LS1- Globalisation Flashcards

1
Q

Globalisation

A

The process in which national economies have become increasingly integrated and interdependent.

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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.
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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.

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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.
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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)
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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
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