globalisation Flashcards
what is the definition of globalisation?
growing interdependence of countries
increasing integration of the worlds local, regional and national economies into a single international market
what are the causes of globalisation?
- 1- trade liberalisation
- more free trade
- deeper trading blocs
- more free trade areas - 2- growth of MNCs/TNCs-firms that can operate globally -> easier for firms to do so due to tech
- 3- growth of tech, making it easier to transport, easier communication - falling costs of international transport
- 4- greater mobility of labour and capital through govt policy
5- increasing global incomes and growing demand for goods and services
what are the pros of globalisation?
- lower prices- bigger market so more international competition, puts down pressure on prices, increases efficiency
- greater quality of goods and services
- inc access to raw materials
- trading blocs, WTO- benefits of trade
- greater employment- inc market size, firms grow so they need to hire more workers to meet that higher output
- bigger economies of scale- higher profits
- ease of movement- govt policy encourage more movement on labour and capital
what are the cons of globalisation?
- inequality in wealth as higher incomes not translated for all
- higher structural employment- businesses lose out due to international competition, people lose their jobs
- environment- inc pollution, depleting resources so future generations will suffer due to lack of sustainability
- trade imbalances- export led growth may lead to trade wars due to trade slowing down which could lead to protectionist policies
- external shocks- if one country experiences a financial crisis it could spread to other countries
- less cultural diversity- same goods and services on offer to buy
how do falling costs of transportation cause globalisation
costs of shipping have decreased due to bulk shipping and containerisation
reduced cost of shipping helps to bring price in the country of manufacture closer to prices in export market - increase international competitiveness
markets becoming more contestable
air and sea freight cheaper
what are some examples of trading blocs
COMESA
ASEAN
TPP
EU
NAFTA
how does increasing global incomes increase globalisation
consumers can afford goods and services from around the world
this fuels international trade
what are the characteristics of globalisation
trade liberalisation
growing international mobility of capital
growing power of MNCs
coca-colonisation
falling transport costs
outsourcing of industries and jobs
decreased power of national governments
increasing international mobility of labour
death of distance
greater specialisation
economies of scale - firms are producing on a larger scale as theyre producing demand from abroad
what is the role of MNCs in globalisation
taken advantage of greater economic and political freedoms
utilised new sources of productive resources
they move originate in developed countries and provided most of the FDI into developing countries, where they locate production processes or generate raw materials
what do the effects of MNCs upon a developing countries economy depend on
willingness to accommodate the needs of the local economy e.g if they want to hire local workers or take workers from the country they came from
ability of host governments to regulate activities effectively
MNCs may expect incentives e.g abolition of trade restrictions, special tax rats etc
MNCs are extremely mobile - subsequent increase in unemployment, however jobs created by MNCs are more likely to survive than domestic firms
what are the impacts of MNCs
encourages a greater volume and diversity of international trade
established cheaper production facilities
helped national governments exploit their resources
spread knowledge of modern management and production methods
helped domestic firms become more efficient
provided training that enhances skills of workforce
MNCs have lobbied international organisations such as the WTO to reduce trade barriers which has fuelled globalisation by highlighting benefits such as economic growth and increased employment rates in LEDCs
established global supply chains, creating opportunities in in wide range of economies
encouraged migration of workers within and between countries
what are the impacts of globalisation on developed countries
all of the manufacturing has gone abroad so cleaner environment for them
deindustrialisation and therefore declining structural employment in manufacturing
increased specialisation in service and knowledge based industries
increased competition for most industries
migration -> outward migration could lead to brain train which is when professionals/ skilled workers leave the country e.g doctors lawyers
what are the impacts of globalisation on developing countries
reduced regulation of capital flows increases opportunities to attract FDI
opportunities for technology transfer with arrival of MNCs
they exploit workers in developing in countries however wages paid by MNCs tend to be higher than domestic employment
improved infrastructure - govt spends more to attract FDI or MNC may invest in infrastructure
economic growth
increased standard of living
environmental impact
however not everyone will benefit if the MNC only sets up in one region of the country
could lead to more income/wealth inequality
MNCs may take profit back to their own country
what is the impact of globalisation on consumers
inc choice
lower prices due to lower production costs when MNCs set up in developing countries, resources cheaper, higher economies of scale, inc competition
inc quality
opportunities to live, travel and study overseas
helped to bring people closer together due to falling costs and rising speed of global communication
what is the impact on globalisation on producers
more competition
economies of scale
no need to respond to changing comparative advantage
increasing importance of innovation
competitive downwards pressure on wages in MEDCs- beneficial for producer but disadvantage for the employee
