4.3.1 Globalisation - Causes and Effects Flashcards
Define Globalisation
‘The ability to produce any good or service anywhere in the world, using raw materials, components, capital and
technology from anywhere, sell the resulting output anywhere and place the profits anywhere’
What are the characteristics of globalisation?
- Free and increased trade (as a proportion of world GDP)
- Free intl movement of labour
- Free movement of Capital
- Increased FDI
- Free interchange of Tech and Intellectual Capital
- Increased Global Media Presence
- Increase Intl specialisation/Division of Labour
What are the causes of globalisation?
- Fall in transport costs (containerisation)
- Fall in cost of long distance communication
- Fall of Communism/Opening of China to free trade
- Growth of TNCs
- Trade Liberalisation
- Foreign ownership of firms
- Increased international flows
- Law of Comparative Advantage
What are the benefits of globalisation?
- Increased revenues due to bigger markets
- Increased Goverment Tax Revenues
- Reduction in Poverty in LEDCs
- Lower prices due to economies of scale/offshoring
- More choice for customers
- More competition means less global X-inefficiency
- Decreased inequality
What are the costs of globalisation?
- Exploitation of workers
- Increasing inequality
- Environmental damage
- Unsustainable (Fossil Fuels)
- Damage to culture
- Interdependence is dangerous
- Fall in Tax Revenues
Explain how a fall in transport costs is a factor causing globalisation
Cheaper transport costs making global trade more possible and much cheaper for consumers
Explain how a fall in communication costs is a factor causing globalisation
Things like the internet, cheaper telecommunication, etc. make it easier for trade to occur internationally, and also easier for TNCs to actually exist.
Explain how trade liberalisation is a cause of globalisation
Lowering of protectionist barriers and the formation of trading blocs makes international trade easier.
Explain how TNCs are a cause of globalisation
-TNCs taking advantage of lower production costs in other countries means cheaper goods that are easier to ship internationally
