globalisation Flashcards
what is containerisation
efficient and low-cost system to transport goods often using common size steel containers
Trade Liberianstion
Reduction/removal of trade barriers
Causes of globalisation
Increased transport
Improvements in IT
Use of containerlisation
Trade liberalisation
benefits of globalisation to producers - 4
- able to import raw materials from cheaper places
- relocate where labour costs r cheaper
- international competition - increases efficiency
- Access EOS - lowering their LRAC
disadvantage of globalisation to producers -3
- small businesses don’t have economies of scale
- have less international power
- eg macdonalds has many restaurants across world allowing for economies of scale
benefits of globalisation to government- 1
- increase in tax revenue
- increase gov spending
- shifts AD
disadvantage of globalisation to government-1
- transfer pricing
What is transfer pricing
TNC’s or companies with “daughter companies” in another country will sell good to country with higher taxes at higher prices to reduce profit
Benefits of globalisation to individual countries
- comparative advantage production
- increases global output
- increases Real GDP
- eg america can now import more medicines
- Increase in quality of life
disadvantage of globalisation to individual countries-1
Over-dependence on good
- if it is a primary good then wont see much increase in quality of life as economic growth increases
What is financial capital
- money to invest
what is FDI
firms invests in firm in another country to gain power over foreign firm
Why isnt the WTO being effective to developing countires
many poor countries struggle to take part effectively in WTO negotiations due to lack of finances,skills
