Globalization and International Relations
Dimensions and drivers
Globalisation is the growing interdependence of economies and societies through trade, investment, migration, information and culture. Know its drivers (cheaper transport, ICT, liberalisation, multinational corporations) and its channels: trade in goods and services, foreign direct investment, financial flows, aid, remittances, technology transfer and migration.
Trade and institutions
Key concepts: absolute and comparative advantage, specialisation, terms of trade, tariffs, quotas, subsidies, protectionism, trade blocs and customs unions (SACU's common external tariff, SADC, the African Continental Free Trade Area), WTO rules, balance of payments, external debt, tied aid, and international organisations such as the UN, IMF, World Bank and African Union. Claimed benefits: cheaper goods, larger markets, technology and jobs. Claimed costs: job displacement, dependence, cultural erosion and unequal bargaining power. Debates on whether aid builds capacity or dependency belong here.
Traps
Globalisation is not only economic. Both protectionism and liberalisation can be argued for - state your criterion. Aid is a transfer; a loan must be repaid with interest. Comparative advantage rests on opportunity cost, not on who produces more per hour.
Worked example
Country A needs 2 hours for a unit of cloth and 4 hours for a unit of wine; Country B needs 6 hours for cloth and 3 for wine. A is absolutely faster at cloth, B at wine. In A, one cloth costs half a wine; in B, one cloth costs two wines. A should specialise in cloth and trade, since it sacrifices less wine per cloth. Total output rises even though A is the better cloth maker.