4.1.3 Factors contributing to increased globalisation

Question 1

What is globalisation?

Answer 1

Is the trend towards closer ties between economies and businesses within the global economy

Question 2

What is isolationism?

Answer 2

This refers to a nation whose trade policies are design to put the interests of domestic businesses first by imposing trade barriers to hamper imports.

Question 3

What is trade liberalisation?

Answer 3

Trade liberalisation is the process whereby trade barriers are removed.

Question 4

What are the methods of trade liberalisation?

Answer 4

tariffs
quotas
regulations

Question 5

What are tariffs?

Answer 5

These are taxes imposed on imports that raises the price of imported products, aiding the sales of domestic rivals

Question 6

What are quotas?

Answer 6

These are physical limits on the quantity of a type of good that can be imported in a year. Once the limit is reached, consumers must buy from domestic producers

Question 7

What are regulations?

Answer 7

Rules, paperwork and red tape that can be implemented to make it harder for imports to enter a country

Question 8

What is the cause of trade liberalisation?

Answer 8

the creation of new trade agreements so both sides remove trade barriers

Question 9

What are the opportunities provided by trade liberalisation?

Answer 9

• companies that rely on imports will enjoy lower costs enabling them to reduce prices to compete with cheaper imported rivals
• due to bilateral nature of trade agreements liberalisation can lead to increased export opportunities with the removal of red tape.

Question 10

What are the threats caused by trade liberalisation?

Answer 10

• allowing imports into a domestic market increases competition. This benefits the large MNCs as they are more efficient harming the smaller less efficient domestic firms.

Question 11

How has political change led to increased globalisation?

Answer 11

since governments can decide whether to join or leave certain unions, the world can become increasingly globalised. Similarly, governments can introduce methods trade liberalisation i.e. regulations.

Question 12

How has the reduced cost of transport and communication led to increased globalisation?

Answer 12

1) Oil prices have remained stable or fallen
2) Technological developments or more efficient engines has reduced energy consumption and cost
3) Technology has enabled the building of bigger trains, boats and planes which allow container economies of scale.
Communication has been improved via the internet and the upgrades of hardware e.g. fibre-optic cables transporting complex data

Question 13

How has the increased significance of transnational corporation led to increased globalisation?

Answer 13

• when the TNCs enter a new market local businesses face great competition
• TNCs benefit from Economies of scale
• TNCs have global supply chains and usually decentralised structures which leads to the global transport of resources, people and ideas
• Although glocalisation can occur, the TNCs use similar branding which makes different nations less different. (as consumer choice reduces)

Question 14

How has increased investment led to increased globalisation?

Answer 14

Due to improvements in communication, trade liberalisation and the specialisation of economies there has been a increase in trans-border capital flows. This is because the flow of money is easier quicker. This was a contributing factor to the global financial crisis in 2008.

Question 15

How has migration led to increased globalisation?

Answer 15

1) Migrants are proactive and determined and are willing to uproot and move to a new country
2) Migrants tend to relatively well educated in search of a job.

Question 16

How has the growth of the global labour force led to increased globalisation?

Answer 16

• As companies have offshored parts of their operations globally - not national or locally, they have reduced operating costs.
• via unions, the mobility of labour has increased.

Question 17

How has structural change led to increased globalisation?

Answer 17

As countries develop, the main employment sectors develop e.g. secondary to tertiary. Major economies that have experienced rapid development in the past 40 years have increasingly specialised in order to improve their international competitiveness.
From structural change economies have been able to find export markets that have enabled the acceleration of development and the related trade to sustain the rise of globalisation.