globalisation

Question 1

Characteristics of Globalisation

Answer 1

Increased foreign ownership of companies

Increased trade in goods and services

Increasing global media presence

Deindustrialisation in developed countries and the service sector becomes more prominent.

Question 2

What factors have contributed to globalisation since 1970?

Answer 2

Improvements in transport infrastructure

Improvements in communication technology

Trade liberalisation

Growing influence of global companies

The end of the cold war

The role of international financial markets

Question 3

What are 2 strengths of globalisation for countries and governments?

Answer 3

Rising incomes and therefore lead to rising tax revenue.

Better quality jobs as MNCs invest in new factories and facilities.

Question 4

What are 2 weaknesses of globalisation for countries and governments?

Answer 4

Decline of traditional industries, which leads to structural unemployment and lower wages.

Many countries also experience increased migration out of the country for poorer countries.

Question 5

What is the impact on consumers of globalisation?

Answer 5

Reduces the price of goods as they can be produced more cheaply and competition forces prices to decrease.

Far greater choice and increased availability of goods and services.

Question 6

Impact on producers of globalisation?

Answer 6

Lower costs as firms are able to obtain products and materials from a wide range of countries.

Increased competition means firms need to aim for productive efficiency.

Tax avoidance where firms can choose where their central operation is and therefore where they pay tax.

Question 7

What are the possible impacts on workers of globalisation?

Answer 7

+ Higher economic growth has lead to rising employment and higher wages.

• Traditional industries have suffered and workers in those industries have become unemployed.
• Due to migration into countries wages might decrease due to increased supply of workers.

Question 8

What impact might globalisation have on the environment?

Answer 8

Resource depletion- greater production of goods leads to the use of finite resources.

Climate impacts- Transportation of goods and individuals could lead to higher carbon emissions.

Rising world population is linked to globalisation and this places stressors on natural resources.

Question 9

Absolute advantage

Answer 9

When a country can produce a good at a lower cost per unit than another country.

Question 10

Comparative Advantage

Answer 10

If the opportunity cost of a country producing a good is lower than the opportunity cost for another country.

Question 11

Comparative advantage 5 assumptions

Answer 11

Constant cost of production- no economies or diseconomies of scale

Transport costs are zero

Perfect knowledge exists

FOP are perfectly mobile so can easily switch

No tariffs or trade barriers

Question 12

Comparative advantage 3 limitations

Answer 12

Transport costs exist and these might outweigh any comparative advantage.

Increased specialisation may lead to larger firms which could lead to diseconomies of scale.

Governments may introduce tariffs or other barriers to trade.

Question 13

Advantages of specialisation and trade

Answer 13

Lower price and more choice for consumers

Countries have access to goods and services they would otherwise not be able to access

Innovation as free trade encourages competition which leads to firms being innovative.

Question 14

Disadvantages of specialisation and trade

Answer 14

Risk of dumping by foreign firms

Increased unemployment due to competition and dumping

Increased integration might lead to countries growing more exposed to external shocks.

Growing influence of global monopolies, which might lead to higher prices

Environmental degradation

Developing economies may face particular problems as monopsony power in developed countries may take advantage.

Question 15

Globalisation

Answer 15

the increasing integration of economies internationally through free trade - technology advance meant, low transport cost - WTO(1980s) - political social

Question 16

1. Global economic growth due to specialisation and competition.

Answer 16

Trade based on comparative advantage results in those countries with the lowest ¬oppturnity cost producing goods.

This results in specialisation and therefore greater efficient, lowering average cost and therefore greater output.

As a result of higher global competition, companies are incentivised to invest , improving the state of technology, raising efficiency.

As a result, world economic output rises.

Question 17

argument of against global economic growth due to specialisation and competition

Answer 17

Economics of scale

Cost of transportation outwights the comparative advantage when they are low within the eu they can trade easily – landlocked country – therefore comparative advantage is not useful

Assume there are no trade barriers Germany and France vs uk and France

Question 18

2. Export led growth in developed countries

Answer 18

Developed countries are able to specialise in high level manufacturers and services, assuming that they have a comparative advantage.

The price of these services are high therefore resulting in high export revenue shifting AD right resulting in higher economic growth

Question 19

arugemenst against export led growth

Answer 19

You need money in the first place uk colonialism

Only get good FDI if you have good workers in the first place

Over reliant with Russia and gas

Pandemic were very reliant on others with specialisation

Sunset indrusty – tawian – structural unemployment – education

Question 20

what is a sunset industry

Answer 20

an indrusty that has existed for a long time and that is less successful and making less profit that precisely like the steel indrusty

Question 21

3. Export led growth in developing countries

Answer 21

Developing countries specialise in primary products, low level manufacturers, or possibly higher-level services like tourism.

Exporting these goods to rich countries results in large injections, raising revenue resulting in higher economic growth

Question 22

arguments against export led growth in developing countries

Answer 22

Primary product depends – good weather –

Exploit

Question 23

4. FDI, innovation and technology transfer

Answer 23

Globalisation also results in higher Foreign Direct Investment from transnational companies to developing countries, shifting LRAS and AD right, resulting in higher economic growth

Question 24

arguments against fdi innovation

Answer 24

Transnational organisations

Extractive fdi – repatriated profits, externalities, corruption

Inclusive FDI – banglandish creates a lot of local employment, training, improve infrastructure

Question 25

5. Employment

Answer 25

Higher exports and AD results in economic growth and therefore a higher derived demand for labour. As a result, more jobs are created, lowering cyclical unemployment. – high skilled

Question 26

arguments against employment globalisation

Answer 26

Domestic structural unemployment – depends on the country and your comparative advantage – foe developing countries the main problem in geographical immobility –

in devlopped likely to be occupational

Question 27

6. Global inequality

Answer 27

Developing countries trading with developed countries are able to raise exports and increase growth. As a result, countries such as the BRICS may ‘catch up’ with developed countries, lowering inequality between nations.

Question 28

arguemneyts against global inequality

Answer 28

National inequality – skilled workers income rise – unskilled loss of jobs