lesson 3 - causes of globalisation Flashcards
How have transport costs changed from 1930 to 2000?
They have decreased massively
Define Protectionism
Policies put in place to protect business by restricting/regulating trade with foreign nations
Define free market economy
Economy based on supply and demand, with little to no government control
Define Neoliberalism
Political philosophy of free trade, free markets, privatisation and increasing the role of business in society
How can global flows be considered threats?
Citizens provided with information that their government finds threatening
Imports can threaten domestic industry
Migration brings cultural change, not welcomed by all
What is the role of the IMF?
Channels loans from richest to poorest nations
What must the recipients of the loan agree to?
Government must introduce free market
Allows TNC’s to enter easily
Which strict conditions do the IMF impose on the nation which receives a loan?
Government must make cuts to public sector
Reduces role of government
Increase in private investment
What is the role + goal of the World Bank?
Role : To finance development through loans
Goal : Reduction of poverty through international trade + FDI
What is the role of the WTO?
Supervise international trade, promoting free trade + ending of protectionism
How does free trade increase globalisation?
Government remove barriers which make trade costly
TNC’s invest due to lowered cost
TNC generates wealth, cultures and ideas
Standards of living increases
Demand for foreign products increases
Economies are more interconnected + interdependent
Name the 4 forms of FDI
Offshoring
Foreign acquisition
Foreign merging
Transfer pricing
What is offshoring?
TNC’s build their new production facilities in ‘offshore’ low wage economies
What is foreign acquisition?
TNC launches takeover of company in another country
What is foreign merging?
Two firms in different nations join forces to create a single entity
