Mission 1: The Netherlands tops the KOF Globalisation Index. The USA, the world's largest economy at market exchange rates, ranks 28th. How can that be?

Global interactions

• Global interactions: flows of goods, services, capital, people and information between places.
• The guide treats this as a two-way, complex process: cultural traits and commodities "may be adopted, adapted or resisted by societies".
• It is "neither inevitable nor universal". Some places are deeply connected; others are left out or opt out.

Measuring participation: globalization indices

• A globalization index combines many indicators into one score, so countries can be ranked and tracked over time.
• The KOF Globalisation Index (ETH Zurich) covers 195 countries from 1970 to 2023, using 42 variables. Its rankings file also ranks 12 regional and income-group aggregates, so its numbering runs to 207; the ranks below are among the 195 countries.
• It has three dimensions: economic, social and political.
• Each is split into de facto (actual flows, such as trade or migrants) and de jure (rules and policies that enable flows, such as tariffs or trade agreements).

The 2025 KOF ranking

• 1st Netherlands, 2nd Switzerland, 3rd Belgium, 4th United Kingdom (2023 data, published December 2025).
• Of 195 countries, Singapore ranks 17th, the USA 28th, China 82nd and India 94th.
• Somalia ranks last, 195th.
• On economic globalization alone, the USA ranks 67th and China 147th of the countries scored.

Why small, open economies top the table

• Most KOF variables are ratios: trade in goods is "Exports and imports of goods (% of GDP)".
• The USA trades a great deal in total, but, as the DHL index explains, large economies' "large internal markets reduce the relative share of international flows".
• Some variables are counts, not ratios: embassies are an absolute number, which favours large, powerful states. The USA ranks 14th on political globalization.

A second index: depth and breadth

• The DHL Global Connectedness Index (NYU Stern) measures flows of trade, capital, information and people for 180 countries.
• Depth: how large international flows are compared with domestic activity. Breadth: how widely flows are spread around the world rather than to a few neighbours.
• 2026 report: Singapore 1st, Luxembourg 2nd, Netherlands 3rd.
• The USA is 39th overall: 2nd for breadth but 131st of 180 for depth. China is 81st: 29th for breadth, 177th for depth.

Evaluating indices (AO3)

• Choice of variables: KOF's cultural globalization includes McDonald's restaurants and IKEA stores per person. These track Western brands, not every kind of cultural exchange.
• Different methods, different winners: KOF puts the Netherlands first; DHL puts Singapore first.
• Time lag: the KOF index published in December 2025 measures 2023.
• Scale: a national score hides gaps between a connected capital city and remote rural regions.
• Exam move: when you use an index as evidence, name it, say what it measures and give one limitation.

Is globalization going backwards?

• KOF: globalization "increased slightly again in 2023". Trade globalization declined slightly; financial globalization grew significantly.
• DHL: global connectedness reached a record 25% in 2022 and stayed close to that through 2025 (the 2025 value is projected), on a scale from 0% (nothing crosses borders) to 100% (borders and distance no longer matter).
• The pattern is shifting: since 2016 the share of US flows that are with China has fallen by 42%, and China's share with the USA by 37%.

Powerful places at the city scale

• Wealth and power also concentrate in world cities: nodes that link economies through finance, law, advertising and other advanced services.
• The GaWC network (Loughborough University) ranks cities by the office networks of leading firms in advanced producer services.
• 2024: Alpha++ London and New York; Alpha+ Hong Kong, Beijing, Singapore, Shanghai, Paris, Dubai, Tokyo and Sydney.
• In 2000, Shanghai was Alpha−, Beijing Beta+ and Dubai Beta. The map of power changes.
• Caution: the 2024 study used 175 firms in 785 cities; the 2000 study used 100 firms in 315 cities.

Mission 2: In 2025 China's economy was larger than the USA's by one IMF measure and smaller by another. Which country is the superpower?

What is a superpower?

• A superpower can project influence across the whole world, not just its own region.
• Geographers look at three kinds of influence: economic (output, trade, finance), geopolitical (military strength, alliances, a veto in global bodies) and cultural (the appeal of its media, brands, ideas and universities).
• Hard power coerces or pays; soft power (Joseph Nye's term) attracts and persuades.
• An actual superpower has all three at a global scale; a potential (emerging) superpower is gaining them.

Two ways to measure an economy

• At market exchange rates (nominal), 2025: USA $30.86 trillion, 26.0% of world GDP; China $19.63 trillion, 16.6%.
• At purchasing power parity (PPP), 2025: China $41.26 trillion; USA $30.86 trillion.
• For the USA the two figures are the same, because PPP values are expressed in US dollars.
• Source: IMF World Economic Outlook, October 2026.

Which measure is right?

