Commerce and transportation means in the World and Mexico

* Commerce and transportation means in the World and Mexico

 * Commercial regions

* World Cities

 * International Economical Organizations and transnational companies

 * Economic Globalisation

Economic globalisation is a worldwide phenomenon wherein countries’ economic situations can depend significantly on other countries. Many allied countries would supply resources to each other that the other countries do not have. These resources can cover imported products, technology, and even human labor. Many people have observed that this phenomenon may lead to a “one-world government,” which consists of a centralized government for all nations.

One popular activity under globalisation is international trade, in which products and services are exchanged between or among nations. Many countries that have abundant natural resources rely on this trading system to market their unique local products and, in turn, improve their economic state. International trade has been practiced for centuries, as evidenced by the Silk Road that connects Asia and Europe for trading purposes. One modern example of this type of trade is the toy industry, wherein many American-sold toys have the phrase “Made in China” embossed on their surface.

Economic globalization may involve the financial and economic aspects of a nation primarily, but its interdependent nature can inevitably affect a country’s lawmaking system and cultural identity. Trading policies and tax treaties are created between countries to regulate trade and protect either country from threats of terrorism. Multinational companies are changing some cultural aspects of many countries; fast food restaurants, for example, have changed the eating habits of Asian countries that consider rice as a staple food. Fashion trends from European countries are also carried over to the opposite side of the globe.

Multinational corporations have existed since the beginning of overseas trade. They have remained a part of the business scene throughout history, entering their modern form in the 17th and 18th centuries with the creation of large, European-based monopolistic concerns such as the British East India Company during the age of colonization. Multinational concerns were viewed at that time as agents of civilization and played a pivotal role in the commercial and industrial development of Asia, South America, and Africa. By the end of the 19th century, advances in communications had more closely linked world markets, and multinational corporations retained their favorable image as instruments of improved global relations through commercial ties. The existence of close international trading relations did not prevent the outbreak of two world wars in the first half of the twentieth century, but an even more closely bound world economy emerged in the aftermath of the period of conflict.

In more recent times, multinational corporations have grown in power and visibility, but have come to be viewed more ambivalently by both governments and consumers worldwide. Indeed, multinationals today are viewed with increased suspicion given their perceived lack of concern for the economic well-being of particular geographic regions and the public impression that multinationals are gaining power in relation to national government agencies, international trade federations and organizations, and local, national, and international labor organizations.

Despite such concerns, multinational corporations appear poised to expand their power and influence as barriers to international trade continue to be removed. Furthermore, the actual nature and methods of multinationals are in large measure misunderstood by the public, and their long-term influence is likely to be less sinister than imagined. Multinational corporations share many common traits, including the methods they use to penetrate new markets, the manner in which their overseas subsidiaries are tied to their headquarters operations, and their interaction with national governmental agencies and national and international labor organizations.

WHAT IS A MULTINATIONAL CORPORATION?

As the name implies, a multinational corporation is a business concern with operations in more than one country. These operations outside the company's home country may be linked to the parent by merger, operated as subsidiaries, or have considerable autonomy. Multinational corporations are sometimes perceived as large, utilitarian enterprises with little or no regard for the social and economic well-being of the countries in which they operate, but the reality of their situation is more complicated.

There are over 40,000 multinational corporations currently operating in the global economy, in addition to approximately 250,000 overseas affiliates running cross-continental businesses.

The World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank are the three institutions that underwrite the basic rules and regulations of economic, monetary, and trade relations between countries. Many developing nations have loosened trade rules under pressure from the IMF and the World Bank. The domestic financial markets in these countries have not been developed and do not have appropriate laws in place to enable domestic financial institutions to stand up to foreign competition. According to the World Bank's 2002 World Development Indicators, there are 63 countries considered to be low-income countries.

Although foreign direct investment in developing countries rose considerably in the 1990s, not all developing countries benefited from these investments. Most of the foreign direct investment went to a very small number of lower and upper middle income developing countries in East Asia and Latin America. In these countries, the rate of economic growth is increasing and the number of people living at poverty level is falling. However, there are still nearly 140 developing countries that are showing very slow growth rates while the 24 richest, developed countries (plus another 10 to 12 newly industrialized countries) are benefiting from most of the economic growth and prosperity. Therefore, many people in the developing countries are still living in poverty.

