4.1.1 - Globalisation

Question 1

What is globalisation ?

Answer 1

Globalisation is the process of interaction and integration among companies, people and governments worldwide

Question 2

What are the aspects to globalisation ?

Answer 2

• Economic
• Cultural
• Political

Question 3

What can globalisation result in ?

Answer 3

It can result in the world economy becoming more like a single economy because of the increased interdependence around the globe

Question 4

In what directions can globalisation move ?

Answer 4

Forwards and backwards

Forward integration and backward integration

Question 5

What are the factors contributing to globalisation ?

Answer 5

• Trade liberalisation
• Transport
• Communications Technology
• Economic and Political transitions
• TNCs

Question 6

Define bilateral

Answer 6

Involving two parties

Question 7

Define consensus

Answer 7

A general agreement

Question 8

Define multilateral

Answer 8

Involving several parties

Question 9

Define orthodoxy

Answer 9

Authorised or generally accepted theory, doctrine, or practice

Question 10

What is trade liberalisation ?

Answer 10

The removal/reduction of restrictions on the free exchange of goods and services between nations

Question 11

What is trade liberalisation ?

Answer 11

The removal or reduction of restrictions on the free exchange of goods and services between nations

Question 12

What does trade liberalisation lead to ?

Answer 12

It can lead to more free trade

It allows for trade to become easier

Question 13

Give an example of trade liberalisation making trade easier

Answer 13

• The EU single market is an example of this
• Firms can sell products anywhere within the EU single market without any restrictions on trade

Question 14

How has the cost of transport changed over the last 50 years ?

Answer 14

It has decreased due to technological advancements

Question 15

What has improved transport led to ?

Answer 15

Firms can more easily sell goods and services on a global basis as a result

Question 16

What is a transnational company ?

Answer 16

A business that is based or registered in one country but has outlets/affiliates or does business in other countries.

Question 17

How has the cost of communications changed over time ?

Answer 17

They have fallen significantly over time

Question 18

What do TNCs rely on ?

Answer 18

They rely on communications technology as they are located around the world

Question 19

Where do TNCs base their manufacturing, assembly, research and retail operations ?

Answer 19

They base them around the world in many countries

Question 20

What is industrialisation ?

Answer 20

It is the development of industries in a country or region on a wide scale

Question 21

What does globalisation allow countries to do ?

Answer 21

It allows countries to specialise and become more productive in the goods and services that they have a comparative advantage in

Question 22

What are the downsides to globalisation for countries ?

Answer 22

It can lead countries to become overdependent on certain sectors of the economy

This is because countries now trade more with one another than in the past

Question 23

What does globalisation allow consumers to do ?

Answer 23

It allows for choice to increase for consumers

However it is difficult for consumers to find out how goods that are imported are produced

Question 24

How can deindustrialisation arise ?

Answer 24

Due to the loss of comparative advantage

The loss of industry can cause an increase in unemployment

Question 25

What is the transferability of skills like in declining industries ?

Answer 25

They often have limited transferability

This is especially true in developed economies

Question 26

What is one limit of globalisation on the government ?

Answer 26

It can limit a governments ability to raise tax revenue

Question 27

What type of tax does globalisation limit ?

Answer 27

Corporate tax

Question 28

How does globalisation reduce corporate tax incomes ?

Answer 28

• If one country decides to reduce corporation tax, TNCs will have an incentive to relocate to that country – Ireland is a good example of such a country
• The departure of TNCs will reduce the amount of tax revenue governments in other countries earn.
  • This can create a ‘race to the bottom’ in which countries reduce tax rates to undercut each other.

Question 29

How does globalisation affect producers ?

Answer 29

Globalisation also allows firms to develop global supply chains and shift production to the most advantageous location

Question 30

What are footloose companies ?

Answer 30

Companies which choose to relocate

Question 31

Relationship between footloose companies and globalisation

Answer 31

Globalisation increases the number of footloose companies.

Question 32

What does globalisation allow firms to have access to ?

Answer 32

• Firms have more choice when it comes to suppliers.
  
  • This allows them to obtain cheaper and/or higher quality raw materials and components.

Question 33

What is offshoring ?

Answer 33

The relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting.

Question 34

What is bargaining power ?

Answer 34

In negotiating, capacity of one party to dominate the other due to its influence, power, size, or status.

Question 35

What can TNCs do if workers demand more wages ?

Answer 35

They can move production abroad. This is known as offshoring.

Question 36

What does offshoring lead to for workers ?

Answer 36

• This makes it harder for workers to gain pay rises and improved working conditions.
  • Therefore, workers have less bargaining power when dealing with multinational rather than national firms.

Question 37

What is the effect of globalisation on the environment ?

Answer 37

Globalisation has increased environmental destruction and contributes to global warming through raising greenhouse gas emissions.

Question 38

What has rising industrial activity led to. ?

Answer 38

It has led to an increased demand for raw materials

Question 39

How has the transportation of goods lead to regarding the environment ?

Answer 39

The increased transportation of goods associated with international trade has led to a rise in greenhouse gas emissions.

Question 40

What are the pros of globalisation ?

Answer 40

Lower prices

Businesses can access raw materials at cheaper prices

Benefits of trade

Greater employment

Firms benefit from much larger economies of scale

Free movement of labour and capital

Technological transfers and innovation