Globalisation Flashcards
What is globalisation
Process in which national economies have become increasingly integrated and inter-dependent
Give 5 causes of globalisation
Trade liberalisation (WTO)
Trading blocs (EU.TTIP)
Growth of MNC’s
Tech advancements
Mobility of capital and labour
Give 5 positives of Globalisation
- Lower prices (increasing international competition)
- Greater employment
- Benefits from large economies of scale
- Free movement of labour and capital (FDI)
- Tech transfers and innovations
Give 5 negatives of globalisation
- Growing inequality
- Increasing structural unemployment
- Environmental costs
- Less cultural diversity
- Greater risk of external shocks ( If 1 industry falls other industries or countries fall )
Give an example of growing inequality globally
1% if earners own over 50% of global wealth
Give an example of globalisation leading to greater risk of external shocks
2008 banking crash started in USA yet affected the world
6 day Suez canal blockage 2021 led to global supply chain disruptions
What is an MNC
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
Give 4 reasons why MNC’s grow into other countries
- Operate closer to target international markets
- Gaining access to lower production costs
- Avoiding forms of protectionism
- Search of economies of scale
Why do MNC’s tend to operate closer to target international markets
Lower transport costs and increased market information
Give three positives of MNC growth
Create jobs and wealth
More R&D, better products
Lower prices due to lower costs due to economies of scale
Give 4 negatives of MNCs
Tax avoidance
Monopoly power leading to higher prices
Monopsony power - lower wages
Negative impact on environment
Explain how monopsony power from MNCs may have little effects on workers in LEDCs
Wages may be lower compared to the pound, but those wages may have the same real value due to a lower cost of living
Give 5 barriers to growth and development in LEDC’s
Poor infrastructure
Human capital inadequacies
Primary product dependency
Corruption
Savings Gap (inadequate capital accumilation)
Give 4 reasons why poor infrastructure can be a barrier to growth and development in LEDC’s
-Increases supply costs
- Lower geographical mobility of labour (High structural unemp)
- Damage export competitiveness
- Less attractive to FDI
Give 4 examples of human capital inadequacies which can be a barrier to growth and development in LEDC’s
- 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
Give an example of low human capital in LEDC’s
Zambia spends only 1.35% of GDP on education
What is primary product dependency
Relying on 1 specific commodity export to make up a high proportion of GDP
Give 3 ways in which primary product dependency hinders growth and development in LEDC’s
- 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
explain how a fall in volatile commodity value can lead to inflation for a country with PPD. Give a real world example
A fall in a volatile commodity’s value reduces export earnings for a country reliant on primary products, decreasing demand for its currency and causing depreciation. This makes imports more expensive, leading to cost-push inflation.
Nigeria (2016) faced high inflation after oil prices crashed, weakening the naira and raising import costs.
Which model emphasises the role of savings
The Harrod Domar model
Explain how the dutch disease can affect resource rich nations, give a real world example of this happening
Dutch Disease occurs when a resource boom (e.g., oil discovery) strengthens a country’s currency, making other exports more expensive and less competitive. This can lead to a decline in other unrelated sectors and job losses.
The UK in the 1980s experienced a mild Dutch Disease after discovering North Sea oil, which strengthened the pound and hurt manufacturing exports.