Similarly, multinational corporations are viewed as being exploitative of both their workers and the local environment, given their relative lack of association with any given locality. This criticism of multinationals is valid to a point, but it must be remembered that no corporation can successfully operate without regard to local social, labor, and environmental standards, and that multinationals in large measure do conform to local standards in these regards.

Multinational corporations are also seen as acquiring too much political and economic power in the modern business environment, because corporations are able to influence public policy to some degree by threatening to move jobs overseas.

Multinational corporations are thus able to penetrate new markets in a variety of ways, which allow existing concerns in the market to be accessed a varying degree of autonomy and control over operations.

CONCERNS ABOUT MULTINATIONAL CORPORATIONS

While no one doubts the economic success and pervasiveness of multinational corporations, their motives and actions have been called into question by social welfare, environmental protection, and labor organizations and government agencies worldwide.

National and international labor unions have expressed concern that multinational corporations in economically developed countries can avoid labor negotiations by simply moving their jobs to developing countries where labor costs are markedly less. Labor organizations in developing countries face the converse of the same problem, as they are usually obliged to negotiate with the national subsidiary of the multinational corporation in their country, which is usually willing to negotiate contract terms only on the basis of domestic wage standards, which may be well below those in the parent company's country.

Offshore outsourcing, or offshoring, is a term used to describe the practice of using cheap foreign labor to manufacture goods or provide services only to sell them back into the domestic marketplace. Today, many Americans are concerned about the issue of whether American multinational companies will continue to export jobs to cheap overseas labor markets.

Multinational corporations are also constrained by consumer attitudes in environmental matters. Environmental disasters such as those which occurred in Bhopal, India (the explosion of an unsafe chemical plant operated by Union Carbide, resulting in great loss of life in surrounding areas) and Prince William Sound, Alaska (the rupture of a single-hulled tanker, the Exxon Valdez, causing an environmental catastrophe) led to ceaseless bad publicity for the corporations involved and continue to serve as a reminder of the long-term cost in consumer approval of ignoring environmental, labor, and safety concerns.

Globalized Economy?

The world economy is not new,5 but those who talk about a globalized economy insist that there have been distinct changes in its structure and modes of production. Whereas earlier economic activities crossed national boundaries (“internationalization”), globalization includes a deeper integration, where transnational corporations orchestrate production from various locations.

The term also includes other factors. One author boils globalization down to five basic elements:

1) new technology,

2) the centrality of information made possible by instant communication,

3) an increasing trend toward the standardization of economic and social products,

4) growing cross-national integration, and

5) mutual vulnerability stemming from greater interdependence.”

Other commentators on the globalization debate remind us that the term “is an ideologically

saturated concept that emphasizes the ‘inevitability’ of western / US-style ‘free market’.

1. The form and extent of a city’s integration with the world economy, and the functions assigned to the city in the new spatial division of labour, will be decisive for any structural changes occurring within it.

2. Key cities throughout the world are used by global capital as ‘basing points’ in the spatial organization and articulation of production and markets. The resulting linkages make it possible to arrange world cities into a complex spatial hierarchy.

3. The global control functions of world cities are directly related in the structure and dynamics of their production sectors and employment.

4. World cities are major sites for the concentration and accumulation of international capital.

5. World cities are points of destination for large numbers of both domestic and/or international migrants.

6. World city formation brings into focus the major contradictions of industrial capitalism – among them spatial and class polarization.

7. World city growth generates social costs at rates that tend to exceed the fiscal capacity of the state.

THE IMPORTANCE OF TRANSPORT AND COMMUNICATIONS TO COMMERCE

Transport is in many ways the life-blood of an nation’s economy; without it, no inter-change of goods or people would be possible. The necessity that such interchange should become as cheap and safe and quick as possible caused increasingly dramatic developments over centuries in both transportation methods and routes: from the slow, vulnerable camel caravans crossing the deserts of Africa and Asia to modern jet planes circling the world in twenty-four hours.

Efficient, up-to-date transport and communications systems are essential for the smooth working of a modern complex economy. Mass production will have little economic value if the products cannot be distributed safely and quickly to potential buyers. The improvements in transport and industrial development have always reacted on one another. The British industrial Revolution in transport as in industrial techniques. One could not have taken place without the other. The present complex system of production in highly industrialized nations is only possible because of the improvement in means of transport which accompanied each stage of industrial development.

