Characteristics Of Gloabalisation

Question 1

Characteristics of globalisation

Answer 1

Growth of MNCs

Deindustrialization of MEDcs rise of NICs

Trade liberalisation (average tariff fallen from 25 % to 15 % over past 30 years )

Increased international trade (total import/export increased spending)

Offshoring /global outsourcing

Falling transport costs

Question 2

Positive consequences for MEDcs

Answer 2

Larger markets for finished products (Eos)

Increased trade brings improved living standards

Improved terms of trade

Question 3

Negative consequences in MEDcs

Answer 3

Structural unemployment in developed countries

Firms ability to outsource makes workers in some industries more vulnerable , reducing worker or trade union power

Protectionism prevents primary producers in LEDcs from exporting goods to MEDcs consumers do not fully receive gains from trade

(Tarries 25 % on imports from Canada thus cost push inflation )

Question 4

Positive consequences of LEDcs

Answer 4

increased employment- manufacturing often pays better than primary sectors

Increased training and productivity

Increased investment

Increased tax revenue from the government

Increased incomes and standards of living due to more opportunities of employment

Possible multiplier effects (AD analysis)

Question 5

Negative consequences of LEDcs

Answer 5

Jobs low skilled and low paid ( foreigners filling more senior positions)

So overestimating benefits of free trade

‘Sweatshops’

Profits remitted to home countries reducing size of multiplier

Loss of cultural identity

Lack of domestic investment increased spending in MNcs

Deterioration of terms of trade

Question 6

How have firms such as BMW benefitted from globalisation ?

Answer 6

Easier to transport across places like Asia to America , thus increasing revenues in these areas

Question 7

How do MNCs benefit consumers/households ?

Answer 7

Create employment and produce prices are lower