• PPP adjusts for price differences between countries. It is better for comparing the volume of goods and services produced, and living standards.
• Nominal GDP shows what an economy's output is worth on world markets: better for buying oil, ships or debt abroad.
• By PPP, China's economy has been larger than the USA's since 2016 in the IMF's data.
• Per person, the gap is reversed: in 2025 GDP per person (PPP) was $90,267 in the USA and $29,369 in China.

Financial power: the dollar

• Central banks hold reserves in a few trusted currencies.
• In the second quarter of 2026, the US dollar made up 56.70% of the world's allocated foreign-exchange reserves (reserves whose currency is reported to the IMF); the Chinese renminbi made up 2.11%.
• The dollar's role as the main reserve currency gives the USA structural power (Susan Strange's term) in the world's financial system.

Geopolitical power

• The five permanent members of the UN Security Council (China, France, Russia, the UK and the USA) can each block a decision: non-procedural decisions need "the concurring votes of the permanent members". This is usually called a veto.
• Military spending, 2025: USA $954 billion, 33% of the world total; China an estimated $336 billion, an estimated 12%.
• The 32 NATO members spent $1,581 billion: 55% of world military spending.

China's geopolitical reach: the Belt and Road Initiative

• China proposed the Belt and Road Initiative (BRI) in 2013 to build land and sea trade routes.
• By June 2023 China had signed "more than 200 BRI cooperation agreements with more than 150 countries and 30 international organizations" (government white paper).
• A World Bank study estimated that, if fully implemented, BRI transport projects "could increase trade between 1.7 and 6.2 percent for the world".
• The same study warned of risks: some economies "could suffer a further medium-term deterioration in their outlook for debt sustainability", and it called for open, transparent procurement.

Trade power

• Share of world merchandise exports: China 3.8% (2000), 10.3% (2010), 14.5% (2024).
• USA: 12.1% (2000), 8.3% (2010), 8.4% (2024).
• China is now the world's largest goods exporter by this measure; the USA leads in finance, as the dollar shows.

Cultural influence

• The Brand Finance Global Soft Power Index 2026 surveys more than 150,000 people in over 100 countries and scores all 193 UN member states on 55 measures.
• USA 1st (74.9 out of 100, down 4.6 points on 2025); China 2nd (73.5).
• The USA still ranks 1st for arts and entertainment.
• Caution: this is a perception survey by a consultancy. It measures reputation, not actual flows of films or students.

Weighing the USA and China (AO3)

• USA: leads on nominal GDP, the dollar, military spending, alliances and soft power, and holds a Security Council veto.
• China: leads on GDP at PPP and goods exports; has a veto; is building networks such as the BRI and the NDB.
• China's GDP per person (PPP) is about a third of the USA's, and its military spending about a third.
• Judgement: the USA remains an actual superpower in all three dimensions; China is a potential superpower, strongest economically.
• Exam move: the guide asks for "at least two actual or potential" superpowers. Compare them dimension by dimension, with dated figures.

Mission 3: In 1980 the G7 produced about half the world's output (IMF, at PPP). By 2025 it produced under 30%. Do the old clubs still run the world economy?

Why countries form clubs

• Global groups let governments coordinate policy, set agendas and speak with one voice.
• Some are forums with rotating chairs (G7, G20); others are organizations with members, rules and staff (OECD, OPEC).
• Their power comes from what members control: output, trade, money, or oil.

The G7/8

• 1975: leaders of France, West Germany, the USA, Japan, the UK and Italy met at Rambouillet, near Paris.
• Canada joined in 1976, making the G7.
• Russia was formally admitted in 1998, making the G8.
• In March 2014, after Russia's annexation of Crimea, the G7 decided to meet without Russia "until further notice".

A shrinking share

• G7 share of world GDP at PPP: 51.8% in 1980; 28.4% in 2025.
• Emerging market and developing economies: 35.0% in 1980; 60.5% in 2025. In the IMF's October 2026 data, their share passed the advanced economies' in 2009.
• At market exchange rates, the G7 still produced 44.5% of world GDP in 2025.
• The global map of economic power has changed, but by how much depends on the measure.

The G20

• Founded in 1999 as a forum of finance ministers and central bank governors. After the 2008 financial crisis its leaders began meeting regularly.
• Members: 19 countries plus the European Union, and since 2023 the African Union.
• The members "represent around 85% of the global GDP, over 75% of the global trade, and about two-thirds of the world population".
• The chair changes every year.

The OECD

• Founded in 1961, succeeding the OEEC, which was set up in 1948 to run the Marshall Plan.
• 38 member countries (October 2024). It decides by consensus and "has no power to initiate any sanctions".
• Its power is soft: research, peer review and common standards. For example, its statistics define and measure official aid; the OECD calls itself "the only official source of reliable, comparable, and complete statistics" on aid.