In early times, trade was carried on by means of producers meeting at certain known places-markets to which they had walked-to exchange their agricultural produce or handmade goods. Domesticated animals came to be used as pack animals and so greater volumes of goods could be carried and greater distances covered. Groups of merchants and their animals would travel together in a caravan for reasons of safety, on ancient well-established routes. But journeys such as crossing the Sahara desert or the steppes of Central Asia would take months and even years.

The waterways have also been means of transport for people and goods since ancient times: rivers which penetrated deep into the heart of a country and man made canals have linked the interiors with the coastal parts. As men ventured farther from their own shares, stables seagoing ships had to be developed to withstand the rigours of long journeys on the open ocean.
Land transport on wheels developed rapidly, necessitating the building of surfaced roads and bridges. These were built by highly sophisticated civil engineering companies.

The advent of railways in most parts of the world in the early nineteenth century brought a social as well as a commercial revolution. For most countries, railways provided an efficient, safe and speedy means of transport. In Nigeria, for instance, these railway networks enabled exports to be brought to the coast for shipment, and imports to be distributed to the hinterland cheaply.

In recent times, air transport has brought about a revolution as great as that of the railways several decades ago. Transport and communications are now possible to previously inaccessible areas. Where great distances have to be covered speedily in remote and difficult terrain, airplanes are the common means of transport.

All this development has not occurred evenly over the earth’s surface, since any transport network is dependent on three major influences: demand for mobility, the physical nature and climatic conditions of the land, and political considerations. Obviously, the more densely populated an area, the greater will be its demand for goods, personal mobility and for the distribution of its local produce. But the physical environment, together with climatic considerations, will put restraints on the type of system that is economical and practical to develop. The political restraints include the amount of money a government is prepared to spend, the territorial boundaries and the importance given to transport as a means of national unification and defence.

Most traffic systems in industrialized as well as developing nations represent a highly complex co-ordination of road, rail and air transport. This means that with the rapid expansion of world trade over the last few decades, many problems have risen, particularly where ports, roads, and airports were originally built to accommodate a much smaller volume of traffic; congestion in the inner cities as well as in ports and airports is very common.
As transport is the life-blood of trade, so trade is the life-force of a modern nation’s economy, and without up-to-date and efficient systems of both, no country can hope to compete in the market-places of the world.
Read more at http://www.infobarrel.com/THE_IMPORTANCE_OF_TRANSPORT_AND_COMMUNICATIONS_TO_COMMERCE#XevmgKWd4vUcSi2l.99

Core, periphery and semi-periphery countries.

Core countries are the industrialized capitalist countries on which periphery countries and semi-periphery countries depend. Core countries control and benefit from the global market. They are usually recognized as wealthy nations with a wide variety of resources and are in a favorable location compared to other states. They have strong state institutions, a powerful military and powerful global political alliances.

Core countries do not always stay core permanently. Throughout history, core nations have been changing and new ones have been added to the core list. The most influential countries in the past have been what would be considered core. These were the Asian and Middle Eastern empires in the ages up to the 16th century, when the European powers took the lead, although the major Asian powers such as China were still very influential in the region. Europe remained ahead of the pack until the 20th century, when the two World Wars turned disastrous for the European economies. It is then that the victorious United States and Soviet Union, up to late 1980s, became the two hegemonies, creating a bipolar world order.

Today, core nations are generally the most developed countries (see picture on the right), which include the United States, Canada, Australia, Japan, and the more developed western European countries. Yet, new additions may be expected soon, as some ex-periphery and some semi-periphery states are quickly gaining momentum in their economic growth.

The semi-periphery countries (sometimes referred to as just the semi-periphery) are the industrializing, mostly capitalist countries which are positioned between the periphery and core countries. Semi-periphery countries have organizational characteristics of both core countries and periphery countries and are often geographically located between core and peripheral regions as well as between two or more competing core regions. Semi-periphery regions play a major role in mediating economic, political, and social activities that link core and peripheral areas.

These regions allow for the possibility of innovative technology, reforms in social and organizational structure, and dominance over peripheral nations. These changes can lead to a semi-periphery country being promoted to a core nation. Semi-periphery is, however, more than a description, as it also serves as a position within the world hierarchy in which social and economic change can be interpreted.  

Today, the semi-periphery is generally industrialized. Semi-peripheral countries contribute to the manufacturing and exportation of a variety of goods. They are marked by above average land mass, as exemplified by China, India, Brazil, Mexico, and Iran. More land mass typically means an increased market size and share. Semi-peripheral nations are not all large though, as smaller countries such as Israel, Poland, and Greece exist within the semi-periphery.

