Ch. 68 - Globalisation

Question 1

Causes of globalisation?(7)l

Answer 1

• Trade in goods (cost adv. for developing countries)
• Trade in services (cost adv. for developing countries)
• Trade liberalisation (reduction of protectionist measures)
• MNCs - more of them, using diff. countries for diff. benefits and skills
• International financial flows
• Foreign ownership of firms
• Communications - developments in this area makes globalisation easier

Question 2

Define globalisation?

Answer 2

The ever increasing integration of the worlds local, regional and national economies.

Question 3

Positives of globalisation? (4)

Answer 3

• economies of scale
• greater competition and choice
• technology transfer
• increased global wealth

Question 4

Negatives of globalisation?(6)

Answer 4

• greater inequality
• environmental implications
• reduced competition and choice (due to MNCs)
• greater vulnerability to exogenous shocks
• labour exploitation
• too much MNC power

Question 5

Effects on developed countries? (2)

Answer 5

• pre financial crisis, view was developed countries gained most and suffered least
• however they have less manufacturing due to higher wage rates, so they are uncompetitive in production industry

Question 6

Effects on developing countries? (4)

Answer 6

• likely to cause inequality
• profit repatriation - money going back to rich countries
• damages environment (mining)
• benefit: MNCs invest in local infrastructure

Question 7

Effects of globalisation? (10)

Answer 7

• prices falling (manu. in low wage countries)
• prices rising(high demand for oil)
• change in cons. choice (holidays all the same, more choice for other goods like clothes)
• increase in world GDP and income
• increase in employment for d’ing c.
• decrease in employment for d’ed c
• income distribution (rich getting richer)
• damaging env. (BUT countries now working together to reduce pollution)
• specialisation + economic dependency
• affects on cultures and politics

Question 8

Characteristics of globalisation? (4) ‘…between countries’

Answer 8

• Goods and services - free trade
• Labour - free movement
• Capital - free movement
• Technology and intellectual capital - free interchange