Published on February 21, 2014
TOPIC 3GLOBALISATION 3.2 What changes have taken place in the FLOW of GOODS and CAPITAL? 3.2a- In the past 50 years both international trade and the flow of capital across international borders have expanded rapidly Lesson 4- part 1- Today we will EXAMINE the changes in the PATTERN and VOLUME of TRADE and FOREIGN DIRECT INVESTMENT
KEY TERMS Match up the key term to the correct definition and write out in your notes Investment made by overseas governments, businesses or individuals in foreign enterprises. GOODS CAPITAL movement FLOW FOREIGN DIRECT INVESTMENT (FDI) things you can trade money.
KEY TERMS- ANSWERS GOODS CAPITAL FLOW things you can trade Capital can take many forms but for the purpose of this section we will refer to capital as money. movement FOREIGN DIRECT INVESTMENT (FDI) Investment made by overseas governments, businesses or individuals in foreign enterprises.
STARTER: Watch this short clip and make notes- Write a definition of the term trade (1)
FOREIGN DIRECT INVESTMENT (FDI) TASK Complete a who?, what? Why? about FDI in your notes. Investment made by overseas governments, businesses or individuals in foreign enterprises (companies, countries). it helps their economies grow and creates jobs. It is still DEVELOPED NATIONS receive most FDI. DEVELOPING COUNTRIES can miss out due to: • Unstable or corrupt government • Poor transpor t and communication links • Pover ty reducing potential market • Complicated regulations • Unstable currency DEVELOPING COUNTRIES can present themselves as attractive locations for FDI because of • Cheap labour • New markets • Low taxation • Cheap land and resources • Relaxed planning and environmental regulations
FOREIGN DIRECT INVESTMENT (FDI ) Investment made by overseas governments, businesses or individuals in foreign enterprises (companies, countries). it helps their economies grow and creates jobs. It is still DEVELOPED NATIONS receive most FDI. DEVELOPING COUNTRIES can miss out due to: • Unstable or corrupt government • Poor transpor t and communicati on links • Pover ty reducing potential market • Complicated regulations • Unstable currency • • • • • DEVELOPING COUNTRIES can present themselves as attractive locations for FDI because of Cheap labour New markets Low taxation Cheap land and resources Relaxed planning and environmental regulations Some DEVELOPING COUNTRIES China (MIC) are seeing increases in FDI. It must also be remembered that FDI can cause problems and is not always advantageous. Problems may include increased pollution, inflation, exploitation of resources, economic leakage and closure of local industries.
FOREIGN INVESTMENT – 1999 – 2009 1. Identify the main differences between the two maps. 2. Can you think of any reasons for these differences?
CHANGES IN THE FLOW OF GOODS Taskhttp://news.bbc.co.uk/1/shared/spl/hi/g uides/457000/457022/html/nn2page1.s tm 1) What has been the general pattern of global trade 1955-2005? 2) Comment on the 1955 situation 3) Comment on the 2005 situation 4) Which areas have seen increase? Decrease? Use figures in your answers.
Comment on the differences between imports and exports shown (3)
TRADE CHANGES 2002 – 2012 1. Identify the main differences between the two maps. 2. Can you think of any reasons for these differences?
