LS1 : globalisation Flashcards
what is globalisation?
the process of interaction and integration among people, companies, and governments worldwide. there are several aspects including economic, cultural and political.
why does globalisation create a single economy?
increases the interdependence of economies around the globe. changes in economic conditions in one country can have a larger impact on other economies.
what are five ways in which globalisation can be achieved?
increasing :
- international trade
- foreign direct investment
- increased capital flows
- spread of technology
- migration of people
what are the five factors contributing to globalisation?
- trade liberalisation / reduction in trade barriers
- lower transport costs / improvements in transport
- rise of communication & technology
- economic and political transition (deregulation)
- global (transnational) company
what is trade liberalisation?
the removal or reduction of the restrictions on the free exchange of goods and services between nations. eg. EU single market
state the three types of trade liberalisation.
bilateral : involving two parties / countries (Chile-United States Free Agreement)
consensus : a general agreement
multilateral : involving several parties / countries (Caribbean Free Trade Initiative)
how do low transport costs contribute to globalisation?
the fall in transportation costs enables goods to be imported and exported more easily.
how does the rise in communication technology contribute to globalisation?
multinational companies rely on communication technology in their global expansion. the ability to make video calls affordably has increased connectivity.
how does economic and political transition contribute to globalisation?
reforms such as opening of the country to foreign investment and permission for entrepreneurs to start businesses. eg. opening of china in the west in 1978, when xiaoping began a period of economic reform
how do global transnational companies contribute to globalisation?
trade liberalisation and modern day communication facilitates the development of global companies like mcdonalds and apple. these not only sell globally but use global supply chains.
what is the impact of globalisation on households?
- increased customer choice
- fall in price of goods and services as production is outsourced to low-cost locations
- increased mobility of firms and skilled workers pressure gvts to lower tax rates. tax competition leads to lower tax revenue, leading to less spending on social welfare which can reduce incomes and increases income inequality. may also affect quality of education which affects potential GDP
what is the impact of globalisation on workers?
- large scale job losses in developed economies as employment whilst large increases in employment in the developing world
- long-term structural unemployment
- reduction in global inequalities as wages rise in developing countries
what is the impact of globalisation on producers?
- specialisation, higher productivity, lower costs, greater economies of scale
- wide sourcing of inputs - wider supply network, greater diversification, reduced risks
- economic dependency and high risk if trade links breakdown
- greater access to markets
- ability to move production from country to country to maximise profit
- competition from intl firms incentivises domestic firms to improve quality to remain competitive
what is the impact of globalisation on gvts?
- deindustrialisation due to loss of comparative advantage
- limit ability to raise tax revenue
- welfare states may become unaffordable due to undercutting tax rates
- changes power dynamics in global politics
what is the impact of globalisation on the environment?
- increased environmental destruction and contributes to global warming
- increased demand for raw materials causes destruction
- deforestation
- increased transportation so more emissions
- development of green technologies possibly
