4.4 Globalisation

Question 1

What is the definition of globalisation?

Answer 1

Globalisation is the increasing integration of the world economy through the expansion of trade in goods and services and the flow of labour and capital across borders

Question 2

In what 4 ways does globalisation cause a country to become more interdependent?

Answer 2

1. International free trade in goods and services
2. Free movement of labour between countries (economic migration)
3. Free movement of capital across countries (FDI, financial capital flows)
4. Spread of technology and intellectual capital across national borders

Question 3

What is the definition of free trade?

Answer 3

free trade is when goods and services can move freely across borders without trade tariffs or protectionist measures

Question 4

Define free movement of labour?

Answer 4

free movement of labour is when there are no restrictions for people to live, study and work in another country

Question 5

Define FDI

Answer 5

FDI refers to firms purchasing physical capital in a foreign country, e.g Toyota builds a UK factory

Question 6

define an MNC

Answer 6

A Multi-National Corporation or MNC is a corporation or enterprise that operates in at least 2 countries

Question 7

What are 5 causes of globalisation?

Answer 7

1. Increases in international trade due to the removal of trade barriers
2. Improvements in transportation - (larger container ships have lead to economies of scale) and big improvements in rail and air
3. Advantages in technology and communications - easier to manage MNC’s, trade around the world and outsource production
4. Worldwide foreign investment - removal of foreign investment restrictions mean that countries with a CA surplus (China) can invest overseas
5. Internationalisation of financial markets - banks and financial markets increasingly operate in various countries, channeling funds from lenders to borrowers cross border

Question 8

What is the definition of development?

Answer 8

Development is the process of increasing people’s standard of living and wellbeing over time

Question 9

What 5 measurements does economic development contain?

Answer 9

1. Life Expectancy
2. Access to Healthcare
3. Access to Technology
4. Education
5. Growth in GDP

Question 10

What 3 criteria does HDI contain?

Answer 10

1. life expectancy
2. years of schooling
3. GNI

Question 11

What is the definition of a developed economy?

Answer 11

A developed economy is one with a high GDP/capita and well developed industrial and service sectors. Also likely to have high levels of life expectancy, education and healthcare

Question 12

Name 4 benefits of globalisation for developed countries producers?

Answer 12

1. Firms have a wider market to sell to
2. Producers gain access to cheaper and wider ranges of resources (competition between suppliers means cheaper)
3. Producers benefit from technological advances resulting from the sharing if scientific information and joint R&D initiatives among nations
4. Producers in more developed countries gain access to cheaper and potentially more skilled labour force through immigration or outsourcing production

Question 13

Name 2 costs of globalisation for developed countries producers?

Answer 13

1. Cheaper labour overseas means some industries may not be able to compete on the global market and may shut down
2. Globalisation means the production of something is more vulnerable to international issues in the world economy

Question 14

Name 3 benefits of globalisation for developed countries workers?

Answer 14

1. Increased employment due to increased domestic production to meet demands of global marketplace
2. Increased employment due to greater FDI
3. Increased geographical mobility

Question 15

Name 4 costs of globalisation for developed countries workers?

Answer 15

1. Structural unemployment as some industries close down and move overseas
2. Firms are more likely to substitute capital for labour in an attempt to be more competitive globally
3. Employment can become dependent on global demand conditions (e.g a recession overseas can affect the domestic economy)
4. Increased immigration may mean more unemployment as foreign workers are willing to work for less or may be more skilled

Question 16

Name 4 benefits of globalisation for developed countries CONSUMERS?

Answer 16

1. access to a wider range of goods from all over the world
2. lower prices and better quality due to increased global competition as there are now more firms
3. Greater travel and tourism opportunities
4. Improved services due to greater immigration of skilled workers

Question 17

Name 2 costs of globalisation for developed countries CONSUMERS?

Answer 17

1. less choice due to global brands as local and specialised business make go out of business
2. volatility of world prices of raw materials, can means fluctuations in costs of living for consumers

Question 18

Name 3 benefits of globalisation for LESS-developed countries PRODUCERS?

Answer 18

1. Firms have access to a wider market
2. Increased FDI which may mean that costs of production lower
3. Producers benefit from join tech and R&D advances

Question 19

Name 3 costs of globalisation for LESS-developed countries PRODUCERS?

Answer 19

1. Vulnerability to global economic shocks - if a recession in another country means that less demand for exports (and they have a less diversified economy)
2. brain drain of skilled labour to more developed countries
3. Growing industries in less developed countries may find it harder to compete on the global market

Question 20

Name 3 benefits of globalisation for LESS-developed countries WORKERS?

Answer 20

1. Increased employment due to increased production to meet global demand
2. Increased employment due to greater FDI
3. Increased geographical mobility

Question 21

Name 4 costs of globalisation for LESS-developed countries WORKERS?

Answer 21

1. firms are more likely to use more capital resulting in structural unemployment as they switch from primary to secondary sectors
2. changing world demand and greater dependence on world markets may lead to more unemployment
3. worse working conditions, especially those working for factories owned by foreign companies
4. Increased inequality if benefits of globalisation are not passed down but instead held by managers and owners

Question 22

Name 4 benefits of globalisation for LESS-developed countries CONSUMERS?

Answer 22

1. Wider range of goods available
2. Access to global brands
   3.Greater travel and tourism opportunities
3. better transport links

Question 23

Name 2 costs of globalisation for LESS-developed countries CONSUMERS?

Answer 23

1. rising prices of certain goods due to changes in global demand, some consumers may find out they cannot afford certain goods
2. declining quality of services if brain drain continues

Question 24

What are 3 globalisation evaluation points PRODUCERS?

Answer 24

1. Less developed economies may find it difficult to take advantage of wider global market as they may not have the resources to increase output and may also lack economies of scale or productivity to compete globally
2. Primary-sector economies may be more vulnerable to economic shocks as they are exposed to unpredictable climates
3. benefits of FDI depend on how much local workers are actually used and may not be beneficial if profit and labour flow back into the giving economy rather than the recipeint

Question 25

What are 2 evaluation point for WORKERS for globalisation?

Answer 25

1. increases in structural unemployment for certain industries will depend on safety nets from the government and provision of training
2. MNC’s may undertake FDI but to take advantage of lower costs of production at the expense of workers mental health

Question 26

What are 3 globalisation evaluation points CONSUMERS?

Answer 26

1. consumers cannot benefit on wider range of goods and services if they do not have the income to afford it, implies those in less developed economies will not be able to take advantage that much
2. being able to take advantage of globalisation will also depend on distribution of income, those at lower ends will not be able to take advantage and will be more vulnerable to economic shocks
3. rural - urban divide may have a similar effect