4.14.1 - Globalisation Flashcards
What is globalisation?
The process of increasing economic integration of the world’s economies.
How has recent globalisation been made possible?
- Improvements in information and communication tech.
- Developments in transport
What are the main characteristics of globalisation?
- The growth of international trade
- Reduction of trade barriers
- Greater international mobility of capital and labour
- A significant increase in the power of international capitalism
- Deindustrialisation of older industrial regions and countries
What are the consequences of globalisation for less developed countries?
- Destruction of local and national products in favour of globalised goods.
- Treatment of local labour by MNCs
- Environmental costs
- Tax competition
- Free trade harming less developed countries
What was the initial view of who benefits from globalisation?
Both developed and developing countries benefit.
Developed countries get lower cost goods, developing countries get new jobs at higher wages.
What is the dependency theory of trade and development?
The theory that developed countries benefit more than developing countries.
Why do some economists believe the dependency theory of trade and development?
- Systems of trade have been organised in favour of developed countries.
- The terms of trade have generally moved in favour of industrialised countries and against primary producers.
- Dividends and profits flow to companies with HQs in North America, Europe etc. with subsidiaries in the developing world.
Is globalisation good or bad?
- Free-marketeers argue it is inevitable. The benefits of further global economic integration alongside the production of more production and higher living standards exceed the disadvantages such as the destruction of local cultures.
- Opponents argue globalisation is a respectable name for the growing exploitation of the poor by international capitalism and US economic/cultural imperialism.
What are the main factors encouraging the overseas location of call centres?
- Relatively low wages in developing countries.
- Highly reliable and cheap telecommunications.
- 24-hour shift employment.
- Workers tend to be fluent in English.
However, there is a lack of cultural understanding from the countries that globalisation moved call centres to. Some of these call centres were moved back.
How has globalisation impacted capital mobility?
People can move much more easily from areas of low wages to areas of high wages.
This ease of movement tends to only involve high-skill workers though.
How have MNCs driven globalisation?
- Economic integration and increased trade
- Investment and technology transfers
- Changing employment patterns and global capitalism
- The global market place and international brands
How has globalisation undermined national governments?
National governments have found it far more difficult to control their domestic economies as companies are free to move whenever they wish.
How does economic integration and increased trade drive globalisation?
Supply chains now stretch across international boundaries, so products are no longer made in only one country but are moved across the globe for lower cost.
How do investment and technology transfers drive globalisation?
MNCs invest and create jobs in attractive regions.
Long-term investment can transfer technology from developed nations to developing countries, notably India and China. In the long-term, economic power is shifting from the West to the East.
How do changing employment patterns and global capitalism drive globalisation?
In the West, many factories have closed as those jobs have been moved to cheaper areas in the East.
This has resulted in large amounts of structural unemployment and poverty in the West, but lifted many out of absolute poverty in the East.
Income equality has risen in developing economies as absolute poverty has fallen. Income equality has fallen in developed economies as stagnating living standards and lower real incomes due to well-paid employment moving elsewhere.
