A Global Perspective Flashcards
Globalisation definition
Growing interdependence of countries economies
Factors for globalisation
Improvements in transport, improvements in technology, trade liberalisation (reduce protectionism), growth of TNCs, international financial markets (move money around the world)
Positive impacts of globalisation on consumers
More choice, can lead to lower prices (firms produce in countries with lower cost)
Negative impacts of globalisation on consumers
Cal lead to higher prices (rising incomes so greater demand), can lead to a loss of culture
How does globalisation effect employment in the manufacturing sector?
Jobs are lost in HICS, jobs grow in LICs as businesses move to countries where it’s cheaper to employ low-skilled labour
What is the impact of increased migration on workers?
Can lower wages as larger supply of labour, but skills provided can rise AD which may lead to improved wages
Impact of globalisation on inequality?
Increases, as wages for high skilled workers increase as demand for them rises as the global economy improves
What is the impact of globalisation on workers in LIC/developing countries?
Can increase jobs which may get them out of poverty, but workers can be exploited by TNCs and given low wages
Benefits of globalisation on producers
More countries to sell to reduces risk as AD not as negatively volatile, profits can increase as can exploit workers in LICs + produce in countries with comparative advantage
Negative impacts of globalisation on producers
Will lose out if unable to complete with international markets, may force some firms to close
Positive impacts of globalisation on the government
Greater tax revenue, as TNCs more willing to pay tax
Negative impacts of globalisation on the government
TNCs May create tax avoidance, also TNCs have the power to bribe weak governments which may create corruption
Positive impacts of globalisation on the environment
Countries can share technology+ ideas to tackle climate change and produce more environmentally friendly
Negative impacts of globalisation on the environment
Increased demand for raw materials + increased carbon emission through transport damages the environment
Positive impacts of globalisation on economic growth
Increased investment through TNCs, can be even greater depending on the size of the multiplier, also TNCs provide improved management and technology to improve productivity
What policies should the government implement to encourage TNCs investment?
Supply side, as would increase incentive for long-term investment
Negative impacts of globalisation on economic growth
Creates economic instability, the lack of loyalty of TNCs mean when costs rise they are likely to leave which creates structural unemployment and reduces growth
Comparative advantage theory for globalisation
Countries specialise in industries where they have comparative advantage as allows cheaper products
What does comparative advantage for globalisation rely on
Lots of global trade, so countries can still access goods for relatively cheap so they don’t have to produce them
Assumptions/limitations of the theory of comparative advantage for globalisation
No transport costs, assumes costs are constant ( doesn’t account for EoS), goods assumed to be homogenous, doesn’t assume for tariffs/barriers, dependent on the terms of trade between countries
Advantages of specialisation for global trade
Increase world output and economic growth, countries benefit from EoS, consumers have greater choice through trade, greater competition (this encourages innovation to lower costs)
Disadvantages of specialisation for global trade
Can lead to an overdependence on exports/imports, environmental issues, creates structural unemployment, loss of sovereignty/culture
How does specialisation for global trade increase structural unemployment?
Jobs in a domestic industry are lost to foreign firms who are more efficient - the less mobile the workforce the worse impact this will have
How does comparative advantage influence the pattern of trade?
Countries will trade where there is a comparative advantage - I.e there’s been a growth in exports of manufactured goods from developing countries to developed as lower price due to lower labour costs