LS1- Globalisation Flashcards
1
Q
Globalisation
A
The process in which national economies have become increasingly integrated and interdependent.
2
Q
Causes of globalisation - trade liberalisation
A
- Barriers to trade such as tariff barriers have decreased as countries have realised the benefits of free trade in promoting growth by exploiting their comparative advantages
- Also through the work of the WTO whose main role is to reduce trade barriers between nations.
3
Q
Causes of globalisation- growth of trading blocs
A
When trading blocs such as the EU and ASEAN have either deepened their integration or have formed, promoting free trade -> more trade and labour migration, FDI is likely to increase leading to the greater integration of these economies.
4
Q
Causes of globalisation- growth of MNCs
A
- As tech improves, mobility of capital is easier and access to work markets is easier.
- MNCs realise the potential and expand further to tap into international markets, leading to greater interdependence of nations in the form of increased FDI.
5
Q
Pros of globalisation
A
- lower prices + increased efficiency due to increased competition
- trade blocs + WTO -> better international relations
- greater employment as firms grow
- benefits from large EoS (e.g. purchasing and managerial)
- free movement of labour & capital (FDI)
6
Q
Cons of globalisation
A
- growing income inequality- corrupt governments may not re-distribute tax revenues effectively, capital intensive sector production or production from one dominant sector can all widen this gap-> a key macro objective is not met in developed nations
- rise in structural employment- major industries go into decline when trying to compete internationally where other countries have comparative advantage
- trade imbalances- trade dominated by a few exporting nations-> trade deficits-> international debt-> less to invest in public welfare + may lead to protectionism
- environmental costs- with FDI increasing, negative externalities rise (dumping waste and expanding in natural areas)
- greater risk of external shocks e.g. 2008 due to interdependence
- less cultural diversity