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M20 Ch.1 What is Economic Globalization?, Factors Contributing to Economic…
M20 Ch.1 What is Economic Globalization?
Meaning of economic globalisation
Process of strengthening the transnational economic connections between all countries around the world
Labour force
Manufactoring
Capital
Trade
Technologies
Characteristics of economic globalisation
Marketing of goods and services breaks geographic boundaries
Sell goods and services to different places around the world
Consumers can purchase goods and services from different countries
Volume of transaction :arrow_up:
Transnational capital flow
Limitations of capital flow between counties :arrow_down:
International economic activities :arrow_up: frequent
Mobility of capital around the world :arrow_up:
Making use of international division of labour
Different countries/region to distribute the manufacturing processes to different countries/regions around the world by
outsourcing
/
setting up factories
Production cost :arrow_down:
e.g.
Development
More professionally skilled workers
Assembly
Cheaper labour
Transational labour flow
Employ workers from all over the world
Talent can work in other countries
Transnational mobility of labour :arrow_up:
Rapid spread of information
Use the
Internet
to look up information
Make appropriate business decisions
Communication between staff in different regions
:arrow_up: information mobility
Factors Contributing to Economic Globalisation (M20 Ch.2)
International politics
End of the Cold War
After WWII
the Capitalist Bloc led by :flag-us:
Different ideologies
:red_cross: communication on politics & economic
The Communist Bloc led by :red_flag:
Dissolution of Soviet Union
End of the Cold War
Start communication especially on economics
Economic Globalisation
Opening up of markets in different countries
Communist countries e.g. :flag-cn:
Western companies to do economic transactions within their countries
Reform and opening up policy in 1978
Tax incentives
:chart_with_upwards_trend: economic globalisation
Development of information technology
Internet
Emails, videoconferencing, etc
:arrow_up: Efficiency of spreading information
:arrow_down: Cost of communication
Keep places in close contact with each other
Able to receive huge amounts of real-time information
:chart_with_upwards_trend: Flow of information around the world
:arrow_up: Management of multinational investments
:arrow_up: Corporate commercial activities
E-commerce
Corporations promote & sell their products through online transaction platforms
Products can reach consumers from all around the world within a short time
Consumers can purchase commercial goods from all over the world
Economic globalisation
Development of transportation
:chart_with_upwards_trend: Speed & capacity in transport
:arrow_down: Time & costs of cross-boundary transportation
Work / do business in different places
Economic globalisation
Rise of international organisations
Organisation for Economic Co-operation and Development (OECD)
World Trade Organisation (WTO)
Help coordinate & manage international economic activities
Impacts of Economic Globalisation (M20 Ch.3)
Positive impacts of economic globalisation
Contributes to the economy of developed countries
Multinational corporations are from developed countries
Purchase & produce in different countries or regions around the world
:arrow_up: sales & earn more profit by exploring the market
Contributes to the economy of developing countries
Increase job opportunities for workers
:arrow_up: income & :chart_with_upwards_trend: material living standard
Brings in technologies & monetary capital
When building factories
:chart_with_upwards_trend: production efficiency
:chart_with_upwards_trend: boosting development of local economy
Provides diverse products for consumers
Allows free circulation of products around the globe & more choices for consumers
International division of labour :arrow_down: production costs
Consumers enjoy goods & services at a lower price
Negative impacts of economic globalisation
Rights & benefits of workers in developing countries are exploited
Overly :arrow_down: production costs
Exploit the rights & benefits of workers
Poor working conditions
Ignorance of safety
:arrow_down: workers' salaries as much as possible
Demanding to work overtime
:arrow_up: profit
Sweatshops
Workers in developed countries become unemployed
Low-skilled production to develop
ing
countries
Low-skilled workers in develop
ed
countries unemployed
Develop
ing
countries workers knowledge improved but requires low salary
Move high technology production lines to these countries
High technology jobs in develop
ed
countries :arrow_down:
Enlarges disparity between the rich and the poor
Multinational corporations from develop
ed
countries
Profit by purchasing, producing, selling in different countries
Develop
ing
countries only benefit from economic globalisation only to a limited degree
:arrow_up: disparity between the rich and the poor
Often government officers / businessmen
Normal workers only a little bit
More interdependence in international economy
One big country fail
Others fail
World capital circulate rapidly
Problem in the financial market of one country
Hit other countries
Global Financial Tsunami in 2008 when a financial crisis hit :flag-us:
Worsens the environmental problems
Develop
ing
countries make liberal environmental protection laws or implement the rules less strictly
Attract investment
:arrow_down: costs of handling of pollutants
Give incentives to multinational corporations to build factories
Environment might be harmed more
Lack of product variety
Products / services imported to the market from multinational corporations replaced local products / services
Uniqueness of local products / services is lost
Lack variety in the market
Economic Globalisation and International Organisations (M20 Ch.4)
Work of international organisations
Platforms for handling international affairs
Promote multinational trade & economic development
Organisation for Economic Co-operation & Development (OECD)
Give advice & comments on politics regarding
countries' economy, education, financial market
, etc
Promote economic & social communcation between member states
World Bank
Help development of developing countries by providing them with
Low interests loans
Encourage investors from all over the world to invest in developing countries
Enhance international cash flow & contribute more to economic globalisation
Interest-free credit
International Monetary Fund (IMF)
World Trade Organisation (WTO)
Demands its member states to eliminate trade barriers
Tariffs
International free trade
Import quotas
Enhance economic & trade communcation around the globe
Differences of political, cultural, & economic situations
International organisations can
eliminate conflicts
between member states
By setting
rules
for economic & trade activities
Enhance international cash flow
Encourage international invectments & promote multinational economic cooperation
Stabilise the functioning of the international financial system
Economics of all countries become interdependent under economic globalisation
Stabilise the international economic system when economic crisis hits a country
e.g.
2008 financial tsunami
Greece facing a debt crisis
The IMF and European Union (EU) provided a bailout loan of :pound: 100 billion
To help Greece overcome the crisis
stabilise the functioning of the international financial system
Problems brought by international organisations
Dominance of developed countries in policy-making
Operate on funds paid by other member states
Develop
ed
countried share more funds
Voting power of member states is related to the proportion of their paid funds
Developed countries have more decision-making power within international oganisations
Constitute policies favouring their own countries
Dominance of values of developed countries
Dominated by developed countries in the West
Values of Western countries affect rule-making within the organisation
Focus more on intellectual property rights