OPEC

• The Organization of the Petroleum Exporting Countries was formed in 1960 by Iraq, Iran, Kuwait, Saudi Arabia and Venezuela, to "coordinate and unify petroleum policies among Member Countries".
• In 2025 OPEC produced an estimated 28.0 million barrels a day: 35% of world crude oil.
• OPEC+ (OPEC plus other producers, formed in 2016) produced about 46%.
• Saudi Arabia is the largest and most influential member; the USA was the world's largest producer in 2025.

How oil producers shaped other countries' energy policies

• In 1973, during the Arab–Israeli War, "Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo" on the USA and other countries; the oil price "first doubled, then quadrupled".
• In the IEA's words, "an oil embargo by major producers pushed prices to historic highs". Consumer countries responded by creating the International Energy Agency (IEA) in 1974 "to ensure the security of oil supplies".
• IEA members hold emergency stocks and have released them together several times, starting in 1991.
• OPEC+ was formed in 2016 "largely in response to" falling prices driven by US shale oil. From April 2023 several members agreed rounds of voluntary output cuts.

2026: a club under strain

• On 28 April 2026 the United Arab Emirates announced it would leave OPEC from 1 May; the EIA's headline describes this as an exit from OPEC+.
• Without the UAE, OPEC's 2025 share of world crude would have been 31%, not 35%, and OPEC+'s about 42%, not 46%.
• The UAE had joined OPEC as Abu Dhabi in 1967.

2026: Hormuz and the oil market

• In June 2026 the US Energy Information Administration (EIA) described "the conflict in Iran on February 28, 2026 and the effective closure of the Strait of Hormuz". In October it assumed Middle East oil flows "remain constrained through 4Q26".
• In March 2026 IEA members agreed to make 400 million barrels of emergency oil available, "by far the largest ever" collective action.
• Saudi Arabia and the UAE could reroute some exports by pipeline: Saudi Arabia's East–West line to Yanbu on the Red Sea; the UAE's line to Fujairah.

How powerful is OPEC? (AO3)

• Strengths: a large share of world crude; Saudi Arabia's spare capacity (about 2.3 million barrels a day: an estimated 11.6 million capacity against 9.3 million produced in 2025) can move prices.
• Limits: members leave (the UAE in 2026), the USA is the largest producer, and recent agreements exempt Iran, Venezuela and Libya.
• Chokepoints can override quotas: when conflict effectively closed the Strait of Hormuz, the EIA says this "limited their ability to increase production levels".
• Consumer countries respond with policy: emergency stocks through the IEA.

Synthesis: power at varying scales

• Global: the USA is an actual superpower and China a potential one (Mission 2).
• Groups of states: the G7's PPP share fell from 51.8% to 28.4%; the G20 covers around 85% of world GDP.
• Within a group: Saudi Arabia's spare oil capacity gives it leverage inside OPEC.
• City: London and New York are GaWC Alpha++; Shanghai rose from Alpha− (2000) to Alpha+ (2024).
• Exam move: the guide asks how wealthy and powerful places exist "at varying scales" and how "the global map is complex and subject to change". Name the scale each time.

Mission 4: In 2022 Sri Lanka defaulted on its foreign debt and turned to the IMF. Who sets the terms of rescue loans, and is there an alternative?

Aid, loans and debt relief

• Official development assistance (ODA): grants and low-interest (concessional) loans from governments to developing countries.
• Bilateral aid goes from one government to another; multilateral aid goes through bodies such as the World Bank or UN agencies.
• Loans must be repaid with interest. Debt relief cancels or reschedules debts that a country cannot repay.

Aid is falling

• In 1970 a UN resolution took up the target that rich countries give 0.7% of gross national income (GNI) as aid.
• Aid from the OECD's Development Assistance Committee (DAC) countries, in current prices: $215.1 billion in 2024; $174.3 billion in 2025 (preliminary data).
• As a share of GNI: 0.34% (2024), 0.26% (2025).
• US aid fell from $65.5 billion (2024) to $29.0 billion (2025).
• In 2025 only Norway (1.03%), Luxembourg (0.99%), Sweden (0.85%) and Denmark (0.72%) reached 0.7%.

Debt relief: HIPC and MDRI

• The IMF and World Bank launched the Heavily Indebted Poor Countries (HIPC) Initiative in 1996.
• In 2005 the Multilateral Debt Relief Initiative added 100% relief on eligible debts to the IMF, World Bank and African Development Fund.
• Conditions: a track record of reform under IMF- and World Bank-supported programmes and a poverty reduction strategy carried out for at least a year.
• When Somalia reached it in December 2023, it became the 37th of the 39 eligible countries to reach the final "completion point".

The IMF: who decides?

