Causes Of Globalisation

Question 1

Define globalisation

Answer 1

Globalisation is the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions
Capital/people/info/good/culture

Question 2

Examples of global trade agreements

Answer 2

The World trade Organisation
123 countries agreeing to major reduction in tariffs

Question 3

Define TNC

Answer 3

Transnational corporations
Invest abroad (FDI) building links between places that produce and consume goods/services

Question 4

Factors that increased the process of globalisation

Answer 4

TNC’s
Lower transport costs
Computer/internet technology
International organisations
New markets

Question 5

How has international organisations accelerated globalisation

Answer 5

Trade relies on trust and cooperation of international organisations allowing globalisation to accelerate
E.g World trade organisation allowing countries to agree on trade rules to make it easier/accelerate

Question 6

How do new markets accelerate globalisation

Answer 6

Companies invest in new markets for hope of profit. And more consumers=more potential sales=more profit. The ability for more profit attracts more companies and accelerated globalisation

Question 7

CASE STUDY: Containerisation’s contribution to a shrinking world

Answer 7

-introduction of containers in 1960’s
-containerisation spread because reduced the unit of cost of international transport from 30% to 1%
-increased speed/reduced theft/losses due to breakages
-Container ships increasing in size means they are more efficient

Question 8

Impacts of political and economic decision making

Answer 8

Societies develop laws to regulate trade
Government make agreements to regulate cross border trade to encourage greater flow
Can lead to protectionism (steel industry)

Question 9

International political and economic decision making

Answer 9

Increased after WW2 these international groups helped to rebuild shattered economies and prevent future conflict. As they provide confidence for businesses to trade internationally by reducing tax and tariffs

Question 10

International momentary fund

Answer 10

Purpose to help governments balance their payments in case of eco in difficulties. With loans
Their aim was to ensure the stability of IMS (the system of exchange rates and international payments)

Question 11

World trade organisation

Answer 11

23 countries signed agreement allowing them to begin process of facilitating trade. Agreeing to reduction in tariffs and taxes

Question 12

FDI

Answer 12

Investment within a country originating from another country

Question 13

Government mechanisms to encourage FDI

Answer 13

Low tax rates
Subsidies
Tax holidays
Special economic zones

Question 14

Define privatisation

Answer 14

Transferring ownership from private to public sector
Margaret thatcher railway

Question 15

Define liberalisation

Answer 15

To remove/reduce restriction on economic activity

Question 16

Define trade bloc

Answer 16

Intergovernmental agreement to reduce trade barriers (EU) to attract FDI

Question 17

Advantages/disadvantages of trade blocs

Answer 17

Adv
Bigger markets (larger pop)
National forms can merge into transnational companies (merge)
Protection from foreign competitors/ political stability (limiting cheap imports)

Disadv
Loss of sovereignty
Interdependence
Compromise/concession (loss of local business as large tnc priority)

Question 18

Define special economic zones

Answer 18

Government leave large areas of land (coastal) for trade with good connection to encourage TNC FDI

Question 19

Define global hub

Answer 19

An area of intense connections usually coastal so transport connections around world.

Question 20

Measurements of globalisation

Answer 20

KOF index measure the extent of which countries are culturally and socially connected
KEARNEY index measure global cities index by info exchange, business activity

Question 21

Define offshoring and outsourcing

Answer 21

Offshoring- when a company moves offshore to avoid high tax and maximise profit
Outsourcing - a contract where a company offshore does part of the work

Question 22

Positive/negative impact of tnc

Answer 22

Positive
Raised living standards
Technology transfer
Political stability
Higher environmental standards

Negative
Tax avoidance
Growing global inequalities
Environmental degradation
Unemployment

Question 23

Reasons for global isolation (switched off) physical political economic

Answer 23

Physical
Distance from market
Wilderness
Low agricultural potential
Lack of minerals

Political
Corruption/presence of terrorists
Weak commitment to development
Civil/tribal conflict
Exclusion from trade blocs

Economic
High levels of debt
Weak education/skills
Poor transport/telecommunications
Dependence on particular industries