Globalisation Flashcards
Globalisation
The process of greater inter-connectedness between countries.
Features of globalisation
- Growth of trade
- Trade liberalisation
- Enhanced mobility of labour
- Enhanced mobility of capital
- Increased cultural exchange
- Increased international capitalism
- Increased outsourcing
- Falling transport costs
- Growth of size and influence of MNCs
Trade agreements (cause of globalisation)
World trade organisation has assisted in the reduction or removal of trade barriers and there has been greater proliferation of trade agreements across the world.
Reduced tariffs and protectionism (cause of globalisation)
A large number of countries with significant global economic influence have lowered protectionist measures.
Expansion of global trading blocs (cause of globalisation)
The growth of trading blocs like the EU and NAFTA have reduced national barriers and promoted more trade integration.
Improved technology (cause of globalisation)
Advances in technology have revolutionised communications, lowered labour costs and enables businesses to access new foreign markets.
More globalised financial systems (cause of globalisation)
There has been a significant relaxation on the rules and regulations surrounding the movement of capital, which can move either freely, or at very low cost, quickly across the globe.
Greater labour mobility (cause of globalisation)
Workers are more willing to move across national borders in search of employment.
Improvements in transportation (cause of globalisation)
This has made the movement of people, goods and services across the globe faster and cheaper.
Growth of multinational corporations (cause of globalisation)
Many large organisations have taken advantage of lower trade barriers, labour mobility and cheap transportation to grow rapidly and enter previously untapped markets.
Greater openness of former closed economies (cause of globalisation)
Large and rapidly developing countries such as India and China which were previously largely closed to trade have become increasingly integrated into the global economy and play a vital role in the creation of new markets and the provision of low cost of labour.
Advantages of globalisation
- Improved allocation of resources (Due to reduction in protectionism and enhanced efficiency)
- Free trade (increased export opportunities)
- Inward investment (movement of capital enables firms to invest outside their country)
- Specialisation (lowers cost and improves efficiency)
Disadvantages of globalisation
- Inequality (LICs may not benefit the way developed countries do. Specialisation may lead to firms getting stuck producing a single primary product)
- Environmental impacts (Scarce resources, pollution and global warming)
- Structural unemployment in developed countries (No need for primary and secondary sector)
- Movement of labour- ‘brain drain’
- Damage to traditional cultures
Consequences of globalisation for developed countries
- Increasing ability to outsource low cost countries
- Economies of scale
- Potential for higher sales- targeting fast growing developing countries.
- Increased competition from low cost producers
- ‘Brain drain’
- Diversify away from manufacturing as other countries have a comparative/ absolute advantage
- Recruit on large scale
Consequences of globalisation for less developed countries
- Increased dominance by global brands
- Treatment of workers- exploration
- Adopt free market policies to attract investment (FDI)
- Opening up markets to the detriment of local businesses