• The IMF has 191 members. It lends to countries that cannot pay for imports or debts, usually with conditions attached.
• Each member's quota sets its voting power and access to IMF money.
• The biggest decisions, such as changing quotas, need "approval by 85% of the total voting power".
• The USA holds 16.49% of the votes: more than the 15% needed to block a decision that requires 85%. China holds 6.08%, slightly less than Japan (6.14%).
• A think-tank analysis argues that a quota based on China's economy would be about twice as large.

Case study: Sri Lanka's crisis

• Sri Lanka's economy shrank by 7.3% in 2022 and 2.0% in 2023.
• The IMF refers to "the external default in 2022": Sri Lanka stopped paying its foreign debts.
• Consumer prices rose by 49.7% on average in 2022. The IMF says headline inflation peaked at 70% in September 2022.
• March 2023: the IMF's Executive Board approved a 48-month Extended Fund Facility of SDR 2.286 billion (about US$3 billion).

Why the debt became unpayable, and who the creditors were

• The IMF says "Public debt increased drastically in 2020-22 due to exchange rate depreciation, large fiscal deficits, SOE borrowing" (SOEs: state-owned enterprises).
• The rescue needed creditors to accept less: the Official Creditor Committee of governments, China's Export-Import Bank, the China Development Bank and private bondholders.
• So the terms were set by several parties: the government, IMF staff and its Board, and the creditors.

The conditions and the results

• Reforms included higher taxes and cost-recovery energy pricing (charging what energy actually costs), introduced in 2022.
• Tax revenue rose from 7.3% of GDP in 2022 to 9.8% in 2023.
• "Inflation declined from 70 percent to around 4 percent in 2023" (IMF).
• Reserves rose to US$5.5 billion by the end of April 2024, and the economy grew by 5.0% in 2024.

Weighing IMF conditionality (AO3)

• For: inflation fell, reserves were rebuilt and growth returned within two years.
• Against: higher taxes and cost-recovery energy prices raise costs for households. The IMF itself recommended social safety net reforms "to protect the poor and the vulnerable".
• Power: programmes are approved by a board where votes follow quotas; the USA alone can block the biggest decisions, such as quota changes.
• Exam move: judge for whom and over what time scale a programme succeeds.

Alternative lenders: the NDB and others

• The BRICS leaders (Brazil, Russia, India, China, South Africa) signed the NDB agreement in 2014 at Fortaleza, Brazil. Its headquarters is in Shanghai, and it began operating in 2015.
• New members: Bangladesh and the UAE (2021), Egypt (2023), Algeria (2025) and Uzbekistan (2026).
• It has approved 139 projects worth US$42.9 billion (NDB website, accessed October 2026), and has approved loans in euros, yuan, rand and Swiss francs since 2019.
• Other lenders: the World Bank's IDA provides "grants and concessional loans" to low-income countries; the China-based Asian Infrastructure Investment Bank (AIIB) began operations in Beijing in 2016 and has 111 approved members.

Comparing the IMF and the NDB

• Voting: in the NDB the five founders put in equal capital. Their combined votes cannot fall below 55%, and no new member can exceed 7%.
• In the IMF, votes follow quotas, and one country can block decisions that need 85%.
• Purpose: the IMF lends in balance-of-payments crises, with conditions; the NDB finances projects such as power and transport.
• Scale: 191 IMF members against 10 NDB members.

Mission 5: In 2024 one inflow of money into Tajikistan equalled almost half of its GDP. Which flows matter most, and for which places?

An overview of global flows

• Goods (materials and manufactures) and services (finance, tourism, software).
• Capital: foreign direct investment, loans, aid and remittances.
• People: migrants, students, tourists. Information: data, ideas, media.
• Flows can be legal or illegal (Mission 6).

Trade in goods

• World merchandise exports were $3.46 trillion in 1990 and $24.62 trillion in 2024 (current US$).
• Make-up in 2024: manufactures 68.8%, fuels 11.2%, food 9.1%, ores and metals 4.0%, agricultural raw materials 1.2%.
• Materials (fuels, ores, food, raw materials) are a minority of trade by value, but they dominate many countries' exports.
• Preliminary 2025 data already show $26.39 trillion; 2024 is used here because the breakdown is complete.

Trade in materials: commodity dependence

• UNCTAD calls a country commodity-dependent if commodities make up more than 60% of its merchandise exports.
• 2019–21: 95 of 142 developing countries were commodity-dependent (66.9%), including 45 of 53 African countries and all 12 in South America.
• Risk: when commodity prices fall, export earnings, jobs and government revenue fall with them.

Trade in services

• World service exports grew from $0.88 trillion (1990) to $8.88 trillion (2024).
• ICT services rose from 5.3% of service exports in 2000 to 14.8% in 2024.
• Services can be delivered digitally across borders, so they depend on data networks (Mission 9).

