4.1.3 Globalisation Flashcards
Globalisation
the increasing integration and cooperation between countries and the growth of international trade
8 reasons why there has been an increase in globalisation
- Reduction in trade barriers/trade liberalisation
- Political change
-Reduced costs of transports and communication
-Increased MNCS- more global companies
-Migration - Growth of the global labour force + increasing population
-Structural change
-Increased FDI - firms are investing more in foreign countries
1) Trade liberalisation
the process by which international trade is made easier through relaxation of trade barriers e.g tarrifs and quotas
Free trade agreements
Encourages trade between countries
- no restrictions between buying and selling
What is a result of free trade/trade liberalisation
- This helps to main which process
the volume of international trade increases and businesses can now sell goods and services in new foreign markets without penalties
- helps to maintain the process of globalisation
The world trade organisation (WTO) is often used to help negotiate what
WTO is often used to help negotiate trade agreements and promote trade liberalisation
Advantages of trade liberalisation - 4
- Any raw materials that a firm imports will become cheaper (due to removal of barriers e.g tarrifs) - this will lower a firms costs, which could make it more competitive as it can reduce prices
- exporting goods becomes easier & cheaper - now more markets to expand to
- Consumers benefit from increased choice from products all around the world - can find better quality
- Consumers can also benefit from lower prices. Increased competition from firms in different countries will mean that products are cheaper from consumers as firms compete for sales
Disadvantages of trade liberalisation - 2
- removal of trade barriers will reduce costs of imports. As a result domestic businesses can be forced out by the increased imports if they are not competitive, which can increase unemployment
- some feel that trade liberalisation is leading to a removal of national cultures
How does political change increase globalisation?
Restrictions to international trade put in place by one government might be REMOVED if the political system changes to one that supports trade liberalisation
- Known as political reform
- this may lead to more trade between countries which in turn increases GLOBALISATION
An example of political change leading to an increase in globalisation & trade
eg the end of communist rule in the Soviet Union in 1991 - the soviet bloc was dissolved and the various countries opened their economies and began trading with the rest of the world. Some joined the EU.
Reductions in what costs have increased globalisation
Reductions in transportation and communication costs
How has transport costs reduced
cargo ships and containerisation ( where goods are shipped in cargo containers) means that costs are now reduced.More goods can be loaded and its more quicker
Overall increases globalisation
Reductions in communication & globalisation
Growth of internet/tech means information can be sent across the world more easily and cheaply.
- Businesses can communicate with customers/suppliers all over the world.
- consumers can gather info about goods and buy them from across the globe.
Overall globalisation is increased.
How has MNCs (Multinational companies) increased globalisation
- They developed significant business interests e.g investments & operations across the globe.
- They have brought familiar products/services to countries across the globe e.g Toyota, Volkswagen
Migration
the movement of people who aim to set up residence in another country
