4.1 Flashcards
Globalisation
Globalisation is a process of deeper economic integration between countries and regions of the world
Characteristics of globalisation
- Greater trade in goods/services internationally
- Increase in transfers of capital between countries
- Development of global brands
- Global division of labour (outsourcing/offshoring)
- High levels of labour migration
- New nations joining world trading system
- Shift in balance of economic and financial power
Causes of globalisation
- Deregulation of markets
- Political changes
- Removal of barriers to trade
- Lowering of transportation costs
- Improved communication systems
- FDI
- Migration/ global labour force
- Structural change
Winners and losers of gloablisation
Winners;
- Consumers (more choice)
- Devleloping countries (more wealth)
- Developed economies (low inflation as falling prices of imports)
- Businesses who trade internationally
Losers;
- Unskilled workers in western economies (job relocation, real wages falling)
- Previously viable businesses (outcompeted by low-cost overseas competition)
- Workers in developing countries (exploited)
- The environment (increase of transportation, global warming)
Economic growth
- Occurs when a country produces more goods and service in 1 year than it did the year before
- Measured by GDP
- Has an impact on spending power of consumers and productivity capacity of a country
3 positive and 3 negative impacts of economic growth
Positive;
- Increased spending leading to increased sales
- Increased opportunities to expand
- Increased profits and investment
Negative;
- Increase in imported goods if industry can’t keep up with demand
- Increase in prices leading to inflation
- Shortage of labour leading to increased wages and costs
BRIC economies
Brazil, Russia, India, China
- Classed as emerging superpowers because they share either large pop, access to key resources, regional influence, power & economic growth
MINT economies
Mexico, Indonesia, Nigeria, Turkey
- Favourable demographics for next 20 years, interesting economic prospects
- Potential to become superpowers in future
3 main indicators of growth
- Income levels (GDP, indicates average income, doesn’t consider inequality)
- Education (literacy rates)
- Health (life expectancy, access to healthcare, child mortality, impacts productivity of workers)
Developed economies
- Mature economies with relatively high standard of living with generous welfare provision
- Most people educated and have long life expectancy
- Workers mostly employed in services
Developing economies
- Countries still have large primary sector and relatively small secondary
- Incomes mostly very low
- Most economic activities labour intensive because capital equipment is expensive
Emerging economies
- Have features of developed and developing
- Fast growing economies
- Rapidly rising standards of living
- Growth in secondary and tertiary sectors, expansion usually fastest in manufacturing
- People migrate from countryside to urban
- Trade will be expanding rapidly
Reasons for trade
- Exchange - countries sell goods/services they can produce relatively cheaply and buy products they would find relatively expensive to produce
- Specialisation - specialise resources in producing certain commodities and benefit from economies of scale
Benefits of international trade
- Companies earn revenue from exports and create jobs
- Low prices for consumers as markets are more competitive due to imports
- Technology is spread, raising productivity
- Economies of scale - causing lower unit costs and prices
Drawbacks of international trade
- Transport costs and impact on the environment
- Loss of jobs due to increased competition from abroad
- Rising inequality - some gain trade while others lose out
- Pressure on wages and working conditions
- Risks from global (external) shocks
