4.1.1- Globalisation Flashcards
What are the characteristics of globalisation?
-emergence of global brands
-emergence of MNCs
-emerging from ‘emerging economies’
-large global flows of capital
-increasingly global supply chains
-freedom of movement for workers
-increased importance of international trade as a % of GDP
What is globalisation?
Ever increasing economic integration of the worlds local, national and international markets
What does economic integration mean?
-free trade of goods
-free movement of labour
-free movement of international finance
-free interchange of technology and ideas
What does free trade mean?
Without tariffs, embargoes, quotas, or product standard legislation
What does free movement of international finance mean?
Can invest in other countries via FDI and can move money between economies for speculation and repatriation of profits
What are the factors contributing to globalisation?
-greater desire to buy goods from other economies
-increase growth and development of MNCs
-trade liberalisation
-greater flows of investment
-improved physical infrastructure and technology
How does a greater desire to buy goods from other economies contribute to globalisation?
Due to higher real incomes, changes in consumer tastes, tourism, initial resource endowment
How does increased growth and development of MNCs contribute to globalisation?
Due to profit incentive, economies of scale, and emerging markets
How does trade liberalisation contribute to globalisation?
-removal of trade barriers through international agreements promote international trade
-due to less protectionism
What are some examples of trade agreements?
The world trade organisation (WTO) and the general agreement on tariffs and trade (GATT)
How does greater flows of investment contribute to globalisation?
Due to regulation of financial markets
How does improved physical infrastructure and technology contribute to globalisation?
-reduces communication and transportation costs
-containerisation cuts costs of shipping
-MNCs put infrastructure in other economies so they are the monopoly
What are the impacts of globalisation on consumers?
-more choice
-lower prices as firms take advantage of comparative advantage
-however, can lead to price rices for ledc consumers who buy primary products due to higher demand
-some consumers worry about loss of culture
What are the impacts of globalisation on workers?
-large scale job losses in western world manufacturing sectors as jobs have been transferred to countries such as China and Poland
-increased migration may lower wages, but migrants provide skills and increase ad which increases the number of jobs
-competition leads to a fall in wages for low skilled workers in developed countries
-wages for high skilled workers are increasing due to increasing demand, worsening inequality
-exploitation issues
What are the impacts of globalisation on producers?
-firms can source products and sell them in more countries, which reduces risk as a collapse of one market will have a smaller impact
-can employ workers cheaper and can exploit comparative advantage
-firms who are unable to compete internationally will lose out
