Globalisation Flashcards
What is globalisation?
The integration of local, regional, and national economies into a single international market.
What are the characteristics of globalisation (4)?
1) Increased foreign ownership of companies.
2) Increased trade in goods and services.
3) Increased global media presence.
4) Deindustrialisation in developed economies, with a fall in their manufacturing sector, but a rise in prominence of the service sector.
What are the 6 factors contributing to globalisation since 1970?
1) Improvements in transport infrastructure.
2) Improvements in communication technology.
3) Trade liberalisation.
4) Growth in influence of global companies.
5) The end of the Cold War.
6) The role of international financial markets.
How have improvements in transport infrastructure contributed to globalisation?
Because of this, the cost of global transportation of goods has fallen, with methods, such as containerisation, costing less than in previous decades. This allows firms to produce in countries with low costs (e.g. China), and then transport the goods to foreign markets.
How have improvements in communication technology contributed to globalisation?
The rapid change and advancement in communication technology has brought down costs. E.g. managers of a global firm can meet through web conferences, instead of face-to-face, reducing costs.
How has trade liberalisation contributed to globalisation?
Far less protectionism exists now, allowing trade to occur with fewer barriers and restrictions, e.g. tariffs.
How has the growth in influence of global companies contributed to globalisation?
As firms are profit maximisers, they have expanded into other countries, to sell goods and services to new markets, and exploit lower costs in less economically developed nations.
How has the end of the Cold War contributed to globalisation?
Following the end of the Cold War in 1991, formerly closed Eastern Bloc countries have been opened up (e.g. Hungary, Romania, Poland), allowing for an increase in global labour supply.
How have international financial markets contributed to globalisation?
As finance is more globally available, domestic firms are able to access foreign finance sources, allowing for business growth.
What are multinational corporations (MNCs)?
Companies with business operations in at least one country other than its home country.
What are 3 benefits to firms of globalisation?
1) Costs are lower, as products/materials can be accessed from a wide range of countries.
2) Increased competition has forced many firms to focus on achieving productive efficiency.
3) Firms can decide which country to base their central operations, and therefore where they pay tax, avoiding high tax rates.
What are 2 benefit to consumers of globalisation?
1) Prices are lower as goods can be produced more cheaply, as well as due to global competition.
2) Consumers have a greater choice, as there is an increased availability of goods and services.
What is 1 benefit to workers of globalisation?
Higher economic growth, caused by globalisation, leads to higher wages and rising employment.
What are 2 drawbacks of globalisation to workers?
1) Global competition leads to a decline in traditional industries in developed nations (e.g. the UK manufacturing sector), increasing unemployment and lowering wages.
2) An increase in migration can force wages down.
What are 3 negative implications of globalisation on the environment?
1) Finite resources are depleted from the greater production of goods.
2) Higher carbon emissions from the increase in global transportation of goods and travel by individuals.
3) Natural resources are stressed by rising population, which is linked to globalisation.
