Globalisation

Question 1

What is globalisation

Answer 1

Process in which national economies have become increasingly integrated and inter-dependent

Question 2

Give 5 causes of globalisation

Answer 2

Trade liberalisation (WTO)
Trading blocs (EU.TTIP)
Growth of MNC’s
Tech advancements
Mobility of capital and labour

Question 3

Give 5 positives of Globalisation

Answer 3

• Lower prices (increasing international competition)
• Greater employment
• Benefits from large economies of scale
• Free movement of labour and capital (FDI)
• Tech transfers and innovations

Question 4

Give 5 negatives of globalisation

Answer 4

• Growing inequality
• Increasing structural unemployment
• Environmental costs
• Less cultural diversity
• Greater risk of external shocks ( If 1 industry falls other industries or countries fall )

Question 5

Give an example of growing inequality globally

Answer 5

1% if earners own over 50% of global wealth

Question 6

Give an example of globalisation leading to greater risk of external shocks

Answer 6

2008 banking crash started in USA yet affected the world
6 day Suez canal blockage 2021 led to global supply chain disruptions

Question 7

What is an MNC

Answer 7

A business that has operations in more than one country which tends to produce in low cost countries and sell around the world due to a recognised brand

Question 8

Give 4 reasons why MNC’s grow into other countries

Answer 8

• Operate closer to target international markets
• Gaining access to lower production costs
• Avoiding forms of protectionism
• Search of economies of scale

Question 9

Why do MNC’s tend to operate closer to target international markets

Answer 9

Lower transport costs and increased market information

Question 10

Give two positives of MNC growth

Answer 10

Create jobs and wealth
More R&D, better products

Question 11

Give 4 negatives of MNCs

Answer 11

Tax avoidance
Monopoly power leading to higher prices
Monopsony power - lower wages
Negative impact on environment

Question 12

Explain how monopsony power from MNCs may have little effects on workers in LEDCs

Answer 12

Wages may be lower compared to the pound, but those wages may have the same real value due to a lower cost of living

Question 13

Give 5 barriers to growth and development in LEDC’s

Answer 13

Poor infrastructure
Human capital inadequacies
Primary product dependency
Corruption
Savings Gap (inadequate capital accumilation)

Question 14

Give 4 reasons why poor infrastructure can be a barrier to growth and development in LEDC’s

Answer 14

-Increases supply costs
- Lower geographical mobility of labour (High structural unemp)
- Damage export competitiveness
- Less attractive to FDI

Question 15

Give 4 reasons why human capital inadequacies can be a barrier to growth and development in LEDC’s

Answer 15

• Large gap between expected years of schooling and mean years of schooling
• High inequality in access and quality of schooling
• Low ability to harness new technologies due to low education
• Younger, skilled workers may suffer from brain drain

Question 16

Give an example of low human capital in LEDC’s

Answer 16

Zambia spends only 1.35% of GDP on education

Question 17

What is primary product dependency

Answer 17

Relying on 1 specific commodity export to make up a high proportion of GDP

Question 18

Give 3 ways in which primary product dependency hinders growth and development in LEDC’s

Answer 18

• Makes them vulnerable to volatile global prices
• Resource rich countries may suffer from the Dutch Disease effect
• Resource export revenues tend to be used to boost commodity export further rather than diversifying the economy or improving HDI outcomes

Question 19

explain how a fall in volatile commodity value can lead to inflation for a country with PPD

Answer 19

Lower export revenue means lower GDP growth
Which means increase in C.A deficit and lower FX reserves
Which means a decrease in currency value and therefore inflation

Question 20

Which model emphasises the role of savings

Answer 20

The Harrod Domar model