Economics (week4) Flashcards
Globalisation
Globalisation is a multifaceted process that involves the integration of national economies through the reduction of barriers to various interconnected elements:
International Trade: Facilitates the movement of goods and services across borders.
Migration: Encompasses both forced (due to conflict or discrimination) and voluntary movements, often for education or economic opportunities.
Information Flow: Enabled by technological advances, including telecommunications and the internet, promoting the exchange of knowledge and ideas.
Capital Movement: The flow of financial assets, driven by factors like peace, international property protection, and the emergence of dominant currencies.
Early Globalisation
Early manifestations of globalisation can be traced back to various historical developments, including:
Long-distance Migration: Tribes migrating to new regions.
Sea Shipping: The use of seafaring vessels for long-distance trade.
Conquest and Settlement: Expansion of empires and colonization of remote territories.
Tribes, shipping, and colonization represent essential historical precursors to the complex globalisation we witness today.
Modern Causes of Globalisation
The contemporary drivers of globalisation encompass several key factors:
Reduction of Tariffs: Lowering trade barriers promotes international commerce.
Elimination of Quotas: Removing limits on imported goods encourages cross-border trade.
International Standards: Agreement on product quality and labeling standards for global markets.
Migration: Involves both voluntary migration for opportunities and forced migration due to conflict or discrimination.
Communications: Advances in technology, including high-speed rail, air travel, satellite communications, and internet connectivity.
Capital Movements: Encouraged by peace, international property protection, and the dominance of certain currencies. Financial markets play a crucial role.
Economic Impacts of Globalisation
Globalisation’s economic effects are wide-ranging, impacting various aspects:
International Markets: Offer increased export opportunities, driving the growth of successful firms. However, they also intensify import competition, hastening the elimination of struggling businesses.
Migration: Typically selective, with younger, wealthier, and less risk-averse individuals. Those who integrate into their new environments can facilitate import-export trade with their home countries.
Technology Transfer: Facilitated through licensing and the activities of multinational enterprises (MNEs), which exploit proprietary knowledge in different countries.
Capital Movements: Allow investments from wealthy nations in poorer countries, providing job opportunities but sometimes depleting natural resources.
Early Forms of Globalisation
Historical examples of early globalisation involve multiple forms:
Prehistoric Trade: Archaeological evidence suggests trade in durable artifacts.
Trade in Ancient Babylon: Astronomical diaries provide pricing data for staple commodities.
Trade Contracts in Classical Greece: Evidence from written records.
Maritime Trade: Evidence from shipwrecks, ancient coins, and trade routes like the Silk Road and Hanseatic League.
Globalisation Today: New Technologies
Modern globalisation is fueled by advanced technologies, including:
Information Technology: Such as quantum computers, satellite communication, and 5G networks.
Biotechnology and Medicine: Covering pharmaceuticals, genetic engineering, and advanced medical equipment.
Transport: Incorporating driverless vehicles, intelligent shipping, and high-speed transportation systems.
Leisure: Offering a broader array of entertainment, televised sports, online gambling, and automated hospitality.
Innovation Hubs and the Productivity Race
Governments pursue increased productivity through various initiatives:
Promoting R&D: Including government-industry-university collaborations and international collaborative research.
Educational Reforms: Expanding educational opportunities and emphasizing business and STEM subjects.
Infrastructure Investments: In high-speed rail, broadband, and other critical systems.
Regional Policy: Shifting from North-South integration to East-West integration in the UK, for example.
Globalisation and Inequality
Globalisation has complex effects on inequality:
Reduced International Inequality: Outsourcing labor-intensive production to developing nations.
Increased Inequality in Firm Size: Some industries are dominated by a few large firms, alongside many small outsourced entities.
Increased Inequality in Personal Incomes: Mature industrialized nations have seen rising income disparities, with skilled manual workers often transitioning to lower-paid jobs.
Globalisation and National Sovereignty
The social and psychological impacts on those ‘left behind’ are critical aspects. Populist politicians have exploited these sentiments, emphasizing national pride. However, their plans for material rewards are often not well-defined or credible.