Remittances

• Remittances: money that migrants send home to their families.
• Remittances received by low- and middle-income countries: $608 billion (2023), $665 billion (2024), $704 billion (2025).
• Largest recipients among low- and middle-income countries, 2024: India $137.7 billion, Mexico $67.9 billion, Philippines $40.3 billion.
• As a share of GDP, 2024: Tajikistan 47.2%, Tonga 39.4%, Nicaragua 26.6%, Nepal 26.0%.

Remittances: benefits and costs

• Benefits: income goes straight to households, for food, schooling, health care and housing.
• Costs: globally, sending money cost an average of 6.36% of the amount sent in the third quarter of 2025. The UN target is "less than 3 per cent" by 2030.
• Risks: dependence on jobs in a few destination countries, and the loss of working-age people from the origin.

Which flow is largest? The World Bank's answer

• World Bank data for low- and middle-income countries, 2023: remittances $608 billion; foreign direct investment (net inflows) $408 billion; aid $252 billion.
• 2023 is used because it is the latest year with aid data. In 2024 remittances ($665 billion) were still larger than FDI ($462 billion).

Why the sources disagree

• UNCTAD reports that in 2025 FDI was "about half" of developing economies' external finance, "ahead of remittances".
• Different groups: UNCTAD's "developing economies" include Singapore and Hong Kong, which together received $267 billion of FDI in 2025. The World Bank's low- and middle-income group does not include them.
• Different measures and years: the two count FDI differently, and compare 2023 with 2025.

Relative importance depends on scale (synthesis)

• Global scale: goods trade ($24.62 trillion in 2024) is far larger than the FDI, remittance and aid flows on screen 5.8.
• National scale: for Tajikistan or Nepal, remittances equal a quarter to a half of GDP; for many commodity-dependent countries, exports of materials matter most.
• Household scale: a single remittance can decide whether a child stays in school.
• Exam move: "relative importance" questions reward naming the scale and the place.

Representing flows (skills)

• Flow map with proportional arrows: shows origin, destination, direction and volume. Becomes cluttered with many flows.
• Sankey diagram: shows how a total splits into parts; weak on geography.
• Chord diagram: shows two-way flows among many places; hard to read precisely.
• Choropleth map: shades areas by value (for example remittances as % of GDP), but it cannot show where money comes from.

Mission 6: Estimated cocaine manufacture more than quadrupled in a decade. How do illegal flows move through a connected world?

Illegal flows

• Illegal flows move goods, money or people across borders in breach of the law: trafficked people, counterfeit and falsified goods, narcotics.
• They often use the same infrastructure as legal trade: ports, containers, air routes and the internet.
• They are hard to measure, so most figures are estimates or counts of what was detected or seized.

Narcotics: cocaine

• Potential manufacture of pure cocaine was estimated at about 4,100 tons in 2024 (range 3,800–4,700 tons), more than four times the 2014 low.
• In UNODC's latest data, about 64% of global cocaine seizures were made in South America; Colombia alone accounted for 966 tons, 40% of the world total.
• An estimated 331 million people used drugs in 2024, 34% more than a decade earlier.

A shifting map of supply

• Afghanistan long supplied "some 80 per cent of the world's illegal production of opium". Starting in 2023, after a drug ban, its production collapsed.
• Myanmar's opium output rose from about 420 tons (2021) to over 1,000 tons (2025), making it the largest producer. UNODC finds no evidence that this was a response to Afghanistan's fall.
• In 2024, 755 different new psychoactive substances, most of them synthetic, were reported on the market, 118 of them for the first time.

Trafficked people

• UNODC counted 74,785 detected victims in 2022 or the most recent year: 25% more than in 2019.
• 38% were children (22% girls, 16% boys); 39% were women and 23% men.
• Detected trafficking for forced labour rose by 47% compared with before the pandemic.
• Victims of 162 nationalities were detected in 128 destination countries. In court cases analysed by UNODC, 74% of the traffickers operated in organized crime groups.

Detected is not the same as total (AO3)

• UNODC counts victims detected by authorities, not all victims.
• A rise can mean more trafficking, or better police work and reporting. A fall can mean less detection.
• Some forms, such as forced criminality in online scams, are newly recognized.

Counterfeit and falsified goods

• Falsified medical products "deliberately misrepresent their identity, composition or source" (WHO).
• In 2017 WHO estimated that 1 in 10 medicines in low- and middle-income countries failed quality tests, suggesting they were substandard or falsified.
• WHO says they "are often sold online or in informal markets".
• Counterfeits flow along legal supply chains: "long and complex supply chains with multiple intermediaries increase the risk" of tampering and substitution (WHO).

