Global Interdependence Flashcards
Definition of Globalization
Opening of international boarders to the flow of trade, investment, immigration, information and technology.
Key Linkages between economies
Global Exports Fuels Chemicals Automotive Products Tourism
Gains from Exports
Domestic producers gain from higher prices and greater consumption
Gains from Imports
Domestic consumers gain from lower prices and greater consumption
Definition of International Competitiveness
The degree to which a country can produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long term
Key determinants of International Competitiveness
Changes in labor productivity
Inflation relative to trading partners
Wages relative to trading partners
Exchange rate
TWI meaning
Trade Weighted Index:
the value of Australis exchange rate relative to major trading partners
PPP theory
Purchasing Power Parity Theory: the exchange rate will adjust so that an identical good in two nations has the same price when expressed in a single currency
Drivers of Globalization
Trade liberalization Reduction/Removal of trade barriers Advanced in transportation and communication Multinational Corporations (MNC) Foreign direct investment
Arguments for Globalization
Provides greater access to a wider variety of goods and services Lowers Prices Provides more better paying jobs Increases competition and efficiency Reduces global poverty Increases overall living standards Enabled developing countries to access foreign investment Increased Multiculturalism
Arguments against Globalization
Results in higher unemployment among low-skilled workers
Lowers wages
Destroys local cultures
Erodes democracy
Increases poverty
Unfair to developing countries
Increases environmental damage
Volatile capital flows have destabilized developing economies
Enables the rapid spread of disease (pandemic)
