A Level Revision Notes: Globalisation

Governments and politicians make very important decisions about trade and the economy. They form intergovernmental organisations to control trade and money. This means governments influence globalisation a lot.
Countries form trade blocs to increase trade and to be more stable like the EU. UK government influences the private sector and businesses. As they want the economy to benefit from taxes and jobs
Large countries and blocs have the biggest influences on economic decisions making. China has become important as they have their own political and economic impact on globalisation.

Key Terms:

Free Trade: Trade is open across all borders without restrictions on quotas and without taxes added tariffs. Trade is unlimited without controls
Free Market (Economic Liberalisation): Economy is open to all with no limitations or restrictions so foreign businesses can move in and operate, sell goods, employ people, takes profit – the UK does this.
Foreign Direct Investment: Foreign countries and companies invest money into the country e.g Donald Trump have a golf course in Scotland, Coca-Cola factories in England and Call Centres in India.

Economic Organisations:

Name Of Organisation:	What They Do:
IMF (International Monetary Fund)	Allows loans
World Bank	Loans from MEDC to LEDC
WTO (World Trade Organisation)	Free trade

International Monetary Fund (IMF):

HQ in Washington DC, the USA
President always European
Huge loans available to help development of poorer countries
You must become a free-market economy to get them
This means Western companies like McDonald's can move in to sell goods and make profits

World Bank:

World Trade Organisation (WTO):

Supposedly promotes Free Trade
Based in Switzerland, Europe
Good to increase trade and reduce tariffs and quotas
BUT often very selective e.g. Wants China to remove charges on manufactured goods, but will not allow free trade with African farmers because the farmers might go out of business

Free Trade Blocs – The European Union:

Trade is free across borders without restrictions on quotas and without taxes
Movement is free and citizens can work anywhere
Allows for more trade
Cheaper products and better quality for consumers/more choice – this is cultural globalisation
Economic migrant workers, free movement

Advantages:	Disadvantages:
Easier to trade so more exports and imports e.g. UK cheese, French wine	Trade blocs still have quotas and tariffs for countries outside the trade bloc.
More security for goods and products so less risk of running out	LEDCs cannot access the EU market, as the tariffs added to make the profits they earn too low, or quotas limit how much they can export to the EU
Businesses like technology can work together e.g. employ European engineers	Keeps the EU economies strong, but damages LEDCs in some areas
Increases globalisation, allowing more connections, flows and interdependence between countries.

National Government Policies:

Free-Markets (Economic Liberalisation): Promote any business to come in and set up, e.g. HQs in London, pay taxes and provide jobs….
Privatisation: The Conservatives like a competition between companies to improve the market e.g. better trains, mobile deals, etc.
Business Start-Ups: Creates new future-economic benefits, such as new products to export, new jobs, more taxes, skills and replaces old declining industries like cotton.

China’s Open Door Policy – Case Study:

Governments can open-up to investment (FDI), trade and the world free-market to aid development.
1978: China did this as it was badly isolated politically and economically.
Over next 30 years, 300 million economic migrants like poor farmers moved to factories and manufacturing areas on the East coast.
China set up Special Economic Zones (SEZs) to produce billions of goods for the world!
400 million now middle-class, but very restricted rights, poor environment etc.
Huge impact on globalisation of trade, transport shipping and migration