Term/Concept NIDL

Definitions
Distribution of Labour is an economic concept referring the distribution of specific tasks & roles within a business to increase efficiency of output. It began in the 1770s and was defined by the economist Adam Smith. New International Division of Labour is the spread of the different stages of manufacturing to locations in several countries, in order to exploit differences in factor costs (labour, energy, raw materials, taxes...) and economy of scale.

Globalisation

The process of going to a more interconnected world economically, politically and culturally. 1st Phase : Origins of descovery (15th century) with Europe organising trade relationships to its own advantage with Africa, Asia and the Americas. 2nd Phase : development with the Industrial Revolution (19th Century) with European countries controling 3/4s of the globe with their colonies. From that point, the flows of International Trade became planetary. Since 1945, encouraged by the free trade market policies of the USA, and the actions of the WTO and GATT, tariffs decreased from 40% to 5% of the price of manufactured goods. 3rd phase : The end of decolonization at the beginning of the 1970s, and the fall of communism. Above all, the communications revolution and production in transport costs, led to Globalisation Theory of cumulative causation ( by Gunnar Myrdal) Job opportunities and wealth are created by attracting new industry into an area. Industries linked to the new industry will follow and increase the number of job opportunities. Local people become wealthier and spend more. Therefore local services benefit. This knock-on effect creates the money needed to enhance infrastructures and the image of the area. Therefore, more industry is attracted.

Multiplier effect

Containarisation

The transport of goods in standard-sized metal boxes, that can be easily loaded on & offloaded from container ships thanks to computerised automatic systems. It reduces turnaround time for ships and transport costs. Sea traffic thus concentrates in a few large, deep, highly specialised harbours around the world, such as Singapore, Rotterdam or Fos/mer. Transport by container provides better protection from weather and theft, and enables perishable goods to be transported in refrigerated units : food can be imported from any part of the world. Example of a container company : CMA-CGM, based in Marseille.

FDI

Foreign Direct Investment. Capital is invested by a company (generally a TNC) in another

country to build factories, research and development units, roads, etc.

Hub

Centre of activity, interest, commerce, or transportation. A focal point around which events revolve. For example, World Cities are hubs in the flows of people, goods and ideas. A large city that has outstripped its national urban network and become part of an international global system. The majority of world cities are concentrated in the North. They are centers of political power, world trade, and communication, and a leader in banking and finance. They are headquarters of NGOs and TNCs, and benefit from high levels of tourism. They are key locations for international capitalism and intrinsic parts of globalization. Subcontracting work. Specific tasks are given to a third party company. A Transnational Company operates regardless of trade barriers and has the power to coordinate and control operations in more than one country. They are companies that have some influence on the top 100 economies in the world. Comparing GDP to revenue, 51 of the top 100 economic units are TNCs, and 49 are nations. They are the most important force causing change in global economic activity. TNCs have three levels of organization: the headquarters are generally in MEDCs (but many TNCs have regional headquarters); the R & D (Research and development) is in the home country aswell; and the plants or transplants are usually in LEDCs. The Core is the most developed region which attracts labour from and exploits the resources of the periphery regions. (e.g. MEDCs/the hot banana/the USA megalopolis) The Periphery is the least developed region. A group of countries where there are no barriers between member countries to encourage free trade. Eg the EU, the North American Free Trade Agreement (NAFTA), the Association of South East Asian Nations (ASEAN) or Mercosur. A bilateral or multilateral treaty committing two or more nations to specified terms of commerce, including quotas and tariffs, usually involving mutually beneficial concessions. The policy of imposing duties or quotas on imports in order to protect home industries from overseas competition. After the Wall Street Crash, the depression in 1929, and the rise of Nationalism and Totalitarianism, many countries practice protectionist policies increasing obstacles to Free Trade. E.g : America giving financial Aid to Automobile Ind. (General Motors : Opel) The absence of barriers (quotas/tariffs) to the free flow of goods and services between countries. Free trade is a type of trade policy that allows traders to act and transact without interference from the government. Since 1945, the Free-Market Policies of the US and the actions of the GATT (General Agreement on Trades and Tariffs) and the WTO (World Trade Organisation) have been encouraged. Their goals

World City

Outsourcing TNC

Core and periphery

Trade bloc

Trade agreement Protectionism

Free trade

are to support Free Trade and reduce barriers. E.g: The EU is a Free Trade area / Trade bloc : Canada, Mexico and Brazil.

