Higher Level Extension: Global Interactions

1. Global Participation Globalisation - The growing interdependence of countries worldwide through the increasing volume and variety of cross border transactions in goods and services and of international capital flows, and through the more rapid and widespread diffusion of technology - Criticisms of globalisation include that it is promoting western culture and capitalism. Although there are undoubtedly global forces at work we do not have a fully globalised world economy Peter Dickens TNCs and states are the two major shapers of the global economy. The interactions include firm-firm, state-firm, and state-state relationships. The impact of these relationships is evident on all scales including: local, national and global. Technological development has been crucial in establishing and strengthening these relationships. States collectively set the rule for the global economy however the majority of investment comes from TNCs, which drive global shift. This has resulted in an increasing number of NICs since the 1960s. Under this process many industries and services have relocated in large numbers from the developed countries to the selected developing countries.

Reasons for economic growth in the Asian tigers - A good initial level of hard and soft infrastructure providing the conditions for structural economic change - Man labour/power particularly through expansion of primary and secondary education. Programs to develop scientific engineering and technical skills. - Culture promotes education and achievement - All these countries are strategically geographically located i.e. next to water sources - Governments were willing to invest in these countries - The establishment of first generation NICs led to the development and investment in second generation NICs such as Malaysia and Thailand. The dimensions of globalisation: - Economic interactions between countries has led to increasing globalization and the development of trade blocks that have increased cooperation between nations (e.g. EU) - Political relationships have also been improved due to the presence of mediators such as the UN, which have facilitated more cooperation between nations and thus increased economic interactions thus increasing globalization.

The development of globalisation: - Globalization developed out of internationalization. - Transport and communications expanded rapidly. - Increasing level of independence between rich and poor countries led to a significant growth in world trade. - Large flows of capital from European companies to other parts of the world. - Major advances in trade liberalization under the World Trade Organisation- economic and legal barriers - Transport-communication revolution - Opening up of the world financial market allowing for more competition The KOF index: - The index measures globalisation in economic, social and political dimensions. - First developed in 2002 by the Swiss Institute of Technology - Scale of 1-100 with underlying variables entered in percentiles - Higher values denote greater globalisation (See KOF index notes for strengths and weaknesses) 2. Global core and periphery Due to the fact that the importance of the different sectors has changed over time, there has been a shift fro the primary to the tertiary and quaternary. This is due to advances in technology that have resulted in less need for man power as these jobs are now done by robots ad machines. Therefore there has been a higher demand for people in the tertiary and quaternary sectors. This has occurred in core and semi periphery area, however the periphery areas they are still heavily reliant on the primary sector as they lack the funds and the skills for such advances. - OECD can be used to identify the economic core of the world. (Organisation for Economic cooperation and development) - Global Cities are ranked according to five areas: Business activity Human capital Information exchange Cultural experience Political engagement London Case Study: Considered one of the worlds major global cities. The City of London is one of the big three financial centres in the world. Most important concentration of tertiary industry in the UK. Workforce about 300,000 most of whom work in banking, finance, insurance and business services. City of London is a main part of Londons CBD. The West end of the city specialises in retailing while the City specialises in business and financial services. Part of the CBD has now extended to the east adding much needed office and retail space. London is continuously being invested in to ensure that it maintains its global position.