4.1.1 - globalisation Flashcards
What is globalisation?
The increasing international interdependence of economies, reflected in an increased level of trade, investment and migration.
What are the characteristics of globalisation?
-increased foreign ownership of companies and FDI
-increased trade of goods and services, higher trade to GDP ratios
-deindustrialisation in developed countries
-increased global media presence and greater connectivity
-greater specialisation and division of global labour force
What are the factors contributing to globalisation?
-containerisation and falling transport costs
-increased influence of MNC/TNCs
-improved communication and technology
-trade liberalisation and reduced trade barriers
-development of international financial markets
-political change, such as the end of the Cold War
-increased size and number of trading blocs
-more labour migration and the emergence of a global labour force
-increased FDI between countries
What are some impacts of globalisation?
-increased living standards due to specialisation and trade, especially in developing countries - lower cost of production = improved SRAS, lower GPL, more consumer surplus and utility
-increased FDI from MNCs = increased AD + LRAS
-increased interdependence of economies
-deindustrialisation in developed countries, global search for new sources of energy
-growth of economies such as China has left Western economies concerned about their power in the economy, production moved to developing countries, etc.
-increased number of footloose companies which can cause unemployment as they move from country to country, TNCs/MNCs
-greater consumer choice
-lower prices, through specialisation according to comparative advantage
-workers may be exploited by large global TNCs and paid extremely low wages. However, MNCs claim to improve health and safety conditions
-increased environmental destruction and other negative externalities eg. rising greenhouse gases from increased transportation of goods.
-resource depletion
-income inequality
