Lesson 3 - Globalisation Flashcards
What is globalisation?
The breakdown of national barriers around the world, allowing the international movement of capital, information, goods and services and the world becoming more integrated
What are the causes of globalisation?
- improved communication
- reduced transport costs (containerisation)
- trade liberalisation (removal of trade barriers)
- skilled workers in developing countries
What is the death of distance?
The problem of geographical distance has been eliminated through containerisation, the internet and satellite communication
How is globalisation impacting the comparative advantage in developing countries?
- mostly in manufacturing industries
- developing countries can take advantage of their productive and low wage workers
- lower unit wage costs
- workers were previously not productive and so wage costs were higher, but this has changed
How has the comparative advantage in manufacturing in developing countries affected developed countries?
- may result in a rise in unemployment
- declining secondary sector
- wages may fall in developed countries, as firms aim to be as competitive as the developing countries
What is the impact of globalisation on the movement of labour?
- more and more migrants from less developed countries moving to wealthier countries in seek of a better life
What are the good consequences of globalisation?
- increased competition leads to lower prices and higher quality
- higher standards of living
- better global governance
What are the bad consequences of globalisation?
- developed nations taking advantage of developing nations
- inequality increasing both between and within countries
- negative externalities (e.g war, travel pollution)
What is the dependency theory?
- the ratio of export and import prices is in favour of HIC’s
- they can import raw materials for much cheaper and in return sell manufactured goods for a much higher prices
- this means that developing countries have to export much more to be able to afford to import capital goods
What is the role of the WTO?
Promote world trade by removing barriers to trade, whilst also regulating trading relationships
How has globalisation affected the UK?
- decline in low skill jobs
- increased demand for high skill level jobs
- focus has shifted to supply side policies to improve education and training
What is a criticism of the dependency theory?
Oversimplifies trading dynamics by solely blaming developed countries, when internal factors in developing countries have also resulted in their underdevelopment
What is a solution to the dependency theory?
Developing countries can focus on producing goods domestically that they were previously importing, in order to reduce the reliance on foreign imports
