Globalisation Flashcards
Globalisation
The ever-increasing integration of the world’s local regional & national economies into a single international market
Globalisation characteristics (1)
●growth of international trade
●increase outsourcing
●decrease transport costs
eg - get to places quicker & cheaper
●increase lvl of labour migration across national borders
Characteristics of globalisation (2)
● Free trade of g/s across national boundaries
Eg - easy for London firm to sell to Poland firm as easy it is to sell to a Manchester firm
●free movement of capital between international countries
Eg - UK pension comp invest in China
● Free movement of labour between countries same way movement in the EU
● Free interchange of tech & intellectual capital across national boundaries
Eg - S.Af comp can license tech from USA on the same terms as US comp
Globalisation causes
● Containerisation
● Trade deals
● Transnational activity
● Technological advancements
Containerisation
Real cost of ocean/air shipping has decreased bc of standardised shipping & EofS of freight industry … huge ports built to serve them
Trade deals
M tariff decrease BUT in non-tariff barriers (eg - quotas) & tougher regulations … deglobalisation
Transnational activity
TNC … globalisation bc act to increase bc want to take adv of decrease labour costs … sell & produce gs around world & have power to lobby gov (influence political decisions)
Technological Advancement
● Good Internet connectivity
- Business quickly ex info/ideas/data across borders … real time communication
● Ecommerce
- Firms of any size access international markets w/o need for extensive physical infrastructure
● Payments
- Change way g/s bought & sold … facilitates cross border trade & opening new avenues for global econ participation
MNC Impact
● Capital inflows & inward I
- MNC profit motive … see opportunities for new markets & chance to decrease CofP … move production to low wage economies … capital expenditure & I funds into country
● EofS
- MNC want to decrease CofP & spread production over greater units … decrease unit price
● Employment
- create job opportunities
● Infrastructure
- MNC invest training workforce to improve skills & spend money on local roads & transport infrastructure to aid own training opportunities
Global chain value
Refers to interconnected network of activities involved in production & delivery of g/s that are performed by multiple firms in diff countries
Globalisation Pros
● Consumer
- Increase C choice bc increase increase availability of g/s
Homogeneous gs … Spain holiday = Peru holiday bc package fits western standards
- Prices decrease bc production moved to low cost countries
Eg - TV production from Wales moved China bc Chinese workers work for less
Globalisation cons
● inequality
- globalisation gains unequal … social & political tension when income & wealth increase
● Threats of global commerce
- irreversible damage to ecosystem/deforestation/ biodiversity ect … exploit envir … trade toxic waste
● Macroecon fragility
- interconnected world = externa shocks spread to other centres (systemic risk)
● Trade imbalance
- … protectionist tension/increase M tariff & quota & move twrds managed ex rate … deglobalisation
● Jobs
- structural unemployment form outsourcing manufacturing to low cost
Deglobalisation causes
● Protectionism
- create trade barriers to protect domestic industries from foreign competiton
● Economic shocks
- downturns / recession … focus on domestic priorities & lower reliance on global trade
● Environmental concers
- worried abt climate change & envir sustainability .. policies prioritise local production & decrease long distance trade carbon footprint
● Health risk
- global health crisis eg - pandemic disrupt travel/trade & s chain
