4.1.3 - 4.1.3 - Factors Contributing to Increasing Globilisation Flashcards
What is the World Trade Organisation?
Reduces trade barriers and ensures customers keep to their agreements
- Deals with complaints between members
- Encourages trade liberalisation
What is trade liberalisation?
The process by which international trade is made easier through a relaxation of the rules which govern it
What issues does trade liberalisation overcome?
- Governments restricting the availability of items
- Stopping imports
- Import tax (tarrifs) on products imported
- Emnargoes
- Quotas
Advantages of trade liberalisation
+ Makes markets more competitive
+ Creates business opportunities
+ Consumers benefit though lower prices and larger range of products
+ Facilitates competition, investment and increases productivity
Limitations of trade liberalisation
- Some industries decline which creates structural unemployment
- Could lead to greater exploitation of the environment (greater production of raw materials)
- Trade liberalisation may be damaging for developing economies who cannot compete against free trade
- Some argue often benefits developed countries more than developing countries
What are the 7 factors which contribute to increased globalisation and why?
- Political change
- Change in government can change attitudes to trade - Reduced transport and communication costs
- Easier for buyers and sellers to connect - Increased transnational companies
- Increased pressure to engage in free trade - Increased investment flow (FDI)
- Allows businesses to establish themselves in countries which may have trade barriers - Migration
- Allowed workers more flexibility when looking for work - Growth of global labour force
- Due to emerging economies there is more labour so more income to spend and more staff - Structural change
- When a country, industry or market changes which sector of the market it operates in
What is a transnational company?
Business which operated in more than one company
