Géography: chapter 1
Globalization: economic agents, flows, networks
How are organized networks and flows in a globalization
dominated by transnational corporations?
I) Globalization and Transnational Corporations
Globalization is a process marked by increasing trade between
an increasing number of areas, which thus become
interdependent. Globalization is closely linked to the
strategy of TNCs.
Transnational corporations (TNCs) are large companies
operating in several states, directly or through subsidiaries.
A) TNCs and globalization
1) TNCs are important agents of globalization
There are several agents of globalization: states, international
organizations, even organized crime.
But TNCs are the most important agents.
you find the
of the biggest
TNCs? Is this
• Where are TNCs from?
TNCs are mostly companies of rich countries
There is a growing number of TNCs based in emerging
countries, especially in China.
• Why are they
of globalization ?
Their wealth make them very powerful.
The most powerful of them are retail, energy or
automotive companies. But there are TNCs in all the
economic sectors: most of the brands you know are
2) How do TNCs affect globalization?
TNCs affect globalization by their “inward investments”, whose
•To get raw materials
Total invest in Africa to discover new oil fields
• To expand into new markets
Ikea expands into China to take advantage of the growing
• To optimize the production thanks to the New International
Division of Labour (NIDL) (you will also hear about the IDL)
The IDL means that :
-production relies on many countries,
-each country has been chosen for its comparative advantages
(cheap raw materials, cost of the workforce, efficiency of
→ As a result, we can talk about a « global industrial shift », in
which production processes are relocated from developed
countries to emerging countries.
Even if you think about something which seems very simple,
such as jeans, there are several countries involved...
That's what you'll have to show in your personal presentation of
a globalized product !
The NIDL is always moving, changing: if a TNC decides to close a
factory and to reopen it in a country where the workforce is
cheaper, we call it...?
TNCs can also use « contract manufacturers »: for example, Nike
only owns few factories, the largest part of its products are
made by contract manufacturers.
This strategy has both positive and negative consequences:
+ : industrialization of poor countries where people go richer
(slowly, of course); cheap products for consumers of MEDCs
- : exploited workforce and environmental destruction in LEDCs,
deindustrialization in MEDCs.
However, the NIDL does not only mean the pursuit of cheaper
costs, it really depends on the strategy of each TNC:
If we take the example of cars manufacturing, we can see that on
the one hand, the French companies are producing more and
more cars abroad, but on the other hand, the Japanese
company Toyota decided in 2012 to expand its activity in
France to provide Northern America in « Yaris ».
Finally, we can say that the world, organized by TNCs, is really
complicated: there are both relations of exchange,
complementarity and competition between countries.
B) Networks make possible and flows reflect the
strategy of TNCs
1) Transportation networks have been regularly improved
• Networks make possible exchanges between territories. It can
be exchanges of goods or immaterial flows. They are
composed of axis and hubs. They can be ranked (local,
national, global networks).
• Those networks have been deeply transformed:
- Maritime transportation (see II): let's focus on the rise of
Intermodal containers are standardized reusable steel boxes used
for the safe, efficient and secure storage and movement of
materials and products within a global containerized intermodal
freight transport system.
Big advantage: the tranporter just have to care for the box, not for what's inside
the box: no time wasted.
But what does mean: « a global containerized intermodal freight
transport system »?
It means huge harbors, with rapid container cranes (grues)
It also means cheap transport on huge ships (14500 containers
for the biggest ones)
At least, « intermodal » means that
a container can either travel on a
…or on a double-decker train,
such as those Union Pacific
Railway trains crossing the USA.
– Air transport
Do you know Federal Express ?
Do you know what this
FedEx was the first transportation company to use to model of
« hubs and spokes »: all the parcels were collected in one
single airport and sent to their final destination during the
night. Advantages: only one dispatching place, easy to
manage. Since that, FedEx opened other hubs in Asia and
Europe (Roissy Airport)
The model of « hubs and spokes » has been adapted to the
transportation of passengers.
- Transport of informations
Thanks to the telephone networks, the rise of Internet, even if it concerns
above all MEDCs, made possible instant sharing of informations.
Percentage of the population connected to Internet in 2010
2) The rapid growth of the flows
• Flows mean the moving of persons, goods, services, virtual
data (money or information) using the networks
• Flows of goods and services are expanding faster than
production. More than a quarter of the world’s production is
How to explain this?
-there are « unavoidable exchanges », of products which can not be found
everywhere, such as raw materials (Oil…)
-But many flows result of the IDL (remember your personal
• Money flows are also increasing rapidly:
- Because of the IDL (inward investments)
- Because of speculation and tax evasion (money transfer to tax
• Human flows are also increasing, but you have to make a
– Migrations, widely caused by social contrasts, and
which happen often in bad conditions (illegal
– Tourism (circa 1 billion international tourists per
year), which reflects the improvement of the
standard of living and the fact that in our societies
spare time activities are getting more and more
II) Focus on… maritime roads and maritime
A)Overview of maritime transport
• In the heart of globalization
Shipping makes globalization possible:
Shipping has been completely transformed
*Ships specialized in one product and container ships
• What are the main maritime roads?
→ The main maritime roads connect the busiest port regions, eg
Eastern Asia and Western Europe, where huge ports can be
• Where are the biggest ports?
→ The biggest ports are the ports connected to the busiest
hinterlands, which must be:
-populated areas but also
-places of production and/or consumption.
• How shipping takes advantage of the world’s contrasts
There are about 50 000 international ships, often with « flag of
convenience » (eg. A ship registered in Panama, to take advantage of
the lack of social rules).
Most of the 700 000 sailors come from LEDCs, eg. Philippines
Most of the 460 000 officers come from MEDCs
• The main agents of shipping:
Shipping companies (which are TNCs) are the most influent
Shipping companies are powerful: they chose some ports as hubs
and make them rich… So ports have to be attractive (efficiency, costs,
…) to attract those companies. Example: the port of Marsaxlokk in
Malta, Mediterranean hub of French company CMA-CGM
B) Issues of a changing activity
• How to secure strategic places
What can we call strategic places?
→ Straits and canals are very important because ships are
obliged to cross them. The two main canals (Suez and
Panama) are being widened and modernized. In the straits, as
they are choke points, the maritime traffic must be carefully
controled to avoid accidents.
Controling shipping in Brittany and in the English Channel
Countries bordering these strategic ways are watched carefully by
countries reliant on shipping.
Example: if Iran is so carefully watched, it’s also because it could
threaten the Strait of Hormuz, crossed by many tankers.
• Piracy is back!
Where is there piracy and why?
Main piracy areas
→ Nowadays, accidents can still happen. But the most serious
problem is piracy. What makes piracy possible is the fact that
shipping roads pass off very poor countries, excluded of
globalization, and often at war: for their population, piracy is a
way to get a lot of money.
Example: in Somalia in 2009, the estimated amount of money
stolen by pirates was 38 million dollars, while foreign aid to
Somalia was only 3,5 million dollars, and the whole Somalian
budget was 13,5 million dollars…
• Changes in shipping: the rise of Asia:
Here’s a list of the 15 world’s busiest ports in 2012
- The world’s busiest
ports are now in
Asia, particularly in
-92% of the ships
are built in Asia
Be careful, inverted ranking
-The biggest shipping
companies are still
European, but Asian
Agents, flows and networks show a rising and moving
However, social and environmental issues are important