Responses and their limits (AO3)

• Supply-side controls can work locally: Afghanistan's opium production collapsed after its ban.
• But supply can displace: UNODC warns of a risk that synthetic opioids replace Afghan heroin in consumer markets.
• Seizures have broadly kept pace with production since 2014, which UNODC says suggests net supply to consumers has grown at about the same pace.
• UNODC concludes that only "combining public health, justice and security approaches" can reduce harm.

Mission 7: Apple employs about 166,000 people. Toyota and its affiliates run more than 50 manufacturing operations in 27 countries and regions outside Japan. Why do these two giants make their products in such different ways?

FDI, outsourcing and offshoring

• A transnational corporation (TNC) operates in more than one country.
• Foreign direct investment (FDI): a firm acquires a lasting interest and a significant say in managing a business abroad. Greenfield FDI builds new plants; mergers and acquisitions buy existing ones.
• Outsourcing: a firm contracts another firm to do part of its work. Offshoring: moving work to another country, whether owned or contracted.

Global FDI in 2025

• Global FDI rose by 6% to $1.6 trillion.
• Developed economies: about $723 billion. Developing economies: $901 billion, of which developing Asia $644 billion, Latin America and the Caribbean $188 billion, Africa about $70 billion.
• The least developed countries received $43 billion: 2.7% of global FDI.
• The top 20 host economies received more than 80% of global inflows.

Where new investment is going

• Greenfield project values in digital infrastructure rose by more than 80%, mainly for data centres.
• Greenfield investment in industries organized in global value chains fell by 13%: electronics (excluding semiconductors) by nearly 40%, cars by roughly 25%, textiles by about 30%.
• UNCTAD links this to policy uncertainty and firms reorganizing their supply chains.

Apple: outsourcing on a global scale

• Headquarters: Cupertino, California. About 166,000 employees (full-time equivalent, September 2025).
• "A significant majority" of manufacturing is done by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam.
• Partners "primarily located in Asia" carry out final assembly of "substantially all" of its hardware.
• Apple keeps design, software, services and marketing; its partners make the hardware.

Apple's markets

• Net sales, year to September 2025: $416.2 billion.
• By region: Americas $178.4 billion; Europe (including India, the Middle East and Africa) $111.0 billion; Greater China $64.4 billion; Rest of Asia Pacific $33.7 billion; Japan $28.7 billion.
• Services earned $109.2 billion: more than a quarter of sales.

Outsourcing: gains and risks

• Gains: Apple says these arrangements "can lower operating costs".
• Risks: they "reduce the Company's direct control over production and distribution".
• Apple relies on single-source partners for many components, and warns that tariffs and trade controls "can materially adversely affect" its supply chain.
• India now appears in Apple's list of main manufacturing locations alongside China mainland, so the network is not tied to one country.

Toyota: FDI and localization

• Toyota sells vehicles in about 200 countries and regions; its consolidated vehicle sales were 9.6 million in the year to March 2026.
• Toyota and its affiliated companies have more than 50 overseas manufacturing organizations in 27 countries and regions outside Japan.
• It produced 73.9% of its vehicles sold outside Japan in overseas plants.
• Share of vehicles sold that were made in the same region: North America 74.6%, Europe 69.0%, Asia 96.4%.

Toyota's production system and supply chain

• The Toyota Production System combines Jidoka (stopping equipment immediately when a problem occurs) and Just in Time: "each process produces only what is needed for the next process in a continuous flow".
• Because stocks are kept low, Just in Time favours suppliers located close to the assembly plant.
• Localizing production lets Toyota buy supplies locally and match local costs to local sales revenue, reducing currency risk.

Contrasting strategies (AO3)

• Apple: asset-light; contracts out manufacturing to partners in Asia; sells worldwide.
• Toyota: invests in manufacturing operations abroad (FDI) and builds cars in the regions where it sells them.
• Why different? Cars are heavy and bulky to ship, and Toyota designs them for local "road conditions, climate, and values", an approach it calls "Best in town". Phones are small and light, so assembly can be concentrated where partner firms work at scale.
• Trade policy: Toyota's 2026 report notes that "in 2025, a significant increase in tariffs on exports to the United States" was announced; building cars inside a market reduces exposure to such tariffs. Apple warns that tariffs "can materially adversely affect" its supply chain.
• For host places: FDI plants bring jobs and long-term commitment; contract factories bring jobs too, but contracts can move.

Mission 8: From 1 January 2021, EU citizens needed points to get a UK work visa. By the year to March 2023, UK net migration had peaked at 944,000. How far can governments control global interactions?

Multi-governmental organizations and trade blocs

• MGOs are organizations of several governments. Trade blocs are one kind, and they vary in depth (Béla Balassa's stages of economic integration):
  • free trade area: no tariffs between members;
  • customs union: plus a common external tariff;
  • single market: plus free movement of services, capital and people.
• The EU single market ensures "free movement of goods, services, capital and persons".

