Globalisation Revision Notes

What is globalisation?

Globalisation is the process by which countries and people are becoming more connected.
Improvements in transport and communications enable the flows of globalisation (people, goods,
capital and information) to move between countries.

It might seem strange to think that our world is becoming smaller. Not in terms of the size of the
Earth but in the way we interact with one another. This is because of globalisation.

Over the years we have been able to communicate and travel far quicker than we did in the past. In
the 1800s, it would have taken a letter days or weeks to reach its destination. These days it only
takes a matter of seconds to phone, text or email someone on the other side of the world.

Recently, this process has been accelerated because of developments in communication and
transport technologies. It's hard to imagine living in a country that isn’t influenced by the wider
world. This can be the food that we eat, the music we listen to or the clothes that we wear.

Drivers of globalisation

Advancements in technology have contributed to globalisation considerably. New technologies have

driven companies to become even more global and has made connecting across the world far easier.

Transport

The way we travel has developed considerably since the 19th century. The introduction of the
internal combustion engine, railways and aeroplanes means we can now travel from one country to
another in a fraction of the time it would have taken in the 17th century. Back then, people
primarily relied on horses or ships as a means of transport. The introduction of the petrol engine has
led to the use of cars, buses and lorries, and the construction of huge highway networks.

Developments in aviation mean that large numbers of passengers and large amounts of freight can
be moved over long distances much more quickly.

One of the biggest contributors to globalisation was the introduction of container ships in the 1950s.
They make transporting bulky goods quick and easy. Using containers to transport goods means that
they can be handled anywhere in the world with specialised ships, lorries and cranes. This allows
suppliers to move their goods quicker and more efficiently from the back of lorries onto ships.

Communication

The 21st century has seen huge leaps in communication technology. This has driven globalisation
even more and has broken down political and cultural barriers. The internet allows people and
businesses to communicate instantly.

Satellite communications allow a global view and communications links even in very remote areas.
They enable TV and telephone communications.

Mobile phones enable people to communicate and to access the internet wherever they are. Social
networking brings people from all around the world in contact with one another.
These technological advances mean that Transnational companies (TNCs) have been able to develop
in countries across the world and still be monitored from one headquarters in a developed country.
The reduction in communication time means companies can work even more efficiently and reduce
their costs.

Transnational Corporations (TNCs)

TNCs are also drivers of globalisation.

TNCs have traditionally had their headquarters in the HICs (high income countries) in Europe as well
as the United States and Japan. Companies in these countries had an advantage as many of these
countries were once colonial powers. Colonial powers grew richer through exploiting the resources
of their colonies. This wealth has enabled large companies to grow.

More recently, some NICs (newly-industrialised countries), such as China, have grown wealthier over
time. This has led to larger companies and TNCs developing in these countries too.

TNCs often manufacture products in LICs (low-income countries) or NICs where wages are lower.
This allows them to make more profit from the products that they sell, but it can mean that workers
in LICs are exploited.

The relocation of factories has led to industrialisation in many LICs and MICs and deindustrialisation
in many HICs.

Globalisation has had both positive and negative impacts. Remember: not all the impacts listed here
are equal. Some may be more serious than others.

Employment and resources

 Job opportunities have led to economic growth in LICs and NICs.

 Deindustrialisation in HICs has led to job losses.
 There is improved access to resources as countries trade with one another.
 Some resources have been overexploited, which means they may run out.

Relationships and trade

 Countries rely on one another and are more likely to work together.
 Manufacturing and transportation processes can lead to higher levels of pollution.
 Ideas and skills are shared between countries. This can lead to greater progress.
 Unequal flows of people or capital can lead to some countries having less power. In some
cases, TNCs are more powerful than the countries they operate in.

Nike

The US sportswear company Nike have had a sizeable number of factories based in South-East Asia
for many years.

Although the headquarters is based in Oregon, USA, the company has over 700 shops worldwide,
offices across 45 countries and over 700 contract factories with nearly 1 million workers across 50
countries.
Nike has been working in China for over 30 years when they started to sub-contract production to
overseas factories. At present there are around 146 factories in China employing 189,000 workers.
There are even more factories and workers in Vietnam.

These factories provide valuable jobs to the workers although the wider implications of these
factories can sometimes help and hinder development in NICs.

How can Nike help development in NICs:

 The jobs that have been brought into China or Vietnam often provide a much better
standard of living than other local jobs.
 When massive global TNCs like Nike find success in NICs, this will encourage other
companies to also come and set up factories. Infrastructure that was set up to support Nike
will also provide an advantage to other investors.
 Nike claim that they have been an important force in helping to improve worker conditions,
pay and rights within countries like China and Vietnam. This means that the local workers
should be better off as a result of working for Nike than compared to other companies.

How can Nike hinder development in NICs:

 Wages in NICs are still quite low compared with similar jobs in HICs. Governments in NICs
are worried that if wages were to rise quickly, this might mean that big organisations like
Nike would look to move their factories to cheaper suppliers.
 Many of the jobs provided require few skills and the workers really do not pick up new skills
that could advance the economy of NICs further.
 Much of the profit generated by the company will not remain in NICs but will leak out and
back to company headquarters in the USA.
 Working conditions are still not great in NICs compared to what they are in other countries.
Sometimes factories that produce textiles that have poor working conditions are called
sweatshops.

