4.1.1 Globalisation

Question 1

Defin globalisation

Answer 1

globalisation can be defined as the increasing integration of the world’s local, regional and national economies into a single international market

Question 2

what are 4 factors that contribute/cause globalisation, explain each

Answer 2

-improvements in infrastuscture and transportation- have mant that there are more quick,cheap and reliable forms of transportation

-improvements in technology and IT- has allowed companies to operate across the globe

-trade liberalisation - and reduced protectionism has made it cheaper and more easy/convinient to trade

-MNC’s and their FDI

Question 3

what are the 2 different types of FDI, explain each, give an example for each.

has this increased FDI, and if so has this increades globalisation?

Answer 3

-market-seeking FDI - this is when firms operate in countries by opening up shops to benefit from the customers in that country. e.g. starbucks investing in china to sell to more customers

-resource-seeking FDI - this is when firms outsource ther facilities and production to other countries to benefit from their lower labour costs. e.g. Nike setting up production sites in Asia

This has increased FDI, and this increased FDI has increased globalisation.

Question 4

what are the economic impacts of globalisation in firms in developed countries

what are the economic impacts of globalisation on the government in developed countries

Answer 4

• Lower labour costs for MNC’s, as through resource-seeking FDI labour costs decrease.
  -Larger customer base, through market seeking FDI,MNC’s are able to have a greater customer reach. can increase revenue
  -both of the decreased costs and increased revenue can lead to an increase in profit.

-the governemnt loses out as there is an increas ein structural unemployment as whole industires move overseas due to the cheaper costs, this may increase governemnt spending on welfare payments.
-there will be a decrease in income and corporation tax revenueas less people work.

Question 5

what are the economic impacts of globalisation in firms in developing countries

what are the economic impacts of globalisation on the government in developing countries

Concisely, what are the 4 impacts on developing countries of globalisation

Answer 5

-negative impact on firms in developing countries, infant industires/firms find it harder to compete with the MNCs as they cannot offer the same wage rate, and produce enough to offer similar prices

-positive impact on the government, decrease in unemployment as more jobs are created, e.g.g by resource seeking FDI
-increase in income and corporation tax revenue, as more peoplea are workng and more firms are operating in the country, increase in indirect tax revenue too as more g/s are bought and sold.

-increase in employment
-increase in the quality of goods for houselholds
-increase in tax revenue
-specialistion/law of comp adv, which may lead to export-led growth

Question 6

what are the postive impacts and negatve impact of globalisation on consumers

Answer 6

positives:
-lower, cheaper goods. due to internation competition increasing.
-increased variety of goods and services (better sovereignty)
-increased quality of g/s - due to specialisatin/comp adv, and technological advancements
-increased consumer welfare

negative:
-ethical concerns regarding labour practices in low-cost production countires
-ethical concersn regarding the environemntal impacts of supply chains