Globalization Flashcards
The benefits of globalisation
Cheaper goods and services for consumers
More competition in consumer markets
Reduction in absolute poverty rates
Gains from specialisation of factors of production
Rapid transfers of ideas stimulates innovation
Gains from improved labour mobility
Costs of globalisation
Rising inequalities - may not be evenly distributed
Threat to global agriculture or climate change
Brain drain
Less cultural diversity
Growing relative poverty
Macro economic fragility
Structural unemployment
Trade imbalances
What is De-globalisation
Process in which countries or regions become less integrated with the global economy
Involves a reduction in the value of the flow of goods, services, capital, information and people across international borders
What can cause de-globalisation
Protectionism
Economic shocks
Health crises
Economic nationalism
What are external shocks
Significant events that can disrupt economic activity, financial markets and overall economic stability
Examples of external shock
Global financial crisis
Covid
What is supply shock
an unexpected rapid increase or decrease in aggregate supply at any given aggregate price level affecting the equilibrium
What is demand-pull inflation
occurs when demand for goods and services exceeds supply in the economy.
What is crowding out
occurs when the government increases its borrowing to finance its deficit, thereby increasing the demand for credit in the market, hindering private sector investment
What is multiplier effect
the effect on national income and product of an exogenous increase in demand. For example, suppose that investment demand increases by one. Firms then produce to meet this demand. That the national product has increased means that the national income has increased.
