globalisation Flashcards
what does gloabilsatin refer to ?
Globalisation refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies
causes of globalisation(Unexplained)
economies of scale
technology
the growth of the world trade organisation
Multinational corporations
Geopolitical changes
Deregulation
causes of globalisation (explained)
1)Economies of scale-
Economies of scale generated by containerisation in the shipping industry
2)Technology
The improved ability for firms to easily connect and promote themselves internationally as a result of the internet and improvements to communications technology e.g Skype, WhatsApp, WeChat etc
3)The growth of the WTO
The Increased effectiveness of the World Trade Organisation (WTO) in negotiating new trade agreements and in helping countries to open up to free trade (trade liberalisation), thus increasing international specialisation and the volume of trade
4)Multinational corporations
A rapid growth in the number and influence of transnational corporations
5)Geopolitical changes
The end of the cold war between Russia and the West in 1990 opened up former communist countries around the world enlarging the global supply of labour e.g. more than 800,000 people migrated from East Germany to West Germany between 1990 and 1991
6)Deregulation
In the 1990’s there was deregulation of many financial markets which resulted in the expansion of global financial services & provided more access to capital
what are the 4 main characteristics of globalisation
1-ncreasing foreign ownership of companies
2-increasing movement of labour and tech across bordered
3-free trade in goods/services
4-easy flows of capital (finance ) across borders
what are the consequences of globalisation on less economically developed countries ?
1)Reduction in absolute poverty - Globalisation facilitates the flow of taxes from multinational corporations (MNC’s) to host countries, enabling investment in vital public services such as healthcare, education, and infrastructure. This improves economic development
2)Employment opportunities - Increased involvement in global markets can generate jobs and higher incomes, potentially triggering a multiplier effect that stimulates overall economic growth. However, concerns arise regarding MNCs’ exploitation of low-wage labour and poor working conditions in some instances, such as sweatshops
3)Depletion of natural resources - Some MNC’s may exploit legal loopholes like transfer pricing and engage in corrupt practices, leading to the depletion of natural resources in developing countries. This phenomenon has been likened to a form of ‘new colonialism’
4)Increased power of monopolies - Large firms can dictate prices and production levels across various regions. They may manipulate governments and gain access to raw materials through bribery and corruption
Consequences of globalisation for more-economically developed countries
Increased trade: Trade favours more economically developed countries. They export more manufactured goods at much higher prices and import cheaper raw materials from poorer countries
Increased capital flow: The profits earned by MNCs are often repatriated to their home country
what is Multinational Corporation ?
Multinational Corporation (MNCs) is a company that has business operations in at least one country other than its home country
The Role of Multinational Corporations in Globalisation - cross border trade
MNCs has facilitated increased trade and a greater choice of goods on the global market
They have also increased cultural globalisation, as western values replace local cultures and goods with global brands such as Coca-Cola, Nike, and Apple
The Role of Multinational Corporations in Globalisation - Technology Flow
MNCs often bring a rapid spread of technologies and production methods to the countries where they operate
Containerised shipping and the innovation in communication technology by MNCs has enabled quick and efficient trade and spread of goods across borders
The Role of Multinational Corporations in Globalisation - Labour Mobility
Increased opportunities from large MNCs has influenced the movement of labour
It also impacts the structure of employment in a country. Deindustrialisation has meant that entire productions have been outsourced to less economically developed economies due to cheaper resources and labour. This may cause structural unemployment in more economically developed countries
The Role of Multinational Corporations in Globalisation - Capital Flow
There is a increased flow of international capital through FDI across borders
Better roads, transportation and access to electricity improve international connections, increasing global networks
