Globalisation Flashcards
define “globalisation”
process in which national economies have become integrated and interdependent
factors of globalisation
Trade liberalisation - barriers have been broken down allowing countries to trade with others
Formation of trading blocs - encourages free trade
Growth of TNCs - led to greater integration
Technological advancements - WiFi, transport etc has led to greater connectivity
Greater Mobility of Labour and Capital - could be because of trading blocs or government policy
Pros
Greater international trade Lower prices Lower unemployment Benefits from large EoS Free movement of labour and capital Technological innovations
Pros
Greater international trade Lower prices Lower unemployment Benefits from large EoS Free movement of labour and capital Technological innovations
Greater international trade
Higher tax revenue
More econ growth so AD shifts right
Promotes econ development in developing countries
Creation of WTO to regulate trade to ensure less inequality
Lower prices
benefits everyone as there is more international competition, increasing efficiency and lowers costs.
consumers: more market access so more choice, more consumer surplus, more higher quality goods
firms: access to cheaper raw materials or labour at EoS
Less unemployment
as integration occurs, firms grow in size as trade potential has increased, so therefore more jobs are created. therefore higher disposable incomes.
More EoS
Lowers prices as market sizes grow, therefore total profit increases, bringing down costs
Greater mobility of labour and capital
Labourers can move to different countries easier - long term supply side benefit
Businesses can be attracted to commit to FDI, huge benefits to nation in long and short term
Greater mobility of labour and capital
Labourers can move to different countries easier - long term supply side benefit
Businesses can be attracted to commit to FDI, huge benefits to nation in long and short term
Cons
Growing Inequality Higher Structural Unemployment Environmental Costs Trade Imbalances Greater risk of external shocks Less cultural diversity
Growing Inequality
Trickle down effect may not have worked
Higher incomes benefit may not apply to all people
Needs to be a push to alleviate inequality
Higher Structural Unemployment
As competition goes up, nations struggle to compete, so business profits falls, increasing unemployment.
Major issue in developing countries without welfare benefits
Environmental Issues
As manufacturing or econ growth increases, waste is generated either via consumption or production. This creates lack of sustainability and exploitation of resources.
Long term costs to future generation as they have to pay for it.
Trade imbalances
Export led growth could result in trade wars or tariffs being applied and protectionist policies being implemented.
Countries could also then take down other countries who are reliant on them eg GFC.
