4.1.3 - Factors Contributing To Increased Globalisation Flashcards
Def globalisation
Is the trend towards closer ties between economies and businesses within the global economy
Def isolationism
Refers to a nation whose trade policies are designed to put the interest of domestic businesses first by imposing trade barriers to hamper imports
8 factors contributing to increased globalisation
- trade liberalisation
- political change
- reduced cost of transport and communication
- increased significance of transnational corporations
- increase investment flow (FDI)
- migration
- growth of the global labour force
- structural change
Explanation of trade liberalisation
Involves removing trade barriers by opening up its barriers by opening up its boarder to other countries eg tariffs, quotas and regulations
Evaluation of trade liberalisation
- consumers have access to global brands as well as decrease in cost of imports, lower prices for business and consumer
- increases competition for domestic firms
Explanation political change
The amount of political corporation that exists between countries
Evaluation of political change
The world trade organisation and UN trying to reduce trade barriers between countries, reducing conflict
Explanation of reduced cost of transport and communication
Extra costs involved in moving goods around the world can reduce profit margins meaning cheaper transportation of goods overtime encourages businesses to trade globally
Evaluation of cost of transport and communication
Containerisation - lowered costs for all firms, reduced barriers of trade and reducing time lag of communication
Explanation of increased significance of transnational corporations
Larger MNCs having greater ability to invest in other economies
Evaluation of increased significance of transactional corporations
- providing employment for local people in host countries by benefiting from FDI
- local businesses struggling to compete with MNCs causing exploitation
Explanation of increased investment flows (FDI)
Investment into a foreign market by an MNC can lead to improved skills, knowledge and technology
Evaluation of FDI
- provides opportunities to the host countries to enhance economic development
- opportunities for home country to optimise earnings
Explanation of migration
People move address countries for different lifestyles and employment opportunities
Evaluation of migration
Migrants bring 1 proactive and determination 2 tend to be well educated
Helping to explain why increased migration can stimulate economic growth
Explanation of growth of the labour force
Companies managing to reduce labour costs by seeing labour market as global instead of global or national
Evaluation of growth of the global labour force
Helps businesses find the right type of labour to expand or grow, helping to achieve new aims of globalisation and global expansion
Explanation of structural change
When an economy shifts its basic functions of operations. Countries change their structure to specific goods and specialise in producing these goods
Evaluation of structural change
Positive multiplier ending in greater value
