Globalisation Flashcards
Positive Impact of globalisation
-Increased Trade : benefit from specialising in comparative advantage
-greater choice : increase SOL
-increase competition : domestic monopolies decrease prices
-lower cost for firms : OUTSOURCE parts of the production process to low labour cost countries
-Migration
—Global economic cycle
Factors contributing to globalisation
-Improvement of transport and infrastructure
-improvement in IT and communication
-Trade liberalisation
-International financial markets
-TNCs
Impact of globalisation on consumer
-increase choice
-lower prices due to Comparitive advantage and increase competition
-some incomes rise so inflation can rise
Impact of globalisation on workers
-job loss in manufacture sector due to china
-increase migration may lower wages or provide important skills that increase AD
-International com has reduced wages for those in developed countries
-TNC train workers and create jobs
-sweatshop worker poor condition
Impact of globalisation on producers
-source and sell produces in different countries.. reduce risk of collapse
-employ low skilled workers and exploit com advantage which increase profits
Impact of globalisation on gov
-higher taxes as TNC pay taxes
-but TNC can bribe gov and avoid taxes
Globalisation impact on Economic growth
-Increased investment by TNC encouraging supply side growth
-TNC bring world class management techniques and technology
-Trade would increase output due to comparative advantage
-HOWEVER TNC leave if there’s no more comparative advantage
Advantage of specialisation and trade
-comparative advantage can increase global output
-benefit from EOS reducing prices
-greater competition encourages greeting innovation
Disadvantage of specialism and trade
-Over dependence
-structural unemployment :
-environmental damage
-loss of sovereignty due to trade blocs
How does COMPARITIVE ADVANTAGE influence patterns of trade
-manufactured goods moved to developed countries
-due to low labour costs
-so the manufacturing sector in the uk has declined (deindustrialisation)
How does EMERGING ECONOMIES influence patterns of trade
-increased imports to increase domestic production
-increase exports
How does TRADE AGREEMENT influence patterns of trade
How does RELATIVE ER influence patterns of trade
-Increased imports from weaker ER countries
Factors affecting a countries terms of trade in ST
-ER, inflation and changes in demand and supply for exports and imports
Factors affecting a countries terms of trade in the long term
-productivity :export prices fall due to better tech and machinery
-changing incomes : rise in income due to prebisch singer would reduce demand for primary goods reducing terms of trade