A new bloc: AfCFTA

• 44 of the 55 African Union states signed the African Continental Free Trade Area agreement in Kigali in March 2018.
• Trading under it began on 1 January 2021.
• It covers about 1.3 billion people and a combined GDP of about US$3.4 trillion.
• Its aim is "to eliminate trade barriers and boost intra-Africa trade".

Free trade zones and special economic zones

• A special economic zone (SEZ) is an area where governments offer tax, customs and regulatory incentives and infrastructure to attract investment.
• A free trade zone (free zone) is a basic type of SEZ where goods can be stored, processed and re-exported without customs duties; UNCTAD notes that "Basic free zones focused on facilitating trade logistics are most common in developed countries". Don't confuse it with a free trade area between countries (8.1).
• In 2019 there were nearly 5,400 zones in 147 economies, up from about 4,000 five years earlier.
• UNCTAD: "the performance of many zones remains below expectations", and too many are enclaves "with limited impact beyond their confines".

Shenzhen: the first SEZ

• Shenzhen was set up in March 1979 and became China's first SEZ in August 1980.
• Location: next to Hong Kong, on the east bank of the Pearl River Estuary.
• By the end of 2024 it had 17.98 million permanent residents and a GDP of 3.68 trillion yuan.
• Its exports have ranked first among mainland Chinese cities for 32 consecutive years.

Economic migration controls: the UK

• After Brexit, the UK ended free movement with the EU on 1 January 2021 and introduced a points-based system.
• From then on, "EU and non-EU citizens will be treated equally".
• Workers needed 70 points, from criteria including the skill level of the job, English at the required level and a salary threshold (£25,600 in general, lowered from £30,000).
• For non-EU workers the rules were looser than before: the skills threshold came down "from RQF6 to RQF3" (from degree level to A-level equivalent).
• There was to be no general route for low-skilled or temporary work. The stated aim was to "reduce overall migration numbers".

What happened next

• UK net migration peaked at 944,000 in the year to March 2023.
• In December 2023 the government announced it would raise the earnings threshold for overseas workers from £26,200 to £38,700 from spring 2024, and stop overseas care workers bringing dependants.
• Net migration fell to 171,000 in the year to December 2025 (provisional).
• In that year 77% of immigrants were non-EU+ nationals; of these, 47% came to study, 23% to work and 14% to seek asylum.

How much did the rules control? (AO3)

• The 2021 system changed who could come: EU citizens lost free movement, while non-EU citizens could apply on equal terms.
• Numbers rose before they fell, partly because the new rules opened routes to more non-EU workers, and partly because of demand for workers and students, and asylum flows.
• The later fall followed tighter rules, but the 2025 figures are provisional and other causes may contribute.
• Exam move: separate a policy's stated aim from its measured outcome, and give dates.

Mission 9: In 2023 the Panama Canal cut the number of ships it let through. In 2026 conflict choked oil shipping through the Strait of Hormuz. Has technology really made the world "shrink"?

Our "shrinking world"

• Time–space convergence (Donald Janelle): places become closer in travel or communication time as technology improves. David Harvey's time–space compression stresses how this speeds up economic and social life.
• Cost–space convergence: moving goods and information gets cheaper per unit.
• Forces driving innovation: competition between firms to cut costs and reach markets; state investment in research and infrastructure; demand from consumers for faster, cheaper connections.

Transport developments over time

• Air passengers carried worldwide: 310 million (1970), 1.03 billion (1990), 4.46 billion (2019), 1.77 billion (2020), 4.27 billion (2023).
• Container port traffic: 547 million TEU (twenty-foot equivalent units) in 2010; 913 million in 2024.
• Seaborne trade reached 12,720 million tons in 2024.

Data flows

• More than 600 active and planned submarine cables, over 1.5 million km in service in early 2026. Satellites carry "a very small percentage" of international traffic.
• Content providers such as Google, Meta, Microsoft and Amazon are major investors in new cables.
• Global internet bandwidth rose by 35% in 2020; cross-border traffic was concentrated on two routes, North America–Europe and North America–Asia.
• The USA and China held about half the world's hyperscale data centres at the end of 2020.

Communication infrastructure and use

• Internet users: 15.6% of people (2005), 73.6% (2025, estimate). About 6 billion people are online and 2.2 billion are not.
• High-income countries 94%; low-income countries 23%.
• Urban areas 85%; rural areas 58%.
• 84% of people in high-income countries have access to 5G, against 4% in low-income countries.