 

 

Extra maps to print Period 4

Economic Acitivities and Economic Inequality

Economic Geography

 

Natural Resources

•          Natural resources are materials in the natural environment that people value and use to satisfy their needs.

•          Renewable resources are natural resources that are constantly being replaced or regenerated by the environment.

•          Soil and fresh water are constantly being replenished by natural processes.

•          Nonrenewable resources are resources that cannot be replaced once they have been used.

•          Nonrenewable resources are minerals that formed within the earth’s crust over millions of years.

•          Coal, oil, and natural gas are nonrenewable fossil fuels that formed from the remains of ancient plants and animals.

•          Recycling and reduction of consumption are ways of stretching limited supplies of nonrenewable resources.

 

§  Renewable resources examples would be soil, water, and forests

§  Nonrenewable resources examples--fossil fuels (oil, coal, natural gas), and metals (gold, iron, copper, and bauxite)

 

Human Resources

 

►   Human resources are man and his mind

►   Human resources depend on level of education, whether it is skilled or unskilled labor, and are entrepreneurial or managerial abilities needed.

 

Capital Resources

 

►   Capital resources are resources that can be used to make more, like money or tools

►   key features of capital are the availability of money for lending, the level of infrastructure, the availability and use of tools, machines, and technologies

►    

 

Energy Sources

 

•         Modern industrial countries use energy to light cities, power vehicles, and run machines.

 

•         Fossil fuels are the most important and heavily used source of energy, but oil and natural gas reserves are spread unevenly across the world and will not last forever.

•         Nuclear energy is produced by fission, the splitting of uranium atoms in a nuclear reactor to release their stored energy, but many concerns surround the use of nuclear power.

•         Water power uses the energy of falling water to generate electricity.

•         Geothermal energy uses the energy that comes from the earth’s internal heat to produce steam to heat homes or make electricity.

•         Solar energy is energy produced by the sun that is stored to heat water and homes and to generate electricityThree levels of economic activity

 

What are four different categories of economic activities?

Why are global trade patterns changing today?

What kinds of data indicate a country’s level of development?

 

•         Primary economic activities are those that rely directly upon natural resources, of which hunting, gathering, herding, forestry, farming, and mining are examples.

•         Subsistence farming is the practice of only growing enough to feed one’s family or village, and commercial farming is the practice of raising crops and livestock to sell on the market.

•         Secondary economic activities are those in which raw materials are used to manufacture products of greater value.

•         A cottage industry is a small-scale industry practiced in subsistence economies, while commercial industry turns out large quantities of manufactured goods.

•         Tertiary economic activities are service industries, which involve firefighters, lawyers, and salespersons.

•         Quaternary economic activities are jobs that focus on the acquisition, processing, and sharing of information, such as education and government.

 

Nations set up trade networks when they do not have all the resources and goods they want.

Goods that are sent out of a country are called exports, and goods that are brought into a country are imports.

Governments seek a favorable balance of imports and exports because too many imports can be damaging to a nation’s economy by increasing unemployment and the nation’s debt.

Trade routes are determined by geography, transportation technology, and international relations.

Modern technology is changing the nature of global trade, as computer and satellite networks allow business deals and payment transactions to be conducted electronically.

 

 

Economic activities and trade patterns affect a country’s level of development.

Modern industrial societies are considered to be developed, countries with lower levels of prosperity are considered to be underdeveloped, and nations showing evidence of progress are called developing countries.

The wealth of countries can be compared by looking at the per capita gross domestic product (GDP).

Developed countries enjoy a higher standard of living compared to developing and undeveloped countries.

Developed countries have higher levels of education and health care, and they have more transportation and communication facilities per person.

People in developed countries consume more food and live longer than people in poorer countries.

 

 

 

Energy resources and technology as it has changed over time:

 

 

Wood—deforestation

 

Coal--pollution, mining problems, competition with oil and gas

 

Petroleum--transportation, environmental considerations

 

Nuclear--contamination, waste

 

Solar or wind--cost, aesthetics

 

 

Patterns of land use

 

Most economic activities are relatively close to the natural resources they use; ex.-coal/steel,  grain/cattle, fishing/ocean, hydroelectric power/aluminum smelting.

