Globalisation

Question 1

What is globalisation

Answer 1

Globalisation refers to the increase in economic integration between different countries as a result of an increase in the freedom of movement across borders of goods services capital and people

Question 2

What are the characteristics of globalisation

Answer 2

• higher trade to gdp ratios
• increased movement of labour across borders
• more global brands
• global supply chains
• greater choice
• deeper specialisation

Question 3

What is a benefit of globalisation

Answer 3

Allows for countries to specialise in the production of goods and services which they have a comparative advantage in

Question 4

What is and How has trade liberalisation lead to an increase in globalisation

Answer 4

• Trade liberalisation is the reduction or removal of trade barriers between different countries
• trade liberalisation has reduced the amount of tariffs and make trade between different countries much cheaper and easier, leading to increase economic integration

Question 5

What is and how has containerisation lead to increased globalisation (Transport)

Answer 5

The costs of transporting goods has decreased due to technological advancements and the emergence of containerisation when goods are shipped in standard sized containers. This had made transporting goods and services a lot more cheaper and efficient which has lead to an increase in international trade and therefore globalisation

Question 6

How has the emergence of TNCs lead to globalisation

Answer 6

Transnational companies refer to companies who carry out their business operations in a range of countries. TNCs base their manufacturing, assembly, research and retail operations in a number of countries. This leads to greater economic integration between countries

Question 7

What are the impacts of globalisation on individual countries

Answer 7

• allows them to specialise in the production of goods and services they have a comparative advantage in. This leads to greater profitability which can lead to higher wages and therefore increases living standards
• allows strong national firms to develop into sucessful global ones which allows for greater employment which will raise living standards.
  However
• countries can become overreliant on certain sectors of the economy which can leave them vulnerable to changes in comparative advantage. E.g Sunderland shipbuilding and Japan and South Korea taking the advantage leading to unemployment
• increased interdependence so macroeconomic conditions in one country can lead to larger effects on another. E.g China in recession decreases demand for imports of major trade partners affecting their AD

Question 8

What are the impacts of globalisation on consumers

Answer 8

• globalisation allows to countries to specialise in production of goods they have comparative advantage in. This allows the to be more productive and fully exploit economies of scale and therefore reduce costs. These lower costs can therefore be passed onto the consumer
• globalisation poses a greater incentive to be more efficient and charge lower prices due to 8cnrease competition. This increases consumer welfare
• consumers have greater choice due to goods being imported from other countries so they are not restricted to homegrown foods.

Question 9

What are the impacts of globalisation on producers

Answer 9

• allows companies to build global supply chains and shift production over to more advantageous locations such as lower labour cost countries
• they face increase competition - could force uncompetive firms out the market
• greater choice of suppliers which can lead to lower costs and greater quality

Question 10

Impacts of globalisation on workers

Answer 10

• workers of uncompetitve economic sectors and firms may face unemployment due to increased competion
• globalisation increases competition and therefore increases the firms incentives to cut costs, this could lead to workers to be laid off
• comparative advantage changes could lead to structural unemployment
• workers have less bargaining power with mncs
• workers of competitive and global firms and sectors may benefit with increased wages

Question 11

What are some pros of globalisation

Answer 11

• lower prices due to competitive conditions and specialisation
• greater choice for consumers
• increased economic growth due to trade
• decreased unemployment as globalisation gives firms a chance to expand, this requires more workers.
• gives firms the ability to economies of scale
• specialise in production of goods country has comparative advantage in
• freer movement of labour allows less labour shortages

Question 12

What are some cons of globalisation

Answer 12

-Globalisation has lead to an increase in economic growth and higher national income. However the distribution of this increased income and wealth has not been distributed equally. This has lead to growing inequality as mainly the rich have benefited from globalisation
-could lead to structural unemployment, countries lose competitive advantage, jobs lost due to cost cutting due to increased competition and countries moving to more advantageous locations - however increased fdi
- Environmental costs of globalisation → there is a lack of sustainability. more pollution in the world. depletion and degradation of resources. future generations will therefore suffer and not accrue the same benefits.
- - Greater risk of external shocks → if an industry goes into shock in one country it can also have an effect on other countries. vulnerability is present. can lead to deep recessions and crisis
- homogenisation of cultures