4.1.1 - cont (impacts of globalisation

Question 1

explain how overdependency on economic sectors occurs due to globalisation

Answer 1

• countries become overdependent on certain sectors of the economy
• so they are vulnerbale to changes in comparative advantage
• e.g shipyards closed down in sunderland causing unemployment and reduced living standards

Question 2

How does globalisation increase global economic instability

Answer 2

• if chian fell into recession
• deand from imports to china falls so countries exporting to china suffer greatly

Question 3

How does globalisation impact consumers

Answer 3

● Consumers have more choice since there are a wider range of goods available from
all around the world
● It can lead to lower prices as firms take advantage of comparative advantage and
produce in countries with lower costs, for example low labour costs. economies of scale
● In other cases, it is leading to a rise in prices since incomes are rising and so there
is higher demand for goods and services.
● Many consumers worry about the loss of culture

Question 4

effects of globalisation on governments

Answer 4

● The government may be able to receive higher taxes, since TNCs pay tax and so do
the people they employ. However, they could lose out through tax avoidance.
● TNCs also have the power to bribe and lobby governments, which could lead to
corruption.
● If the government uses the correct policies, they can maximise the gains and
minimise the losses.
- risk of deindustrialisation

Question 5

How might gov receive less tax due to globalisation

Answer 5

• if another country reduces taxes, all TNCs race to relocate over there
• thus govs forced to lower taxes to ensure TNCs stay
• less tax may make welfare states unaffordable

Question 6

How does globalisation affect producers

Answer 6

• benefit from global supply chains and shift production to most advantageoud location, maximise comparative advantages
• more choice and greater quality due to competition between supplier

Question 7

how does globalisation effect workers

Answer 7

● , some people have gained jobs whilst others have lost. There
have been large scale job losses in the western world in manufacturing sectors as
these jobs have been transferred to countries such as China and Poland.
● Increased migration may affect workers by lowering wages but migrants can also
provide important skills and an increase in AD which increases the number of jobs.
● International competition has led to a fall in wages (or reduced growth) for low skilled
workers in developed countries whilst increased those in developing countries.
● The wages for high skilled workers appear to be increasing, since there is more
demand for their work; this is increasing inequality.
● TNCs tend to provide training for workers and create new jobs.
● Those working in sweatshops will see poor conditions and low wages, but this is
better than other alternatives.

Question 8

effects of globalisation on the environment

Answer 8

● The increase in world production has led to increased demand for raw materials ,
which of which is bad for the environment.
● Increased trade and production has also led to more emissions.
● However, globalisation means the world can work together to tackle climate change
and share ideas and technology.

Question 9

How can you demonstrate pros of globalisation diagrammatically

Answer 9

• outward shift in ppf shows increase in output
• ppf and gains from specialisation and trade based on comp advantage
• ## AD-AS diagrams used to show gains from investment, productivity, knowledge transfers, and innovation

Question 10

extra cons of globalisation

Answer 10

• negative externalisty due to external costs from unsustainable growth
• brain drain effects
• growing relative poverty despite reduction in absolute poverty
• corporate tax avoidance
• ## germany china south korea have huger current acc surplus; trade imbalance and thus more protectionist measures and manipulation of exchange rates

Question 11

diagrams of cons of globalisation

Answer 11

• lorenz curve shows wealth inequality
• externality diagram from pollution and waste - loss of social welfare
• trade theory diagram shwos protectionsim?
• ad as analysis shows brain drain (cuasing depopulation and high structural unemployment)

Question 12

pros of globalisation for HICs

Answer 12

• increased access to foreign markets; uk exports increased from 196bn£ in 2000 to £613 bn in 2019
• attract FDI: uk increased FDI from £62bn in 2000 to £1033 bn in 2019 show on LRAS diagram
• improved productivity and innovation due to international comp

Question 13

pros of globalisation for LEDCs

Answer 13

• increase FDI provides capital tech and expertise facilitating development e.g for SSA FDI inflows went from $10bn in 2000 to $46bn jn 2020
• expand access to global markets so can trade more and grow: SAA went from 79 bn dollars in 2000 to 338bn dollars in 2019
• increased access ti tech and knowledge: cell phone penetration increased from 3% to 44% from 2000-2020

Question 14

cons of globalisation fro HIC

Answer 14

• job displacement - companies move to low wage countries and comp increased due to opening of workers so low skilled workers in HIC become structurally unemployed: NISSAN sunderland
• income inequality between high and low skillled workers
• enviro degradation: exploitation of natural resources in developing countries caused pollution and carbon emissions

Question 15

cons of globalisation for LEDC

Answer 15

• exploitation of labour so avoid labour standards, wages and working condition laws when outsourcing
• economic dependence on few key commodoties so vulnerable to fluctuation in global demand and prices

Question 16

Increase in inequality by globalisation through specialisation and trade

Answer 16

• trade based on comparative advantage has the potential to stimulate economic growth and lift per capita incomes, it can also lead to a rise in relative poverty
• if a country
  can now import cheaper steel from elsewhere, then there will be a contraction in
  domestic supply and a fall in employment and real incomes in that industry.
• so struc unemp, decline in SOL and real wages come down
• deindustrialisation of neorth east as nissan sunderland moved operation

Question 17

evaluate the idea that globalisation creates inequlaity through specilaisation

Answer 17

• trade generates faster GDP growth, then the government will see an increase in tax
  revenues which might then be used to fund capital investment in public goods and
  merit goods and services including finance for re-training programmes and
  improvements to infrastructure in economically-depressed areas
• depends on whetehr gov has rescources and poltiical will to actively protect employment

Question 18

globalisation increases tax avoidance

Answer 18

• higher profits for multinational corporations such as Apple, Google and Facebook which feed into generous pay-outs for senior executives and increasing dividends for shareholders
• use shadow pricing and other forms of legal tax avoidance to reduce their liability to pay tax and thereby increase the return to those with an equity stake
• national governments do not generate the
  revenues needed to pay for public services and welfare systems - both of which can
  have a progressive effect on the final distribution of income.
• Oxfam estimates that tax avoidance costs developing countries $170 billion a year whereas $

Question 19

evaluate tax avoidance ideas

Answer 19

• In the US, they have introduced a one-off tax on the off-shore cash held by US businesses after it was found that US companies had built up almost $2.6tn in untaxed cash held offshore
• Developing countries can also improve their
  governance so that multi-nationals investing pay a proper rent for the ownership of
  land and are less vulnerable to corruption from elected officials
• greater contry by country financial reporting