4.1.1 - Globalisation

Question 1

What Is Globalisation?
(3 Points)

Answer 1

~ Process in which national economies have become increasingly integrated and inter-dependant.

~ Integrated, meaning countries have become closer together.

~ Inter-dependant, countries are more reliant on each other for growth and development.

Question 2

What Has The Integration Of Global Economies Impacted?
(3 Points)

Answer 2

~ National cultures.

~ The spread of ideas.

~ Accelerated industrialisation in developing nations and has led to deindustrialization in developed nations.

Question 3

What Has Increased Globalisation Exponentially?

Answer 3

Improvements in technology.

Question 4

What Are Factors Which Have Contributed To Globalisation In The Last 50 Years?
(9 Points)

Answer 4

1) Trade Liberalisation

~ Reduced protectionism, making it cheaper and more feasible to trade.

~ Lead to more free trade between nations.

2) Trading Blocs

~ Deeper trading blocs have lead to countries integrating together.

~ Increased effectiveness of the WTO in negotiating new trade agreements.

3) Growth Of MNCs & TNCs

~ The bigger they have got the more they have dispersed around the world, leading to greater integration.

4) Technological Advancements & Improvements In Transport Infrastructure

~ Made it easier to transport goods around the world.

~ Made it easier for businesses to set up in foreign countries without many issues.

~ Improved communication around the world, boosting trade.

5) 1990s Deregulation Of Financial Markets

~ Resulted in the expansion of global financial services and provided more access to capital and easier ability to raise and move money around the world.

6) EOS Generated By Containerisation

Question 5

What Are The Benefits Of Globalisation?
(14 Points)

Answer 5

1) Lower Prices Due To More International Competition

~ Consumers benefit due to greater CS/welfare, greater market size and access, greater quality and choice and more innovative product being produced.

~ Firms benefit from reduced costs due to lower prices and more access to raw materials from around the world.

2) Benefits Of Trade (Trading Blocs & WTO)

~ Benefits from greater growth.

~ Greater governments which have come from greater growth and trade, meaning greater tax revenues.

~ Helps promote economic development.

3) Greater Employment

~ Market size is getting bigger.

~ Firms grow in size, which opens up the need for hiring more labour.

~ Means that workers will see higher incomes, living standards, enjoying greater luxuries.

4) Benefits From Large EOS

~ Firms benefit from larger EOS, due market size increasing.

~ Increasing output and lower costs.

~ Higher profits then stimulate greater investment,

5) Ease Of Movement

~ Due to advancements in technology and transport.

~ Government policy to encourage more movement of labour through migration laws.

~ Looser government policy attracts foreign investment.

Question 6

What Are The Drawbacks Of Globalisation?
(10 Points)

Answer 6

1) Growing Inequality

~ Increases in profit, incomes and tax revenue collections it hasn’t been spent equally amongst the world’s population.

2) Higher Structural Unemployment

~ Due to increased competition some businesses are unable to compete.

~ Individuals would then loose jobs, incomes and lifestyles, especially a bigger issue in developing economies as they is no safety net of welfare benefits.

3) Environmental Costs

~ Growth has been put first over anything else.

~ Leading to more pollution, firms have degraded resources by producing lots.

~ Future generations will then suffer due to a lack of sustainability.

4) Greater Risk Of External Shocks

~ As if one country goes down another one could as country have become more integrated.

5) Less Cultural Diversity

~ Due to growth of MNCs.

~ Countries lose their uniqueness.

~ Loss of cultural diversity, due to MNCs selling the same products people then have to buy.