Natural resource availability

• Resources create flows and give producers leverage.
• Cobalt, used in lithium-ion batteries: the Democratic Republic of the Congo produced an estimated 73% of the world's mined cobalt in 2025.
• In February 2025 the DRC temporarily banned cobalt exports to address oversupply and low prices; in October it replaced the ban with export quotas.
• China is the world's leading producer of refined cobalt and its leading consumer. Mining, refining and use happen in different places.

Geographic isolation: the national scale

• There are 32 landlocked developing countries (LLDCs).
• Kazakhstan is 3,750 km from the sea; Afghanistan, Chad, Niger, Zambia and Zimbabwe are over 2,000 km.
• World Bank figures (2014): exporting a container cost $3,204 from an LLDC and $1,268 from a transit country.
• 81.2% of LLDCs were commodity-dependent in 2019–21.

Isolation at other scales

• Local and regional: 58% of rural people are online, against 85% in cities.
• Islands and cables: the world has about 200 cable faults a year, two-thirds caused by fishing and ships' anchors. Places served by one or two cables are the most exposed.
• Isolation is relative: a new cable, port or road can reduce it; a damaged one can bring it back.

Panama: drought at an engineered route

• A 2023 drought cut transits of the Panama Canal; daily crossings fell to a low of 27 in January 2024, against a long-term average of 38.
• The drought reduced capacity, "forcing carriers to reroute through the Suez Canal and the Strait of Magellan and around the Cape of Good Hope".
• UNCTAD links the drought to El Niño and, elsewhere in the same report, to climate change.

Red Sea and Hormuz: conflict at chokepoints

• Red Sea and Suez: after attacks on ships, many sailed around the Cape of Good Hope. UNCTAD says the average voyage haul rose from 4,831 miles (2018) to 5,245 miles (2024), "as security concerns redraw the map of global shipping".
• Strait of Hormuz: about 34% of global seaborne exports of oil pass through it. In June 2026 the EIA described its "effective closure"; in October it said Middle East oil flows remained constrained.

Synthesis: interlinked processes

• Political decisions (Shenzhen's SEZ, 1980) open places to foreign investment and export production.
• Technology (containers, cables, the internet) lets components, products and data move cheaply between them.
• Finance flows (FDI, remittances) follow, and reinforce the links.
• Physical factors and conflict can interrupt them: drought at Panama, attacks in the Red Sea, the closure of Hormuz.
• UNCTAD: "Distance is no longer geography; it is geoeconomics".

How Unit 4 is examined (Paper 3, HL only)

• Paper 3: 1 hour, 28 marks, 20% of the HL grade.
• There is a choice of three extended-answer questions, one based on each HL unit, and you answer one. Each question has two parts: part (a), 12 marks and part (b), 16 marks.
• Part (b) carries more marks, and from its 9–12 band upwards "Synthesis or evaluation is required".

Part (a): what the top band rewards (10–12 marks)

• "The response addresses all aspects of the question; the analysis is explained using evidence integrated in the paragraphs, and it is well structured".
• "No evidence of synthesis or evaluation is expected" in part (a). Focus on accurate, detailed, located evidence.
• Meet the command term exactly: "explain" needs reasons or causes; "analyse" means "Break down in order to bring out the essential elements or structure".

Part (b): what the top band rewards (13–16 marks)

• "Synthesis and evaluation is required at this level". Part (b) uses AO3 command terms such as "discuss", "evaluate" and "to what extent".
• Links to other (sub)topics in the guide must be "explained and supported by the evidence". For example, connect TNC strategies (4.2) with SEZs (4.3) and superpower trade (4.1).
• Your judgement must be "explicitly linked to the range of evidence", including "critical analysis of the relative certainty of evidence used": for example, detected rather than total trafficking victims, provisional migration figures, nominal rather than PPP GDP.
• The conclusion "summarizes the evidence and argument, and links all back to the question".

The big ideas

• Globalization indices measure participation differently: KOF and DHL measure flows mostly relative to size, so small, open economies lead.
• The USA is an actual superpower in economic, geopolitical and cultural terms; China is a potential one, leading on PPP GDP and exports.
• The G7's share has shrunk; the G20, OECD and OPEC shape the world economy in different ways, and OPEC's grip is limited.
• The IMF lends with conditions, and its board votes by quota (Sri Lanka); the NDB is a smaller, project-focused alternative. Aid fell sharply in 2025.
• Which flow matters most depends on scale: trade globally, remittances for Tajikistan. Choose the right map for each flow.
• Illegal flows ride legal networks and shift when supply is cut.
• Apple outsources; Toyota localizes through FDI.
• Political rules shape flows (blocs, SEZs, migration controls); technology shrinks the world unevenly; resources, isolation and chokepoints still matter.

Final screen. Score, the mission list ticked, and "Next: test yourself in the Verify stage" (links to the Verify quiz).