Fair trade

Fair trade is an organized social movement and special approach that aims to help producers in developing countries (LEDCs and NICs) and promote sustainability. The movement advocates the payment of a higher price to producers as well as social and environmental standards in areas related to the production of a wide variety of goods. It focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffe, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate and flowers. Fair trade's strategic intent is to work with marginalized producers and workers in order to help them move towards economic self-sufficiency and stability, as producers are guaranteed a certain price every year, that is not likely to change very much. The 21 Century, as they call, is the age of the information / communication revolution. Rapid development in the fields of communication and information technologies over the past 1015 years has made a tremendous impact on the socioeconomic setup around the world. Businesses are now operating in a more dynamic and volatile environment then ever. Perceptions are changing as people now have easy access to vast information reservoirs. Territorial and geographical boundaries are vanishing and the WORLD is becoming a single global market place. To compete in this dynamic environment, people need to have access to the most modern technologies and introduce modern ways of communication to gain access to the information hubs. The Internet is one of the fastest growing phenomena in the regard.

Information and Communication revolution

CounterGlobalisation

The critics of a market-orientated corporate led globalisation advocate alternative ways of managing National and International exchange. Counter-globalisation questions the assumtion that the global market liberisation will work for the benefit of all, and points out the widening disparities of income and development, and the rapid pace of environmental degradation. They also highlight the loss of local cultures, the destruction of bio-diversity, and increase in global tensions. The three largest economic blocks of the world : NAFTA, EU, Japan. Trade between its members accounts for 80 % of world trade. Seeking a just, inclusive and sustainable world that works for all. It is the new awareness of the world as a fragile and potentially self-destructive world system. A response to rising concerns about the need for a new economic, social, political, and environmental deal at the global level. "A dynamic nongovernmental system of interconnected socio-economic institutions that straddle the whole world and that have complex effects that are felt in its four corners." It is a very disparate group: athletes, musicians, aid workers, scientists, aids politicians, international non-governmental organizations

Triad Global Civil Society

(INGOs e.g. Green Peace, Oxfam...). They organize themselves and conduct cross-border social activities, business and politics outside the boundaries of governmental structures. INGOs have grown in number since 1970, with 50 000 worldwide disbursing more money than the UN. More than 2/3 of the EU's recovery relief aid is channeled through INGOs.

Tariff Lobbying Trade balance Surplus Deficit Quota

Tax on imported goods for export buyers. To put pressure on a decision maker. Often by an large trade group, TNC or NGO. It is the relation between imports and exports. It can be surplus or deficit. When total export value is higher than total import value When total import is higher than total export value. A limited number or value of products exported and imported by or into a certain country or trade block. eg: the multi-fiber agreements (1975) The movement of goods, people, services and informations along a network. Money given by the governement in the aim of promoting local production and enabling national production over imported goods. it is often part of a protectionist policy. For example, the Common Agricultural Policy. Selling surplus goods at beneath the local market costs, putting local producers out of business. eg: dutch poultry producers "dumping" surplus chicken into the ghanaian market. Measure taken to spread industrial commitment over a large range of activities so that there is no overdependance on one. Multinationals diversify as they buy up new firms producing different products. In declining areas, there are problems of overdependence of the labour force on one industry, especially in those areas which developed a high degree of specialization in the nineteenth century. Here, regional diversification of employment is seen as the answer to overdependence and may also foster economic growth. Governments and local authorities are the usual agents of regional diversification.

Flow Subsidy

Dumping

Diversification

GDP

Gross Domestic Product. The sum total of goods produces by a given country in a given year and including only products made by the given country. The World Trade Organisation is an international organisation which aims are to : expand free-trade concessions equally to all members establish freer global trade with fewer barriers make trade more predictable through established rules make trade more competitive by removing subsidies. International Monetary Fund (UN Organisation). Its purpose is

WTO

IMF

to seek foreign currency in order to maintain its foreign exchange rate. Funds come from contributors and member countries and go in aid to poor countries, unless the IMF disagrees with that country's economical or political system. The USA holds 17% of the votes in the IMF and therefore has a right of VETO; in order to pass something, the council needs more than 85% of the votes.

Primary Product Dependency Monocultural economy Trade war

When a country's economy depends mainly on one type of product, e.g. Ghana and cocoa (51% of its economic revenue). The expansion of trade economies at the expense of the ecosystem's integrity, e.g. Nigeria and numerous oil spills destroying economic viability for fishermen.?????? A conflict invoving two or more countries as a part of an effort by each to improve its own import/export rate. (e.g. The Banana Wars, Dole/Delmonte/Chiquita) When the proportion of workers decrease in one (or more) sector(s) while increasing in one(or more) other sector(s) . It usually occurs from a mostly primary and secondary activity (substinence economy) to tertiary and quaternary sectors and is usually associated with developement. The advantage of some nations, regions or TNC to produce goods better and more cheaply than (in) less favoured nations or regions. This comparative advantage leads to trade, as nations exchange those goods which they can produce more easily for goods not readily produced at home. For example, the resources of raw materials and labour.

Sectoral shift

Comparative advantage