Globalisation Flashcards
define globalisation
process in which national economies have become increasingly integrated and interconnected
causes of globalisation
- trade liberalisation= higher influence of organisations like World Trade Organisation
= advocated free trade= contribute to low trade barriers to increase free trade - higher trade blocs= groups of countries in specific regions that manage and promote trade activities
= lead to trade liberalisation - growth of multinational coorperations= own and control goods in multiple countries
= use marketing to become global= increase growth
= get adv of EoS e.g. risk bearing - tech adv= easier transport to move goods around world
= easier for businesses to set up abroad e.g. internet increases communication between countries
= increase interconnectedness - increase mobility of labour and capital= coorperations become more integrated= increase trade blocks and increase gov policies which encourage migration
= spread more capital around the world
pros of globalisation
-lower prices= markets become integrated= increase competitive pricing= lower prices for consumers= increase welfare and market access to wider choices of goods
- lower prices for businesses= lower AC for production by switching production to places with low labour costs
- spread of tech advancement= easier and cheaper for firms to move across the world= attract foreign investment for efficient machines and production methods= increase LRAS
- promote growth in developing countries= easier movement of labour due to VISA etc=increase employment= share resources freely= increase size of firms= increase potential for trade= need labour to supply this output
cons of globalisation
- trade imbalances between countries e.g. US runs big CA deficit vs China who has huge CA surplus= imbalance of country’s access to healthcare and eduction markets etc
- MNCs may exploit LEDC labour @ unfair wages and long hours
- growing inequality= higher incomes aren’t for all
- large global brands spread across the world= decrease culture diversity
- environmental costs due to higher growth= causes pollution due to factory emissions= less resources to produce output= future gens will suffer= less sustainable in LR= lose jobs and incomes
- greater risk of external shocks= high integration= high dependence on other countries= risk of shocks to industry e.g. 2007 financial crisis stemmed from American bank but damaged world economy= deep recessions
define trade blocs
group of countries that agree to reduce or eliminate trade barriers between them to promote economic cooperation and trade
e.g. EU has 27 members have common market, currency, and trade policy
= increase trade
define trade liberalisation
the process of reducing or removing barriers to international trade, such as tariffs, quotas, and regulations
define MNC
a business that has operations in more than one country
how have MNCs impacted globalisation
They have used marketing to become global,
= by growing, they have been able to take adv of Eos e.g. risk-bearing
= spread of technological knowledge and economies of scale has resulted in lower costs of production
adv of debt relief to LICs
- higher credit ratings= more borrowing access
- higher investment
- less interest to pay back= money to spend on public services
disadv debt relief to LICs
- doesn’t address underlying structural problems that contribute to debt accumulation,
= e.g. poor governance and corruption
= country may fall back into debt= undermining the sustainability of debt relief efforts - debt relief is often contingent on the decisions of external actors e.g. International Monetary Fund (IMF) or World Bank
= means LICs may have limited control over process
= terms of relief may be tied to stringent economic policies, including austerity measures or structural reforms that may be harmful to growth and social stability
define de-globalisation
contracting interdependence, integration and interconnectedness between businesses and countries
causes of de-globalisation
- rise in protectionism= more tariff barriers
- rise in trade tensions like US and China
- economic nationalism like disputes over vaccine exports, tech rivalries etc
- greater use of migration regulations and laws
= less free movement of labour across borders
adv de-globalisation
- give developing countries more control over their resources, reducing the influence of multinational corporations that might exploit local labour, environmental resources, or political systems for profit
- reducing the reliance on foreign companies, developing countries could strengthen labour rights and working conditions in industries that might otherwise be vulnerable to exploitation in the context of global supply chains
- reduce the cultural dominance of globalised markets, allowing developing countries to preserve and promote their own cultural identity
- can offer protection to infant industries
= allowing them time to grow and become competitive without being overwhelmed by cheaper foreign products - encourage developing countries to focus on domestic production, reducing their reliance on imported goods and services
- adopt more sustainable and eco-friendly practices
= reduce environmental costs associated with global trade like carbon emissions from transportation and over-exploitation of resources - MNCs can’t exploit cheap labour and unfair hours or treatment of workers etc
disadv de-globalisation
- barriers to trade like tariffs can limit access to export markets
= reduce export revenues, hinder economic growth, and increase poverty - make imports more expensive and harder to obtain, slowing down industrial development
- deflation risk due high unemployment and low AD
- lead to a reduction in FDI as businesses may look for safer or more politically stable environments, leaving developing economies with fewer resources for growth and development
= countries may miss out on important innovations like capital or tech advancements that could drive their economic development - developing countries also rely on remittances from workers abroad. If global movement becomes more restricted due to de-globalisation (e.g., less migration)
= could reduce remittances and impact household incomes - reduced access to cheaper imported goods
=rising prices for essential items like food and fuel
= can worsen SOL for low-income households - de- globalisation leads to protectionism in wealthier countries
= developing countries lose comparative advantage
= limiting their ability to generate income - technological exchanges may be reduced, leaving developing countries lagging in terms of innovation and productivity
