MACRO - 5. globalisation ✅

Question 1

what is globalisation

Answer 1

ever-increasing integration and interdependence of worlds local, regional, national economies into single international market broken into four main areas:

• free trade across borders
• free labour movement
• free capital movement
• free interchange of technology and intellectual capital across borders

Question 2

causes of globalisation (7)

Answer 2

• TRADE IN GOODS (developed countries offloading manufacturing into developing)
• TRADE IN SERVICES (eg tourism, call centres)
• TRADE LIBERALISATION (protectionist barriers fallen encouraging world trade growth)
• MULTINATIONAL COMPANIES (MNC’s grown massively in number, can influence governments choices from promise of investment)
• INTERNATIONAL FINANCIAL FLOWS (becoming greater)
• FOREIGN OWNERSHIP OF FIRMS (increasing by MNC’s and some countries have investment funds to buy stakes)
• COMMUNICATIONS AND IT (developments shrunk time needed)

Question 3

consumer impacts of globalisation

Answer 3

• CONSUMER CHOICE (increased availability and choice of goods/services, homogenised goods?)
• PRICES (fall in prices, cheaper labour but higher prices bc of higher incomes and this = higher demand. where supply = perfectly elastic = upward pressures)
• INCOMES (raised incomes = higher purchasing power)

Question 4

worker impacts of globalisation (4)

Answer 4

• EMPLOYMENT AND UNEMPLOYMENT (job losses in developing, job gains in developed, structural unemployment but developed world unemployed found new jobs)
• MIGRATION (increased from war, but economic migrants search for better standard of living. first gen fill skills gaps but can cause tension with natives and migration likely to increase)
• WAGES (UK workers wage levels matching other countries , high skilled workers = high demand in developing, low skilled workers wages increased as demand increased and inequalities reduced)
• MULTINATIONALS (create jobs and human capital raised by training)

Question 5

producer impacts of globalisation (4)

Answer 5

• SPECIALISATION AND ECONOMIC DEPENDENCY (specialisation and trade dependent on each other, reduces risk)
• COSTS AND MARKETS (source from more countries, price lower w wider supplier network, lower costs so sell to wider countries)
• FOOTLOOSE CAPITALISM (can destroy jobs easily if production moved between countries, MNC’s responding to market forces)
• TAX AVOIDANCE (transfer pricing, set up office and manufacturing in low tax country)

Question 6

government impacts of globalisation

Answer 6

government adopting policies to maximise benefits and limit losses of globalisation

eg lower tax on profits, giving subsidies to encourage MNC’s to set up here but bribery from MNC’S known

Question 7

environmental impacts of globalisation

Answer 7

higher emissions and if higher demand for logging/food production then logging and agricultural land increases
some countries made efforts to reverse environmental degradation