AOS 3 - Globalisation

Question 1

Definition of Globalisation

Answer 1

Globalisation is when countries from around the world link together and become interdependent on each other. This involves the integration of political, social, cultural, technological and environmental factors on an international scale.

Question 2

Economic reasons why globalisation may be of importance to Australia and the global economy

Answer 2

GLOBAL
The rise of Asia: relatively unskilled and cheap labour has allowed Asia to become a key manufacturing lactation.
The rise of MNCs: have boosted globalisation because they operate in more than one country therefore building links between countries
AUSTRALIA
Inflation: globalisation helps contain inflation because it forces business to have more competitive prices
Choice + Access: consumers can buy products from all around the world thanks to globalisation and ecommerce
Labour Mkt: globalisation has cause deregulation of the labour mkt which increases productivity
Manufacturing: mass decreases due to the rise of Asia
Outsourcing: increased in Australia due to globalisation
Financial Mkts: deregulation to allow more access to credit and low IR
Government: must keep inflation, budget, exchange rate and taxation steady to attract business to operate in Australia

Question 3

Economic factors that might influence the extent and nature of globalisation

Answer 3

• labour costs
• interest rates
• government policy
• taxation
• economies of scale
• inflation
• exchange rate
• supply vs demand
• free trade agreements

Question 4

The different perspectives held by stakeholders regarding globalisation such as the role of consumers, businesses, governments and other relevant stakeholders

Answer 4

MNCs: see seperate card
Environment: promotes consumer culture, depletion of natural resources, climate change, pollution
Inequality: since 1975 real wages have risen by 15% for the bottom tenth and 59% for the top tenth therefore increasing inequality
Food industry: foreign owned agricultural causes leakages from eco
Service industry: tourism, education, healthcare, insurance, legal, construction and engineering are growing as Australian exports

Question 5

The effect associated with any action taken by relevant stakeholders to address globalisation

Answer 5

• globalisation has raised many millions of people out of poverty over the last 20 years
• 10% or 767m of the worlds population still live below the absolute poverty line of $1.90US
• trade off between increasing living standards and preserving the environment

The world trade organisation (WTO): governs international trade between nations + provides policy advice for gov
The world bank (WB): provides loans + grants to the gov of developing countries and aims to 🔻global poverty + 🔺global living standards
The international monetary fund (IMF): acts as a lender to help countries meet their external financial obligations

Question 6

The rise of MNCs cost/benefit analysis

Answer 6

ECONOMIC
Benefits: employment, business & capital equipment investment, new technology, innovation, increased managing and entrepreneurial skills, tax income for gov
Costs: tax paid offshore, strong bargaining power, income goes to a small group, cheap labour, overspecialised, minimise tax
SOCIAL
Benefits: fair trade movement, contribute to country development, ethical management funds/investors, community pressure on MNCs
Costs: influence gov policy making, foreign ownership, human rights abuse/worker exploitation/poor working conditions/child labour
ENVIRONMENTAL
Benefits: fair trade movement, pressure from various stakeholders,
Costs: promoting consumer culture, depletion of natural resources, climate change

Question 7

Main causes of recent economic globalisation

Answer 7

1. International division of labour: labour tasks are divided across various locations to 🔺productivity 🔻cost of production
2. Economies of scale: the higher the volume of output produced the lower the cost per unit
3. Advances in technology: enables increased trade of g+s between countries in key areas such as communication, finance, manufacturing, retail, personal services and entertainment
4. Deregulation of trade + markets for labour + market services: productivity based wage setting improves efficiency. increases competition as power is diverted away from the gov towards businesses and key financial rates are decided by market powers