Globalisation

Question 1

What are the aspects of globalisation

Answer 1

Economic, cultural and political

Question 2

What does Globalisation result in

Answer 2

Increased interdependence of economies around the globe

Changes in economic conditions in one country have a larger impact on other economies in a highly globalised world

Question 3

Define Globalisation

Answer 3

The economic integration of different countries through growing freedom of movement across borders of goods, services, capital and people

Question 4

Factors contributing to Globalisation over the past 50 years

Answer 4

Trade Liberalisation
Transport
Communications Technology 
Economic and Political Transitions
Global Companies
Containerisation

Question 5

How does Trade Liberalisation contribute to Globalisation

Answer 5

Trade becomes easier

Question 6

Define Bilateral

Answer 6

Involving two parties

Question 7

Define Consensus

Answer 7

A general agreement

Question 8

Define Multilateral

Answer 8

Involving several parties

Question 9

Define Orthodoxy

Answer 9

Authorised or generally accepted theory, doctrine or practice

Question 10

What is Trade Liberalisation

Answer 10

Removal or reduction of restrictions on trade

Question 11

Who has been responsible for negotiating reductions in tariffs and other barriers to trade

Answer 11

The WTO (World Trade Organisation)

Question 12

Define Aviation

Answer 12

The flying or operating of aircraft

Question 13

Why has the cost of transport declined over the past 50 years

Answer 13

Technological advancements in aerospace and shipping

Leads to firms being able to sell goods and services on a global basis easier

Question 14

What are Trans-national corporation / Multi-national corporation

Answer 14

A business that is based or registered in one country but has outlets/affiliates or does business in other countries

Question 15

What do TNCs rely on

Answer 15

Communications technology developed within the last 50 years

Question 16

What is operating on a global scale only possible due to

Answer 16

Advancements in communications technology

Quality of communications has improved immensely over the last 50 years

Cost of communications has fallen significantly

Question 17

How does Economic and Political Transitions affect Globalisation

Answer 17

Changes in types of economies

Question 18

The 500 biggest TNCs account for how much % of world trade

Answer 18

Nearly 70%

Question 19

Define Comparative Advantage

Answer 19

When a country produces a good or service for a lower opportunity cost than other countries

Question 20

Define High-End

Answer 20

Of superior quality or sophistication and usually high in price

Question 21

Define Industrialisation

Answer 21

The development of industries in a country or region on a wide scale

Question 22

What does Globalisation allow countries to do and what does this help

Answer 22

Specialise and become more productive in the goods and services which they have a comparative advantage

Helps to raise living standards as profitability and wages rise

Question 23

What can firms do in a globalised world and what does this lead to

Answer 23

Strong national firms can develop into successful global ones

Helps boost employment and raise living standards

Question 24

Positive effects of Globalisation to consumers

Answer 24

Choice increases

Lower prices due to economies of scale

Question 25

Negative effects of globalisation for consumers

Answer 25

Difficult to find out how a product was made Labour may be subject to unsafe work conditions Imports could have been produced in an environmentally unstable way

Question 26

What can lead to deindustrialisation

Answer 26

Loss of a comparative advantage

Question 27

What does a loss of industry cause

Answer 27

An increase in unemployment in the regions affected

Question 28

Problem with skills used in declining industries

Answer 28

Limited transferability to other industries - especially true in developed economies

Question 29

How does globalisation limit a government and explain?

Answer 29

Limits it's ability to raise tax revenue If a country reduces corporation taxes - incentivises TNCs to relocate to that country

Question 30

How does the departure of TNCs limit a government and what does this create

Answer 30

Reduces the amount of tax revenue generated Creates a 'race to the bottom' - countries reduce tax rates to undercut each other

Question 31

Why do commentators argue that countries should maintain common corporation tax levels

Answer 31

To prevent transfer pricing | Without sufficient tax revenues - danger that welfare states become unaffordable

Question 32

What does globalisation allow firms to do

Answer 32

Expand far beyond what is possible in one country Develop global supply chains Shift production to the most advantageous location

Question 33

What are footloose companies

Answer 33

Companies which choose to relocate to the most advantageous location

Question 34

What happens to producers in a globalised world

Answer 34

Exposed to more competition More choice when it comes to suppliers - allows them to obtain cheaper and/or higher quality raw materials and components

Question 35

Define Offshoring

Answer 35

The relocation of a business process from one country to another

Question 36

Define Bargaining Power

Answer 36

In negotiating - Capacity of one party to dominate the other due to its influence, power, size, or status

Question 37

What happens if workers demand improvements in wages or working conditions and what are the consequences

Answer 37

TNCs can threaten to offshore - makes it harder for workers to gain pay rises and improved working conditions Leads to less bargaining power for workers when dealing with TNCs compared to domestic firms

Question 38

What happens to workers within developed economies

Answer 38

In industries with comparative advantage - tend to do well with globalisation and earn higher wages Low skilled workers lose out as the industries they work in tend to be become uncompetitive

Question 39

What has the past few decades shown (globalisation)

Answer 39

Many developed countries lose comparative advantages in low skilled manufacturing industries to emerging economies Decline in demand in industries with falling wages and employment Developed countries have tended to maintain comparative advantages in high-skilled manufacturing and service industries Wages and employment in these industries have tended to be strong as a result

Question 40

What has globalised increased environmentally

Answer 40

Environmental destruction and contributes to global warming through raising greenhouse gas emissions through rising industrial activity Increased transportation of goods associated with international trade has led to a rise in greenhouse gas emissions

Question 41

How much does shipping contribute to the worlds total greenhouse gas emission

Answer 41

2 to 3%

Question 42

Define Containerisation

Answer 42

The real prices and costs of ocean and air shipping have come down due to widespread use of standardised containers Reduces unit costs of transporting products across the world

Question 43

Impact of Globalisation on the UK economy

Answer 43

Expanded choice and higher consumer surplus Effects on retail prices and the rate of inflation Impact of UK firms relocating their production of goods and services to lower-wage economies Impact of net inward migration on real wages and on UK government spending/tax revenues Impact of inward investment into UK on employment and growth Impact on share prices and profits of UK companies.

Question 44

What are external shocks

Answer 44

Events that come from outside a domestic economic system