2.6.1 Globalisation

Question 1

Globalisation

Answer 1

Increasing intergration and interconnectedness between countries.

Question 2

Characteristics of globalisation

Answer 2

1. Greater trade between countries.
2. Higher levels of labour migration
3. Increased capital transfers
4. Greater use of outsourcing
5. Increase in global brands

Question 3

Causes of globalisation

Answer 3

1. Improvements in communication e.g. speed, cost
2. Transport improvements
3. Containerisation = increases efficiency
4. Increased free trade - reduced trade barriers
5. Closer political ties
6. Abolition of capital controls

Question 4

Concequences for more developed countries

Answer 4

1. increased ability to outsource production to low-cost countries.
2. potential for hiher sales by targetting products at fast-growing, less-developed econs.
3. exploitation of econs of scale by producin on global scale.
4. increased comp for firms in developed econs from low-cost producers.
5. need to diversify away from manufactering.
6. ability for firms to recruit globally
7. possible ‘brain dead’ as skilled workers seek opportunities overseas.

Question 5

Concequences for less developed countries

Answer 5

1. increasing dominnce by lobal brands from developed countries.
2. Issues of treatment of local workforces - exploitation.
3. Havin to adopt free-market macroecon policies to attract FDI.
4. Opening up markets to forein comp, risk for local businesses.

Question 6

Benefits of MNC’s

Answer 6

1. employment, generates many new jobs and boosts DP.
2. wages - offer higher onces to attract workers.
3. Tax rev - from profits and incomes earned.

Question 7

Drawbacks of MNC’s

Answer 7

1. may pay lowest wage if sufficent numbers needed.
2. effect on employment levels might not be significant as they bring skilled labour from developed countries, only recruit locally for less-skilled jobs.
3. property rights and regulations less clear in under-developed countries, open to exploitation and deplete natural resources.
4. Tax rev may not rise significantly as profits minimised to avoid tax schemes.
5. unethical worker treatment, not clear protection for them - exploitation.

Question 8

Criticism of globalisation

Answer 8

1. imbalance of power - LDC export cheap raw materials and import expensive manufacturing goods.
2. many owe world bank and IMF large sums and forced to adopt measures like privatisation to recieve support.
3. accusations of poor workers rights - child labour, anti-union measures.
4. low skilled jobs in multinationals are lost due to labour rates in LDC’s

Question 9

Benefits of globalisation

Answer 9

1. comparative and absolute advantage.
2. increased FDI
3. Competetion decreases cost + encourages innovation.
4. movement of labour.
5. faster spread of technology
6. political and social ties.

Question 10

Costs of globalisation

Answer 10

1. can exacerbate inequality
2. erodes national cultures
3. environmental cost
4. dominated by MNC’s

Question 11

Corporate domination depends on:

Answer 11

1. magnitude of trade liberalisation.
2. trickle down equality
3. enviremental impact
4. difficultly to measure
5. vulnerablility ot economic shocks

Question 12

Issues with corporate domination:

Answer 12

1. damage to envirement
2. exploitation of labour
3. monopoly power
4. economics degradation
5. non-renewable resources
6. damage to cultures

Question 13

FDI

Answer 13

purchase of an asset in another country, such that it gives direct control to the purchaser over the asset.
1. establishing overseas corperations
2. done via organic or acquisitive growth

Question 14

MNC advantages:

Answer 14

1. employment and income
2. BoP
3. technology transfer
4. tax revenue
5. skills transfer
6. infastructure

Question 15

MNC disadvantages:

Answer 15

1. uncertainty
2. power and control by MNC’s over host country.
3. transfer pricing
4. local firms driven out of business
5. repartriation of profits (back to home country)
6. increased gap between rich and poor
7. consumerist values