4.1.3 Factors contributing to increased globalisation Flashcards
globalisation
process by which world is becoming increasingly interconnected due to massively increase trade and cultural exchange
factors contributing to increased globalisation
- Reduction of international trade barriers/trade liberalisation
- Political change
- Reduced cost of transport and communication
- Increased significance of global (transnational) companies
- Increased investment flows (FDI)
- Migration (within and between economies)
- Growth of the global labour force
- Structural change
trade Liberalisation
international trade = easier -relax tariffs & barriers
-gov remove barriers = imports out = increase demand for domestic
product of trade negotiations
remove tariff = import price fall = vc fall = cons price fall
4 impacts of trade liberalisation on globalisation
- remove tariff = import price fall
- VC cut = low con price = sell more = growth opps
- increase market access to bus willing sell abroad
- increased competition = be efficient
political change
e.g. China
told to focus on producing product for domestic consumption = little foreign comp
joined WTO = access to rich markets of developed world = integrate with rest of global economy
impact of political change on globalisation
lifted living standard in China = large car market = companies taken adv by opening factories = boost economy
reduce cost of transport/communication
- transport cost = discourage IT = cut exporters
- oil = grow = lower price
- tech advances = engines used to power
- planes/trucks = less fuel and super sized trucks
-profit margins = lower costs =growth world trade
impact of reduce cost of transport/ communication on globalisation
business EOS = huge quantities at once,
cheaper air flights - global meetings
improvements in interest = catalyst for change,
free instant messages = far countries not isolated
increased significance of global companies and the impact they had on globalisation
globalisation =large companies set up/buy existing businesses in other countries
TNC - “one fits all” same everywhere whereas MNCs= glocalise
- increased comp for domestic market/competitors
- increased consumer choice
increased FDI and impact of that on globalisation
businesses invest/set up production inside trading bloc = get around tariffs
increase FDI = companies in more countries = country an income generation, jobs, GDP = positive multiplier effect
migration of workers and impact of that on globalisation
many countries = extensive legal barriers preventing foreigners seeking work
immigration= source of low income able bodied workers
larger workforce for business to chose from = greater availability of staff for bus to chose from
growth of global labour force and impact that had on globalisation
global labour force: one that is free to see better jobs in other countries
companies get wider range of staff to chose from = cause resentment from host nations as citizens feel jobs are being taken by immigrants
structural change and impact that had on globalisation:
-economic condition =industry change way it operates
primary sector -> manufacturing (industrialisation) = develop knowledge economy e.g. IT
countries = pull out of poverty & primary sector = productivity in secondary = manufacturing increase and net income rises
trade liberalisation definition
process by which international trade is made easier through the relaxation of rules which govern it
trade barrier
sanction(ban/embargo), restriction, duty (tariff), prevents trade/ increase difficulty for trade between countries (subsidy = government support)
7 arguments for trade liberalisation
- jobs
- choice & prices (efficient)
- relationships
- comp = productivity = output and cost per unit
- diversify risk resource = efficiently returns = greatest (offshoring = pull)
- opportunities
- markets competitive
political decision making
carried out by individual gov = protect domestic interest
G7
started as 6 then went to 7 was no formal charter
G6 : 1975
represent nearly half of worlds total GDP (10.5% pop)
membership = lost or gained
commitments not actions
sanctions other nations
implement it and whether effective globally
4 key causes of globalisation
- technology:
containerisation (shipping cost decrease)
comm costs decrease - business:
rise in MES (min economy of scale) = strain domestic - Demography: labour force
- Politics: protectionism, tax systems
MNCs grow profit max drive expansion (human flows)
TNC -
business own factories/shops in more than 1 country “one fits all” same product everywhere
migration
people move from 1 town or country to another in search of better life
