather conditions may make these more likely
e.g bacteria blight is more common in a wet winter
droughts make cicada infestations more likely
Fairtrade
Started in response to dire struggles of coffee farmers following collapse of world coffee prices in 1980s
Certified coffee producer organisations are ganurteede to receive at least the minimum Fairtrade price for their coffee
aims to cover costs of production and act as a safety net if market prices fall below a sustainable level
Farmers also receive additional Fairtrade Premium to invest in business or community improvements
Farmers must use at least 25% of it to enhance productivity and quality
e.g by investing in processing facilities
in 2013-14 farmers earned an estimated 38.6 million in premiums that were invested in farmer services or community improvement
Impact on coffee farmers lives
Able to fertilise and replace plants
Can improve living standards and invest in the future
Communities invest in schools and health services
Use premium money to continue studying to a higher level
OCFCU
Established in 1999 by 34 cooperatives representing 22 691 household farmers and a captial of $90 000
OCFCU pays 70% of its net profit back to cooperatives and then they pay 70% of their profit to the member farmers.
Shows that farmers area benefitting by being paid 3 time sin one coffee season
Factors affecting globalisation
Globalisation is a result of new systems tech and relationships
development of new systems, tech and relationships in a range of sectors like finance, transport and management have been the driving force behind globalisation
Systems
include ways of working, procedures and methods of organisation that allow a particular function to be carried out e.g just time manufacturing making products in response to demand
In since1940s many new systems have been introduced to make it easier for flows of info, capital, products, services, and labour to cross national boundaries
Tech
used for info, communications and transport
has advanced rapidly
e.g internet allows people to to access info, planes allow people and goods to be transported quickly
Relationships
before WW2 relationships mainly involved one country losing and another gaining
now they’re based on trade on common rules
Financial systems promote globalisation
Governs flows of capital between countries
finance systems are based on companies called investment banks
help companies raise capital by selling shares on behalf of them
people who buy- investors, receive a fraction of the profit
in 1980s several things happened to make finances more global
information tech- internet allowed investors greater access to info. investors and investment banks can easily find out about a company about make decisions
investment banks made new financial products that made foreign investment less risky
Governments around the world undertook a process called financial deregulation, where they relaxed rules about what banks were allowed to do. included allowing banks to charge more for services
financial deregulation also involved removing barriers to capital coming in and out of country, making it easier for investment banks to buy and sell shares and other products
these changes led to a greater range of companies getting involved in finance e.g commercial banks selling shares. enabled investment banks to have a greater amount of services like exchanging currencies to allow trade over borders
trade agreements remove barriers to trade
global trade system governs the flow of products between countries
trade regulated by governments who control the products they let in and what price
controls include tariff(taxes on imports), non-tariff barriers (e.g rules on quality), banning of certain things
controls make it more expensive for companies to sell abroad and for consumers to buy the stuff
to make it cheaper, countries enter trade agreements- act like contracts
both countries agree to remove controls.
benefits both countries’ companies and consumers
trade agrees ments between 2 countries are bilateral trade agreements
multilateral trade agreements- trade agreements between several countries.
all involved countries agree to remove tariffs etc.
multi bi lateral agreements make up the global trade system
the globaltrade system is governed by WTO
transport and communications systems have improved global business
improved transport systems allow people to get places quicker
e.g high speed trains and fast ships
unifrom metal containers introduced in 1the 950s-
allowed more goods to be transported quicker and cheaper onto another form of transport easier
communications satellites
launched in 1the 960s
allows cheaper wireless communications between two devices
means even rural or remote countries can access ithe nternet
optic fibre cable
signals of light transmit more info than any other cable
allows fast communication between 2 devices
allows almost-instant communication
significant software growth
allow free communication
e.e email text facetime
management and information systems have increased companies’ efficiency
supply chains more global
supplier may be in different country to the factory and the research and development areas
can minimise costs
large companies benefit from economies of scale
The average cost to a firm of making items is usually high
large companies reduce average costs by using special equipment and production lines
may also be able to buy raw materials at a lower price in bulk
gives large companies an advantage over smaller ones
outsourcing
when a company pays another country to do work that in the past may have been done in-house to save cost
e.g rather than developing a new call centre company may pay another to take calls
cheap labour costs mean many companies outsource abroad
working practices also changed
e.g casual and temporary contracts allow companies to take on workers as and when they are needed - don’t have to pay a fixed yearly wage so save money
countries work together to prevent security threats
with trade agreements, companies are more interdependent
if countries must buy and sell products they can so will not fight and be at war with each other
by working together security improves
e.g NATO deters common threats
developed countries have intervened in conflicts to secure resources like oil tho
Globalisation
Globalisation is the process of countries becoming more connected
Process of the world’s economies, political systems and cultures becoming more strongly connected
if no globalisation there would be no connections, but if complete globalisation the world would be one big community
Caused by the movement of …
information
capital
products
services
labour
…between different countries
As the world is becoming more interdependent- led to global-scale attempts to manage a range of international issue
Five Factors promote globalisation
Service
services being economic activities that aren’t based on producing material goods
improvements in ICT allowed services to be global industries,
banking and insurance depend on communication and transfer of info
ICT means services can locate anywhere and serve everyone
deregulation in the 1970/the 80s (removal of rules to increase competition) and opening of national financial markets to the rest of the world
meant it was easier for banks and other financial institutions to do business in other countries
services can be split into low-level and high level
high-level services tend to be in HICs and low level in LICs
companies increasingly relocating low-level to LICs
increasing flows of services make the world more interconnected e.g more people have bank accounts
Products
historically manufacturing industries were located in more developed countries with products getting sold in the same place
recently manufacturing has decreased in developed countries
lower labour costs overseas have caused many companies to relocate their production abroad and import to countries where things are sold
e.g dyson in malasyia but sold in UK
International trade in goods is increasing
changing flows of products make the world more interconnected
e.g many products bought in the UK have been imported
Captial
capital is money that’s invested- spent on something to produce an income or increased profit from it
historically, the capital was invested within a country but now its’ being invested in foreign places - foreign direct investment
improvements in ICT have encouraged flows- that can instantly be moved
increasing flows of capital are making the world interconnected
most economies are dependent on flows from other countries
Labour
movements of people who participate in the workforce from one country to another
more people moving overseas-
international migration increased by over 40% between 2000 and 2015
people move because they have to e.g war but many just move for work reasons
some migrants are highly skilled workers (e.g medical and ICT) moving to developed countries where wages are higher
other relatively more unskilled workers move because of unemployment or poor wages
Increasing flows of people means people bring aspects of their cultures with them and countries are connected by spread out families
Information
Info like financial data can be spread quickly
development and spread of email Internet and social media means a large amount of info can be exchanged instantly across the globe
allows people in different countries to communicate
increasing flows of info are making the world more interconnected e.g people learn a lot about different countries and cultures
Marketing is becoming more global
marketing- process of promoting and selling products or services
marketing is global
global marketing involves treating the world as a single market and using one strategy worldwide
gives economies of scale- cheaper to have one campaign for the whole world than for individual countries
can create brand awareness- consumers identify the name or logo o a product so will buy
marketing adapted to regional markets- different laws and cultural attitudes e.gdifferentt ideas about consuming alcohol