Globalisation AS Edexcel

• the process of widening and deepening global connections, interdependence and flows
• involves commodities (raw materials e.g copper), information, migrants and tourists

developments between transport and trade have increased massively since the 19th Century:

• TNCs: invest abroad (foreign direct investment) and builds links between producers and consumers.
• Travel: railways, telegraphs and steam engines reduced costs of moving goods. In 20th Century, containerisation reduced transport and handling costs.
• Increase technology: allows fast travel and cheap flights more common; more and more people and goods travelling fast.

Containerisation: strong steel containers that can carry 25,000kg of goods, can be transferred from ships and lorries.

global communications: e.g social media allowing the creation of recognisable global brands.

internet: created in 1989, since then hardware, software, telecommunications have increased rapidly, boosting the global economy.

online shopping: e.g Amazon, causing shops like Woolworths and Blockbuster to go bust - loss of jobs.

delivery: free delivery or standard delivery (links in with transport) means less people go out to go shopping as it can all get delivered to your door.

idea of a shrinking world: the world is becoming ever more interconnected and advanced, everyone is more aware of what is going on asif the world is getting smaller.

• World Trade Organisation (WTO): regulates and agrees trade flows. The general agreement on trade and tariffs (GATT) means countries have to lower their barriers to trade e.g lowering tariffs on goods crossing borders
• International Monetary Fund (IMF): channels loans from richer nations to poorer nations that aply for help. In exchange, the poorer nations agree to run free market economies open to outside investment. Voting rights are not equal - amount of money put in is proportional to voting rights
• World Bank: lends money on a global scale. Aiming to achieve Millenium Achievement Goals, eliminating poverty and improving sustainable development.

Foreign direct investment (FDI): an investment made by one country with business operations or interests in a seperate country.

Trade bloc: intergovernmental agreement where barriers that trade are reduced or eliminated along the participating states.

• EU: an internal market that aims to ensure the free movement of people, goods and services between Europe.
• ASEAN: (Association of South East Asian Nations) an organisation which promotes intergovernmental cooperation and economic integration within its member states.

Advantages of trade blocs:

• bigger markets but no extra taxes (e.g Tesco able to branch out to other countries, not just UK)
• national firms can grow to become TNCs (e.g Vodafone)
• protection from foriegn competitors
• political stability

Disadvantage of trade blocs:

• loss of soreignity (independent government)
• interdependence: countries become ever more dependent on each other; e.g an economic crisis would affect all
• compromise: countries entering trade blocs must allow foreign firms to gain domestic market share.

• large areas of land set aside by the government to help ease trade e.g seaports
• helps companies import materials and export finished products without incurring taxes
• provides local employment and technology transfer

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