Globalisation Flashcards
What is globalisation
Globalisation is the process in which national economies have become increasingly integrated and inter-dependent
Where do some economist believe globalisation stemmed from
back in the times when the Spanish and Portuguese were occupying most of South America
What are the causes of globalisation
Globalisation has been made possible with improvement in information and communication technology and developing transport and other more traditional forms of technology
what are examples of globalisation
Service industries in the uk dealing with customers through call centres in India
What are the main characteristics of globalisation
-The growth of international trade and reduction of trade barriers
-Greater international mobility of both capital and labour
-Increase in power of international capitalism and multinational corporations or transnational companies
-The deindustrialisation of older industrial regions and countries
-The movement of manufacturing industries to newly industrialising countries
-The movement of internationally mobile services industries such as call centres and accounts offices
A decrease in power in governmental power to influence decisions made by MNCs to shift economics activity between countries.
What is the reduction of trade barriers known as and who is it encouraged by
it is known as trade liberalisation and it is encouraged by world trade organisations
What does MNCs
Multinational corporations
What are the consequences of globalisation for less developed countries
-Low paid workers can be abused such as sweatshops
-Farmers in the less developed countries being forced to grow genetically modified crops
-The privatisation of state - owed industry in order to qualify for IMF and world bank loans.
-The dominance of multinational corporations which leads to a decrease in cultural diversity
What is multinational companies
This is a company that has business operations in at least one country other than its home country. By some definitions, it also generates at least 25% of its revenue outside of its home country.
What are the pros of globalisation
-Lower prices
-Benefits of trade
-Greater employment
-Benefits from large economy of scale
-Free movement of labour and capital (FDI)
-Technological transfers and innovations
what does lower prices entail
increase international competitions
-much bigger market relieves the pressure of prices, increases efficiency and lowers cost
-This increases consumer surplus
-More choice of goods and services
-Greater quality of goods
-More enervative products being made
What does benefits of trade entail
-More trade blocs such as the EU or the NAFTA
-The World Trade Organisation (WTO)
what does Greater employment entail
-Market size is bigger
-Firms grow in size because there potential for trade increases, therefore more workers will need to be hired in order to supply that output
-can help people grow there wealth there for that’ll improve peoples quality of wealth
-Improves standard of living
-Provides people with a stable form of income
what are the benefits from large economy of scale
-Increase output and then lower cost
-leads them to benefit from higher profits
-leading to more stimulation in investment and more innervation in technology down the road
What does Free movement of labour and capital (FDI) entail
-Business benefit from the ease of movement
-Investment in technology
-Government policies to encourage more movement of labour and capital
What are the ways governments can increase labour market flexibility
-Training for low-skilled workers
-cheaper housing
-child care support
-Encourage immigration
-Legislation to reduce labour market protection
-support zero-hour contracts
-reduce the power of trade unions
what are the cons of globalisation
-Growing inequality
-Higher structural unemployment
-Environmental costs
-Trade deficit
-Greater risk of external shocks
-Less cultural diversity
What does growing inequalities entail
higher incomes not translating for higher incomes for all
What does higher structural unemployment entail
-Countries struggle to compete with developed countries and there higher income and efficient business
what does Environmental costs entail
lack of sustainability, increased greenhouse gas emissions, ocean acidification, deforestation (and other forms of habitat loss or destruction), climate change, and the introduction of invasive species
What does trade deficit entail
A trade deficit occurs when a nation imports more than it exports.
what does greater risk of external shocks entail
As countries become more inter-dependent if one country goes into a recession another country could get dragged along with it
-This can also happens in industries such as banking
What is an example of greater risk of external shocks
An example of this is the banking crisis in 2008 which started in the US but spread through out the global
what does less cultural diversity entail
same kinds of good and services in different countries therefore countries start to loss there individualism
what is an example of a trade deficit
In 2018 the United States exported $2.500 trillion in goods and services while it imported $3.121 trillion, leaving a trade deficit of $621 billion.