Glocalisation

Glocalisation is the adaptation of international products to the particularities of a local culture in

which they are sold.

Advantages of glocalisation

 Increase chance of success: By adapting to local culture, a company’s product is likely to be

more preferable…and therefore make a profit.
 Local companies more competitive: If foreign companies are willing to innovate and price
products competitively, it’s likely to force local companies to do the same.
 Drive innovation: Using local expertise in product design is likely to need to new ideas for
companies.
 Increase sales: By adding products specific to a local market alongside their existing
products, companies give consumers choice…and this is likely to lead to higher sales.
 More jobs for local workforce: As foreign businesses develop, they create more jobs and
income for the local economy.

Disadvantages of glocalisation
  Requires large investment: In order to produce a product for specific local markets,
companies must spend a lot of money to research and manufacture new ideas.
 Local market resistance: Foreign companies might introduce local product variants but it
might not increase local interest as consumers may be loyal to existing companies.
 Shutting down local companies: When TNCs enter a local market, they increase competition
and drive prices down. This might force local companies to close if they can’t compete.

Globalisation and sustainability

Sustainability is about meetings the needs of the present without compromising the ability of future
generations to meet their own needs. Globalisation can be considered sustainable and
unsustainable.

Positive aspects of globalisation

 Food: Supermarkets like TESCO source goods from all over the world. So in the UK, we can
buy fruit and vegetables at low prices all year round.
 Travel: People are now travelling further overseas than ever before. Workers are also able
to move to countries where they are needed or the wages are highest.
 Consumer goods: Thanks to global production, things like phones, clothes and computers
and cheaper than ever. So everyone has a higher standard of living.
 Culture: The internet has created a global village where people can share common interests
like sport, music and film.
 Development: When TNCs invest in developing countries, local people have jobs and local
suppliers can sell their products. Taxes from these activities can help build schools and
hospitals.

Negative aspects of globalisation

 Cultural erosion: Global companies such as Coca-Cola, McDonalds, Netflix and Amazon are
spreading European or American values. This results in an erosion of local cultures.
 Worker exploitation: TNCs manufacture lots of goods in developing countries because of
cheap labour. But local contractors can exploit workers by inflicting poor working conditions
and allowing few rights.
 Pollution: Many developing countries don’t have strong laws to protect the environment.
TNCs may pollute the air water with toxic chemicals but never face consequences.
 Resource depletion: As more countries develop, people use more resources. Many natural
resources are running out and environmental problems like deforestation are of growing
concern.
 Profits: TNCs invest in developing countries but most of their profits don’t go to the
developing countries in taxes, they go back to the richer countries in profits.

Sustainable solutions: reducing the environmental and social costs of globalisation

 Ethical shopping: Ethical shopping means buying products that do minimal harm or
exploitation to humans, animals or the environment. Buying ethically encourages better
conditions for workers and farmers in developing countries.
  Buying local produce: Buying products locally reduces “food miles” and carbon emissions. It
also helps local farmers. By doing this, at least some of the carbon emissions you contribute
to the atmosphere are reduced.
 Fair trade: Free trade normally means that the factory worker or grower of a commodity
gets the smallest share of the final price of the goods. Fair trade aims to give a bigger
proportion to producers.
 Campaign for improved conditions: TNCs reduce costs by sub-contracting the
manufacturing of their products to factories in developing countries. Campaigning for better
wages, longer-contracts and better conditions respects workers’ rights.
 Reduce, re-use, recycle: At least 80% of our rubbish could be reused, recycled or
composted. Along with reducing our waste, this approach is essential because landfill sites
are running out and incineration (burning) releases more greenhouse gases into the
atmosphere.
 Carbon offsetting: This is a system where you can pay to offset the carbon emissions you
make. For example, if you went on holiday, you could pay extra for carbon credits that
would be used to plant trees (which absorb Carbon Dioxide).

Fairtrade

Fairtrade is a recent global movement which tries to make some elements of trade much fairer. In
most cases the emphasis will be on trying to ensure that producers in LICs get much better trading
conditions, a better wage and will become increasingly sustainable.

The farmers and workers at the bottom of the supply chain, who actually work with the raw
materials will be given a guaranteed price and a fair reward for their efforts. This means their quality
of life should improve, as well as the long-term prospects for their children.

Fairtrade products sometimes cost more in supermarkets in HICs, but many consumers consider this
a small price to pay for the benefits they bring.

Benefits of fair trade

 Stable prices: Most Fairtrade products will have a fair trade minimum price that should
cover the full costs of sustainable production – even if there was a fall in global prices.
 Fairtrade premium: Producers are paid a premium or an extra amount of money beyond the
price of the goods so that the farmer/producer can invest in further machinery, seeds,
education, healthcare or farm improvements. This social premium usually benefits the
entire community, not just the Fairtrade farm.
 Partnership: Producers will be much more involved in the decision-making processes that
affect them. They can be involved in fair trade councils and committees that can make local
decisions.
 Environment: Many Fairtrade organisations have led to massive improvements in
environmental standards. Farmers are encouraged to cut down fewer trees and to protect
their local environment and soils and they will be supported and paid to achieve this.
 Child labour: Fairtrade organisations have banned child labour – they are keen to support
the education rather than the exploitation of children.
Covid-19 and globalisation

You will need to use notes from the lesson for this topic.