Globalisation Flashcards
What is Globalisation?
This is situation in which there is an increase in the ease of transferring goods, services, technology, investments etc. between countries.
Its indicators include FDI, Export to GDP ratio.
Causes of Globalisation.
Improvement in transport networks like planes, ships, trains etc.
Removal of trade restrictions.
Consequences of Globalisation.
It has led to increase in global output of which benefits countries in increase AD.
Consumers have a variety of products to choose from.
However:
Leads to dependency
Domestic firms have more competition.
Define Trade Bloc.
This is a group of countries (usually in the same region) that have entered agreement in order to improve trade and economic operations between them.
Mention the four types of Trade Blocs.
Free trade areas: In this agreement, members have agreed to remove all trade restrictions with other members only.
Customs union: This is a agreement that contains free trade among its members but all members keep a common import tariff to non-members.
Monetary union: This is similar to free trade areas but there is easier flow of capital and labor, members in this agreement also adopt the same currency and monetary policies.
Full economic union: This is similar to monetary union but it involvess members also adopting similar fiscal policies, essentially making them one economy.
