Globalisation and Effects of Free Trade: Concepts

Question 1

To what extent has global trade increased?

Answer 1

It is 30 times higher than in 1950

Question 2

To what extent has transport technology improved?

Answer 2

Freight ships can transport 20 times as much and are 90% cheaper than 60 years ago

Question 3

In what ways does communication technology like the internet increase globalisation?

Answer 3

1) Faster to order imports
2) Faster and safer to invest overseas
3) Easier to manage international businesses

Question 4

What is the extent of migration in the global economy?

Answer 4

270 million people live outside their country of birth

Question 5

To what extent has globalisation slowed down in recent years?

Answer 5

While trade is still increasing, it is growing at a slower rate

The value of world trade has fallen from 61% of GWP in 2007 (the year before the GFC) to 51% in 2022

Question 6

Why was there a US-China trade war and what happened?

Answer 6

China has consistently breached and avoided WTO regulations since it joined the WTO in 2001.
In response, the Trump Administration raised US tariffs on China from 3% to almost 20% on average.
China retaliated by doing the same to the US.

Question 7

Why has China imposed protectionist measures against Australia?

Answer 7

The Australian Government upset the Chinese Government by speaking about human rights issues in China and by calling for a UN investigation into the Chinese Government’s handling of the start of the pandemic

Question 8

What measures has the Chinese Government imposed on Australian products?

Answer 8

• A 200% tariff on Australian wine
• A 40% tariff on cotton
• Bans on Australian beef and lamb
• Bans on the use of Australian coal in electricity power stations

Question 9

How has technology rivalry caused globalisation to slow?

Answer 9

Government regulations are slowing the uptake of some technological advancements in software and communication from other countries

Question 10

Why have governments imposed some regulations on the use of foreign software and communication technology?

Answer 10

1) Western countries (e.g. US, Australia, Europe) are concerned about data security risks from using Chinese technology (e.g. a 5G network built by Huawei)
2) The Chinese Government protects local technology firms to improve China’s self-sufficiency and to become a world leader in advanced technology

Question 11

What is an example of structural unemployment in Australia due to trade liberalisation?

Answer 11

• In 2017, the car industry in Australia shut down due to free trade
• 5,000 people were made redundant
• Fewer than half of those retrenched following the closure of the car industry found full-time, permanent work within 5 years

Question 12

What is an example of a risk to national defence in Australia due to trade liberalisation?

Answer 12

The EU, China and US all restricted exports of medical goods such as vaccines and ventilators during the pandemic

Question 13

What is an example of the use of protection to support infant industries?

Answer 13

The Chinese Government supports 10 strategic high-tech sectors including planes and energy generation

Question 14

What are 2 examples of the use of protection to prevent dumping?

Answer 14

1) In 2018, the US set tariffs of 25% on steel due to dumping by Chinese firms
2) China justified its protectionist policies against Australia on the (false) argument that Australia was dumping in China

Question 15

To what extent has globalisation reduced global poverty?

Answer 15

1 billion people have been lifted out of poverty in the past 30 years

Question 16

How has globalisation affected growth in developing economies?

Answer 16

It has had limited impact, as developing countries have been mostly excluded from trade and financial flows

Question 17

How has globalisation affected growth in emerging economies?

Answer 17

They have experienced rapid growth due to increased exports

Question 18

How has globalisation affected growth in advanced economies?

Answer 18

Growth has been slow, due to structural change and the impact of economic crises in one country leading to downturns in other countries (‘contagion’)

Question 19

How has globalisation affected inequality in developing economies?

Answer 19

Inequality has widened in resource-rich developing countries due to a small number of people owning the mines

Question 20

How has globalisation affected inequality in emerging economies?

Answer 20

Income inequality was widened because incomes have grown rapidly in urban areas connected to ports for exports, but have grown slowly in rural areas that don’t specialise in manufacturing exports

Question 21

How has globalisation affected inequality in advanced economies?

Answer 21

Globalisation has put downward pressure on wages for low-skilled jobs (because they could be replaced with cheaper labour in emerging economies instead)