TOPIC 3GLOBALISATION 3.2 What changes have taken place in the FLOW of GOODS and CAPITAL? 3.2b- In the past 50 years both international trade and the flow of capital across international borders have expanded rapidly Lesson 4-part 2- Today we will EXPLORE the reasons for the changes in the PATTERN and VOLUME of TRADE and FOREIGN DIRECT INVESTMENT
RE A SON 1 - I N C RE A SED A N D FA STER G LOBA L T RA N SP ORT A N D I N FORM ATION E XC H A NG ES Transport has developed, getting from the UK to the USA used to take months by ship Now it takes hours by flight. Transport has increased- there are now more flights to more global locations, more frequently, everywhere seems closer. Road and rail networks have increased making transport within countries, even DEVELOPING ones easier and quicker http://www.youtube.com/watch?feature=pl ayer_embedded&v=Wuo2T-smOwQ
Traditional trading ships, many were called clippers, one product would be shipped at a time. Comment on the distribution of shipping lanes globally in 1850 (3) 1850s shipping lanes
Comment on the distribution of todays shipping routes (3) Today most goods are transported by large ships called containers, this process is called CONTAINERISATION. Containers stop at multiple locations and pick up multiple goods 20 th century shipping lanes
Describe how shipping has changed between 1850 and now (2)
BBC - The Box In 2008 the BBC branded (named) a container and fitted it with a GPS tracker. The aim of the project was to learn stories about global trade. In one tracked year the container travelled over 50,000 miles by container ship, train and lorr y (truck). On its journey the box visited many countries including Singapore, China, the US and Brazil. It also carried a huge variety of products ranging from whiskey to cat food. The journey of the box demonstrates how interdependent the world has become. Countries are no longer self -suf fi cient, but instead rely on each other for var ying products. The container also travelled through a dif ficult time for the container industr y, rising fuel prices and falling demand because of a global recession meant that their profits fell from a profits of $ 3 billion in 2008 to a loss of $ 20 billion in 2009. http://news.bbc.co.uk/1/hi/b usiness/8314116.stm lessons the Box taught us
REASON 2- LOWER TRANSPORT COSTS Describe the changes in transport costs of air and sea travel between 1930 and 2000 Explain how lower transport costs would increase global trade
REASON 3- GROWTH OF TNCS
Many TNCs are now richer than national governments, thus they dominate much movement of capital across the globe. Many TNCs have MERGED creating bigger TNCs. Which have more money (capital) and therefore can get bigger and bigger. Examples of MERGERS British Airways and Iberia Tata steel and chorus steel Proctor and gamble and Gillette Exxon and mobile MERGER- Where one company buys another company, creating a larger single company
Disney and Pixar Mickey and Nemo. Pinocchio and “Toy Story.” Cinderella and “Cars.” The merger of legendary Walt Disney and everything-wecreate-kids-adore Pixar was a match made in cartoon heaven. Disney had released all of Pixar’s movies before, but with their contract about to run out after the release of “Cars,” the merger made perfect sense. With the merger, the two companies could collaborate freely and easily. Did the merger work? Well, take a look at the successful movies that Disney and Pixar have put out since: “WALL-E,” “Up,” and “Bolt.” Pixar has plans for twice-yearly films, unthinkable before the merger, and has certainly gained the expert advice from Disney when it comes to advertising, marketing plugs, and merchandising. When it comes to marketing to children, no one does it better than Disney. Even pre-merger cartoon “Cars” got the Disney treatment and remains a top seller in merchandising among 4 year old boys. Exxon and Mobil Big oil got even bigger in 1999, when Exxon and Mobil signed an $81 billion agreement to merge and form ExxonMobil. Not only did Exxon Mobil become the largest company in the world, it reunited its 19th Century former selves — John D. Rockefeller’s Standard Oil Company of New Jersey (Exxon) and Standard Oil Company of New York (Mobil). The merger was so big, in fact, that the FTC required a massive restructuring of many of Exxon and Mobil’s gas stations, in order to avoid outright monopolization (despite the FTC’s 4-0 approval of the merger). ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten spots in the “Top 10 Corporate Quarterly Earnings” (earning more than $11 billion in one quarter) and it remains one of the world’s largest publicly held companies (second only to Walmart).
BIGGER THAN MANY COUNTRIES THE WORLD’S 100 LARGEST ECONOMIES CORPORATE REVENUE VS. COUNTRY GDP 2000 (MILLIONS US$)
REASON 4- STATE LED INVESTMENT Some governments invest massive amounts of money into trades- creating state led companies, these include Sonotrach in Algeria Gazprom of Russia Sinopec of China Petrobas of Brazil All of these examples are companies that are involved in the petrochemicals (gas, oil, petrol, energy) sector. Task Research one of these companies Find out How much the company is worth How long the company has been operating How supported the company is
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