Factors contributing to increased globalization (4.1.3) Flashcards
What is Globalisation?
The economic integration of different countries through increasing freedoms in the cross-border movement of people, goods/services, technology and finance
What is a big reason for why Globalisation has increased?
Trade Liberalisation
What is Trade Liberalisation?
The removal or reduction of barriers to trade between different countries
What are the benefits of Trade liberalisation?
-Increased international trade allows businesses to increase their market size and so leads to increased output so countries can benefit from EofS
-Freer trade helps businesses to reduce costs as imported raw materials and components can be sourced cheaply
What are the drawbacks of Trade liberalisation?
-Domestic Firms in particular may not be able to compete against international firms
-Some industries may be subject to dumping (business sells products abroad in export markets at significantly low prices) as businesses abroad may sell excess products at unfairly low price
What are the 7 factors of reasons for increased globalisation?
-Growth of Global labour force
-Reduced trade barriers/trade liberlisation
-Political Change
-Reduced Transport and communication costs
-Increased importance of global companies
-Increased investment flows
-Migration (within and between economies)
What does Political Change mean in regards to reasons for increased globalisation?
Changes in the Government of a country can influence the countries attitude to trade
What does reduced cost of transportation and communication mean in regards to reasons for increased globalisation?
-Economies of scale due to innovation and contanerisation on large ships has reduced business costs
-Technological advancements due to the internet/mobile tech have improve making it easier for buyers and sellers to connect with one another
What is contanerisation?
Put simply, containerisation is the system of freight forwarding in large, standard-sized metal boxes. These boxes, or containers, can seamlessly switch between trucks, trains, and ships without needing to unload and then reload the cargo inside.
What is a transnational company?
A transnational company is a business that operates in more than one country. They will have their HQ in one country but have other branches in other countries
What does increased significance of transnational companies mean in regards to reasons for increased globalisation?
-With an increasing number of transnational companies operating globally there is an increased pressure by countries to engage in free trade (no tariffs, barriers)
What does increased investment flows (FDI) mean in regards to reasons for increased globalisation?
-FDI is important for job and wealth creation within an economy
-It allows businesses to establish themselves in countries where they may face trade barriers
What is migration?
The movement of people from one location to another
What does Migration (within and between economies) mean in regards to reasons for increased globalisation?
-Migration has led to increased globalisation as better transportation and deregulation have allowed workers to have more flexibility when looking for work
What does growth of the global labour force mean in regards to reasons for increased globalisation?
Global labour force has grown significantly especially due to the growth of emerging economies such as India and China. This has increased globalisation due to:
-More people in work=more income to spend=boosting global demand
-Increased supply of labour=falling wages=reduce business costs
-More people working=increased levels of entrepreneurship
