4.1.1 Globalisation

Question 1

Globalisation

Answer 1

A variety of ways in which countries are becoming more and more closely integrated, in an economic, cultural and political sense. The pace of global integration has increased considerably over the last 50 years.

Question 2

Purely economic definition of globalisation

Answer 2

An increase in economic interdependence.

Question 3

Two historical examples of globalisation

Answer 3

Colonialism and imperialism.

Question 4

What are five characteristics of globalisation?

Answer 4

• Increase in trade as a % of world GDP
• Increased international specialisation
• Growing importance of TNCs
• More Foreign Direct Investment (FDI)
• More movement of money and people between countries

Question 5

What are the six factors contributing to globalisation?

Answer 5

• Decline in communication costs
• Huge real fall in transports
• Lower trade barriers
• Collapse of communism and the opening up of china to world trade
• TNCs taken advantage of transport costs, communication costs and lower trade barriers
• Growth in the number and size of trading blocs

Question 6

What is the most important factor contributing towards globalisation?

Answer 6

Lowering trade barriers as it is a necessary condition for some of the other factors to contribute towards globalisation.

Question 7

What are 3 impacts of globalisation on countries?

Answer 7

• Free trade enables application of the law of comparative advantage meaning that when countries specialise in what they are good at, world output and living standards increase.
• 2008 financial crisis led to de-globalisation where protectionist policies were used to protect domestic employment i.e. less trade.
• More inequality within developed countries since the jobs of unskilled workers transferred to developing countries so wages decrease for unskilled workers in developed countries.

Question 8

What are are two impacts of globalisation on the government and how can this be evaluated?

Answer 8

• Higher economic growth-> higher incomes->higher tax revenues
• Less spending on benefits
  EVAL- BUT, TNCs may shift their earnings to other countries (transfer pricing).

Question 9

What is the impact of globalisation on producers?

Answer 9

Lower production costs due to both offshoring and economies of scale (average costs are falling since their selling to a larger market).

Question 10

What is the impact of globalisation on consumers?

Answer 10

They will have more choice and lower prices, resulting in a high consumer surplus.

Question 11

What are three impacts of globalisation on workers?

Answer 11

• Developing world = exploitation of workers e.g by TNCs but they get jobs which may not have existed and they may potentially earn more than in domestic firms.
• Developed world = driven down wages of unskilled workers.
• H&s laws are less demanding in developing countries.