A Level Geography - Globalisation Key Players

Name three international organisations that have promoted free trade and FDI (3 marks)

1.       World Trade Organisation (WTO)

2.       International Monetary Fund (IMF)

3.       World Bank

Suggest reasons why these organisations may be considered controversial (6 marks)

The World Trade Organisation does have positive aspects, but there are some negatives which make the organisation seem controversial. It has repeatedly exposed home-grown products to foreign competition. Foreign goods are cheaper and better quality and this has meant that more local firms have gone out of business. Additionally, because of the decline in local companies staying alive, many people have become unemployed which as a result. Add this to the fact that EU and North American countries trade unfairly with developing countries by showing no care for the environment and respect for the natural resource – it can be understood why some people criticise the organisation for being unjust, unreasonable and ultimately unfair.

Another example of a controversial organisation is the IMF. Although this does achieve its main goal of maintaining international financial stability, the rules and regulations can be considered controversial, especially because of strict financial conditions concerning borrowing governments. Many countries who lend the money dictate what the money has to be spent on which is unfair for countries who have their own set of priorities. The 185 members of the organisation do not hold equal power. Countries are made to vote, and the share of the vote they have is proportional to the amount of money they have invested in the fund which is not fair for less developed countries who wish to get their voice heard. They have diminished influence on what money should be spent on and how much should be given.

The World Bank is perhaps the worst culprit when it comes to being exploitation. Similar to the IMF, the World Bank also has a proportional voting system. Larger, more developed countries have the most influence which means the power lies in the hands of only the wealthy countries which means many countries with weaker economies have no say. The USA has 16% of the vote and has controversially been home to all of the organisations presidents. It has funded projects which are damaging to the environment and are so expensive that developing countries have no chance of repaying the loan. Countries granting the loans impose strict conditions on the money and grants they give. Money given could also be given to corrupt governments and dictators who have no care for their people, which means the money would not be put to good use.

Using examples, assess the role that National Governments have played in accelerating globalisation in recent decades (12 marks)

National governments play a pivotal role when it comes to accelerating globalisation. Governments are able to make key decisions which can greatly influence the rate of which a country branches out and creates connections which countries across the globe.

The introduction of privatisation in the United Kingdom shows how globalisation can be sped up. Margaret Thatcher believed this would promote healthy competition between the businesses. She privatised some of the largest companies at the time, including British Airways and British Gas. Selling off these publicly owned companies meant that investors from elsewhere were able to gain a stake in the services and infrastructure. Globalisation has happened a lot more quickly because of this privatisation, and since the global financial crisis, the UK government has received Chinese and Middle Eastern investment to help fund new infrastructure projects. An example of this is the new Hinkley Point C power station which the Chinese have invested in to help further the nuclear industry in the UK. The decision made years ago by Margaret Thatcher still comes into play today, and has allowed for many countries abroad to make connections with the UK, showing that privatisation has sped up the rate of the globalisation.

In addition to the privatisation scheme, free-market liberalisation was also brought in by Margaret Thatcher. This involved deregulating the banks. This took the banking world by surprise and shook it, but quickly, London became the world city synonymous with banking. Her method was later called Big Bang as it introduced international companies to once national businesses. This can be compared to Ronald Regen’s policies during the 1980s. Essentially, they followed two simple beliefs which sparked new connections with countries around the globe. Governments were no longer allowed to intervene in markets and were no longer allowed to impede economic development. Secondly, restrictions would be lifted on the way companies and banks operated to prevent the idea of ‘trickle-down’ (the richest members of society will have the most, the poorest: the least). This played a crucial role in determining the speed of globalisation as it gave countries abroad a role to play in other countries’ businesses. It was criticised, like all of Margaret Thatcher’s policies, but eventually led to the United Kingdom becoming one of the most globalised countries in the world.

Rallying countries to unite also saw the globalisation accelerate. The European Union was set up after the Second World War to promote peace. Although it initially had only six members, this number quickly ballooned in size when leaders realised the benefits that would come from it. It started as a way to make coal and steel trade a lot simpler, but over time this changed as more countries wanted to join. This saw the introduction of the Schengen Agreement which saw border controls loosen and is the root of the EU Euro. This free movement of people meant that many people were able to travel freely between one destination and another, allowing Europe to become a multicultural continent. Although a negative light has been shone onto this, it was, overall, positive for the countries involved; it improved their economies and saw their populations diversify to include people of all backgrounds, religions and colours. The European Union also saw national government take an interest in trade blocs (voluntary international organisations that exist for trading purposes). Connections could be made to countries all over the world. Trading freely with close neighbours or distant allies saw physical borders to be overlooked as money and goods were able to be exchanged easily and efficiently, which in turn, saw the rate of globalisation increase.

Similar to the European Union’s Schengen Agreement is China’s Open Door Policy of 1978. At the time, China was a poor and ‘switched off’ country where the majority of the population lived in bad conditions and worked land for a living. When Deng Xiaoping reformed the country, this changed and brought about China’s blossoming into the global powerhouse it is today. Farmers were allowed to make small profits on their crops for the first time and the controversial One Child Policy was drawn up. This triggered a rapid process of change for the country, which included creating new connections with distant allies in order to ensure it’s development. The largest migration in human history took place when people moved from rural to urban areas, but their past villages were not emptied due to the strict registration system called ‘Lukon’. Cities had an influx of people which coined the term ‘instant cities’ and a new urban mega region was made around the Pearl River Delta.

Despite China trying to switch itself on with these reforms, there are still factors which mean that China does not hold an open door for everyone. The government has strict controls on foreign transnational companies. For example, China blocked Coca Cola from buying Huiyan Juice in 2000 over fears that culture would be lost. The country only shows 34 foreign films per year also, which shows that there are aspects put in place by the government which limit how quickly China can branch out and make connections. Although the Chinese have been important to accelerating globalisation, these factors have slowed it down.

To conclude, the speed at which globalisation happens depends on how open a country is to change. Globalisation relies upon maintaining connections with old friends and creating connections with new ones. It is clear from China’s restrictions that this can have an impact on how a country develops, and it can be seen from the United Kingdom that a tolerance  of new regulations and ideas  can drastically quicken how a country globalises. National governments play a pivotal role in this as they are the people who can pass these laws and determine the amount of connections  the country has, which therefore affects the access the population has to resources which can further this globalisation even more.