L5&6 trade and flows
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TOPIC 3- GLOBALISATION 3.2 What changes have taken place in the FLOW of GOODS and CAPITAL? Lesson 4- part 1- Today we will EXAMINE the changes in the PATTERN and VOLUME of TRADE and FOREIGN DIRECT INVESTMENT 3.2a- In the past 50 years both international trade and the flow of capital across international borders have expanded rapidly
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Transcript of L5&6 trade and flows
TOPIC 3-
GLOBALISATION
3.2 What changes have
taken place in the FLOW of
GOODS and CAPITAL?
Lesson 4- part 1- Today we
will EXAMINE the changes in
the PATTERN and VOLUME of
TRADE and FOREIGN DIRECT
INVESTMENT
3.2a- In the past 50 years both
international trade and the flow of
capital across international
borders have expanded rapidly
GOODS
CAPITAL
FLOW
FOREIGN DIRECT INVESTMENT (FDI)
KEY TERMSInvestment made by
overseas governments,
businesses or
individuals in foreign
enterprises.
money.
movementthings you can trade
Match up the key term to the
correct definition and write out in
your notes
GOODS
CAPITAL
FLOW
FOREIGN DIRECT INVESTMENT (FDI)
KEY TERMS- ANSWERS
Investment made by
overseas governments,
businesses or
individuals in foreign
enterprises.
Capital can take many forms
but for the purpose of this
section we will refer to capital
as money.
movement
things you can trade
STARTER: Watch this short clip and make notes-
Write a definition of the term trade (1)
It is sti l l DEVELOPED NATIONS receive most
FDI. DEVELOPING COUNTRIES can miss out
due to:
• Unstable or corrupt government
• Poor transport and communication l inks
• Poverty reducing potential market
• Complicated regulations
• Unstable currency
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.
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
TASK
Complete a who?, what? Why?
about FDI in your notes.
It is st i l l DEVELOPED NATIONS receive most FDI.
DEVELOPING COUNTRIES can miss out due to:
• Unstable or corrupt government
• Poor transport and communication l inks
• Poverty reducing potential market
• Complicated regulations
• Unstable currency
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.
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?
Task-
http://news.bbc.co.uk/1/shared/spl/hi/guides/457000/457022/html/nn2page1.stm1) 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.
CHANGES IN THE FLOW OF GOODS
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 3-
GLOBALISATION
3.2 What changes have
taken place in the FLOW of
GOODS and CAPITAL?
Lesson 4-part 2- Today we
will EXPLORE the reasons for
the changes in the PATTERN
and VOLUME of TRADE and
FOREIGN DIRECT
INVESTMENT
3.2b- In the past 50 years both
international trade and the flow of
capital across international
borders have expanded rapidly
REASON 1- INCREASED AND
FASTER GLOBAL TRANSPORT
AND INFORMATION
EXCHANGES
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
Comment on
the distribution
of shipping
lanes globally in
1850 (3)
1850s shipping lanes
Traditional trading
ships, many were
called clippers, one
product would be
shipped at a time.
Comment on the
distribution of
todays shipping
routes (3)
20th century shipping lanes
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
Describe how
shipping has
changed
between
1850 and
now (2)
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 travel led
over 50,000 miles by container ship, train and
lorry (truck).
On its journey the box visited many countries
including Singapore, China, the US and Brazi l .
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 ficient, but
instead rely on each other for varying
products.
The container also travel led through a dif ficult
t ime for the container industry, r ising fuel
prices and fal l ing demand because of a global
recession meant that their profits fel l from a
profits of $3 bi l l ion in 2008 to a loss of $20
bi l l ion in 2009.
BBC - The Box
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.
MERGER- Where
one company buys
another company,
creating a larger
single company
Examples of MERGERS
British Airways and Iberia
Tata steel and chorus steel
Proctor and gamble and Gillette
Exxon and mobile
Disney and Pixar
Mickey and Nemo. Pinocchio and “Toy Story.” Cinderella and
“Cars.” The merger of legendary Walt Disney and everything-we-
create-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 $11 billion in one quarter)
and it remains one of the world’s largest publicly held companies
(second only to Walmart).
BIGGERTHAN MANY
COUNTRIES
THE WORLD’S 100
LARGEST
ECONOMIES
CORPORATE
REVENUE VS.
COUNTRY GDP 2000
(MILLIONS US$)
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
REASON 4- STATE LED INVESTMENT-
