1. The International Economy - Globalisation Flashcards
What is globalisation?
A process of deeper economic integration between countries and regions of the world.
What are the causes of globalisation? (1)
- Containerisation - increased efficiency for bulk shipping, decreased costs, prices of imports becomes closer to national markets & increased international market contest ability.
- Technological Change - reduced costs of transmitting and communicating information
- Increase in the MES - As the MES of some industries increases national industries alone become insufficient to utilise economies of scale
What are the causes of globalisation? (2)
- Opening up of financial markets - removal of capital controls in many countries - allows FDI
- Differences in tax systems - variations in tax systems country-country encourages corporations to move abroad to exploit new comparative advantages etc
- Less Protectionism - opening of borders and falls in average tariff lvls help create globalisation
What are the characteristics of globalisation? (1)
- Greater trade in goods and services both between nations and regions
- An increase in transfer of capital and FDI
- Development of global brands
- An increase in the spatial division of labour - increased outsourcing and offshoring in foreign locations
- Increased labour migration between and within countries
What are the characteristics of globalisation? (2)
- Increased membership of the worlds trading system - China, India and Russia joined the WTO in the last 30 yrs
- Shift in economic and financial power from developed to emerging economies
- Increased spending on infrastructure, innovation and infrastructure
- Increased global inter-dependence
- Increased growth rates in developing economies
Who are the BRICs?
Four countries that have seen rapid economic growth in recent years - Brazil, Russia, India and China
Who are the MINTs?
Four countries that have large populations, favourable demographics and emerging economies. They’re expected to be the next big thing after the BRICs and provide investors with good returns - Mexico, Indonesia, Nigeria and Turkey.
What are the positive consequences of globalisation? (1)
- Promotes local growth by stimulating overall growth - essentially trickle-down effect, if world growth increases MNCs will spend more through national and local businesses - increased living standards and local growth
- Creates higher levels of mutual trust - countries and economies can work together to lift each other out of poverty etc
- Global community needs a global economy - goods and services are already being bought world-wide through the internet so a global economy is useful
What are the positive consequences of globalisation? (2)
- Forces us to share financial considerations - economic globalisation creates one big pile of cash that can be used for the benefit of all. Emphasis shifts to meeting global needs first rather than national ones.
- It gives undeveloped countries the chance to join the developed world - outsourcing to undeveloped nations would create equality in development.
- The need to access the global market may lead to new innovations and improvements, new technological developments will improve the standards of living.
What are the negative consequences of globalisation? (1)
- It gives businesses more power over civil governments - wealthy businesses in undeveloped nations can influence laws/elections bc of there power
- It removes the emphasis of local culture - development of MNCs will erode local culture etc
- It encourages the development and spreading of disease - increased international travel will lead to more spreading of disease etc
What are the negative consequences of globalisation? (2)
- Increases in worker exploitation - the aim of globalisation will still be to maximise profits, workers in undeveloped nations will likely be paid below a living wage
- To an extent it will simply move unemployment and poverty from one place to another - outsourcing decreases ue in undeveloped nations but previous ppl employed in the area in other countries are now ue instead
What are the arguments for globalisation as an opportunity?
- Economic Development
- Reduced Trade Barriers
- Increased FDI
- Increased competition - innovation and invention
- Knowledge transfers - increased productivity
- Improved social welfare & employment chances
What are the arguments for globalisation as a threat?
- Increased Inequality - developed countries simply exploit the cheap labour in undeveloped ones
- Increased control for developed countries - tied aid and extended influence in undeveloped nations
- Threat to workforce - developing country workforce will easily move else where for better pay etc
- Erosion of local culture - increased crime etc
What is a multinational corporation?
A Multi-National Corporation (MNC) is a business that is based or registered in one country but has outlets/ affiliates or does business in other countries.
What is the relationship between globalisation and MNCs?
Globalisation is one of the major reasons for the growth in TNCs. A number of businesses in order to grow and develop have had to take on a global or international perspective. In addition, TNCs have also caused further globalisation – a two way process.