 

Not all nations are close to the resources they use: ex.--Japan has limited natural resources, but they are a major industrial power and the United Arab Emirates (UAE) have lots of oil, but no major industries.

 

Examples of technology creating demand

 

Some new technologies have created a demand for a particular natural resource--steam engine and coal, internal combustion engine and gas, computer chips and skilled labor.

 

Costs and benefits from using natural resources

 

Costs

 

►    1.  Resource depletion.

►    2.  Environmental destruction       

►    3.  Health problems

 

Benefits

 

►   1.  Helps us produce goods and services.

►   2.  It creates employment opportunities

►    3. It helps develop new technologies

 

 

 

 

The effects of unequal distribution of resources

 

Because resources are distributed unequally around the world, it causes several things to happen:

 

1.  Interdependence of nations -- they must trade with each other to acquire the goods they do not possess.

 

2.  Uneven economic development (rich and poor countries).

 

3.  Energy producers and consumers.

 

4.  Imperialism (one country dominating another).

 

5. Conflicts over control of resources.

 

 

Developed nations are generally urban. Most people in developed nations work in secondary and tertiary areas. Most developed nations have a high GDP. Most developed nations have a highly educated population.

 

Indicators of standard of living and quality of life

 

A nation has a high standard of living and a high quality of life if…

 

§  the population growth rate is low

§  the population age distribution is even

§  The literacy rate, life expectancy rate and percentage of urban people is high

§  the infant mortality is low

 

Why do countries trade?

 

►   To import goods and services they need

►   to export goods and services they can sell for profit

 

What influences economic activity?

 

1. A country’s access to human, natural and capital resources.

 

Do they have a skilled workforce?

Do they have natural resources?

Are their transportation and communication networks modern, outdated or nonexistent?

Do they have access to new technology?

 

 

 

2. A country’s location and ability to exchange goods.

 

Are they landlocked?

Are they an island or coastal nation?

How close are they to shipping lanes?

What is their access to communications?

Are they members of a political or economic alliance that provides access to markets? (Examples would be, the European Union (EU), North American Free Trade Agreement(NAFTA))

 

What is comparative advantage?

 

►   Comparative advantage means a country will export goods and services that they can produce at lower relative costs than other countries.

 

What are the effects of comparative advantage?

 

►   Enables nations to produce goods and services they can sell for profit

►   influences the development of industries (ex. steel, aircraft, automobile, clothing)

►   supports specialization and efficient use of human resources

 

Examples of countries and their use of resources

 

►   Japan--highly industrialized despite limited natural resources

►   Russia--has numerous resources but many are not economically profitable to actually develop

►   United States--diversified economy , specialized industry, abundant resources

►   Cote d’Ivorie--limited natural resources, but they use cash crops to buy manufactured goods

►   Switzerland--has limited natural resources, but produces goods on a global scale

 

What are the effects of unequal distribution of resources?

►   Unequal distribution of resources causes countries to specialize in the goods and services they produce.  It also encourages countries to trade with one another for the goods they can not produce themselves.  It allows only some to make a profit.

 

How has economic interaction changed over time?

 

►   Labor has moved from individual homes (cottage industry) to factories to offices to telecommunications.

►   There has been a large migration from rural to urban areas.

►   Industrialized countries now export labor intensive work to developing nations.

►   Trade alliances have grown in number.

►   Service industries (tertiary) have grown in number.

►   Financial service networks and international banks have increased.

►   Products have become internationally assembled instead of everything being made in one location (ex. vehicles, electronics).

►   Modern transportation networks that allow for rapid and efficient exchange of goods and services (ex.  Federal Express, UPS, US Postal Service) have grown.

►   Widespread marketing of products has increased (ex. Fuji, Nike, etc).

 

Examples of Economic Unions

 

►   EU--European Union

►   NAFTA--North American Free Trade Agreement

►   OPEC--Organization of Petroleum Exporting Countries

►   ASEAN--Association of Southeast Asian Nations

 

Advantages of Economic Unions

 

►   They allow for more efficient industries

►   They have access to larger markets

►   They have access to more human, natural, and capital resources without restrictions

►   They have a greater influence on world markets

 

Disadvantages of economic Unions

 

►   They cause some industries to close

►   Certain industries become concentrated in particular countries while forgetting the smaller ones.

►   Agribusiness is replacing the family farm.

►   There is often difficulty in agreeing on common economic policies.