(PAPER 1) 4.1.3 factors contributing to increased globalisation

Question 1

factors contributing to increased globalisation:

Answer 1

• reduction of international trade barriers/ trade liberalisation
• political change
• reduced cost of transport and communication
• increased significance of global ( transnational) companies
• increased investment flows
• migration
• growth of the global labour force
• structural change

Question 2

liberalisation definition and consequences

Answer 2

international trade can be restricted by international trade barriers such as tariffs and quotas. liberalisation (the removal of trade barriers) increases the volume of international trade between nations—-> this has created many opportunities e.g. trade agreements

Question 3

opportunities presented from the reduction of international trade barriers/trade liberalisation

Answer 3

• Imported raw materials will become cheaper, lowing firms’ costs. This makes firms more competitive.
• Increased export opportunities with more markets for a firm to expand into.
• Consumer choice increases.
• Increased competition means that prices are driven down, making products cheaper for consumers.

Question 4

threats presented from the reduction of international trade barriers/trade liberalisation

Answer 4

• Reduces the cost of imports, meaning domestic firms could suffer.
• The removal of national cultures.

Question 5

political change

Answer 5

Restrictions to international trade put in place by one government might be removed if the political system changes to one that supports trade liberalisation.

e.g. there was political and economic reform in India in the 1990s, which included a reduction in import tariffs and an increase in foreign investment.

Question 6

reduced cost of transport and communication

Answer 6

Transport costs discourage international trade because they cut into an exporter’s profit margin. The cost of moving goods around the world has fallen in the last 50 years as a result of:

• Stable or falling oil prices. This is contrary to fears that the supply of oil may run low, driving costs up.
• Technological developments making engines more fuel-efficient.
• Technological developments allowing larger ships, planes and trains to carry more at a lower unit cost. This allows container economies of scale.

Question 7

world trade organisation (WTO) definition

Answer 7

an international organisation that promotes free trade by persuading countries to abolish tariffs and other boundaries

Question 8

transnational companies definition and advantages.

Answer 8

• Transnational companies are businesses that own factories, offices or shops in more than one country. They play a large and growing role in the world economy as they make significant contributions to world GDP.
• They boost the economies of the countries that they locate in by increasing employment. This can lead to more demand for products and encourage other businesses to expand into those countries.

Question 9

increased significance of global (transnational) companies

Answer 9

Domestic firms have and will suffer from the presence of transnational companies. They will face fierce competition from these companies as they can simply transfer resources and products from one country to another.
Furthermore, consumer choice from nation to nation declines because global companies are able to sell their products in so many markets.

Question 10

increased investment flows

Answer 10

As communication flows have improved, cross-border financial transactions have become easier—> as a result, more investment capital has been exchanged between countries—–> causing more business activity in those countries. It also helps to create jobs.

Example: Some international investment flows occur when the likes of Coca-Cola and Jaguar Land Rover build new factories abroad. Cross-border mergers and takeovers also contribute to international investment flows. However, the downside to this is the interconnectedness which has evolved. Financial crises, such as in 2008, can stem from banks preparedness to lend to foreign customers and invest in the
world.

Question 11

migration (within and between countries)

Answer 11

As transport has become cheaper, migration of workers between countries becomes more feasible. Many people who migrate do so for economic reasons. Increased migration can stimulate economic growth, as migrants tend to be proactive and are determined to work hard. Migration contributes to globalisation in many ways:
➢ Culture importation- for example, there are many specialist shops in the UK that cater for Polish immigrants. Much of the produce sold in these stores is imported from Poland.
➢ Low-cost labour- as a result, businesses can lower their costs and gain a competitive edge in overseas markets.
➢ Income- a significant proportion of money earned by migrants is sent back to their place of birth. This is usually spent by families in their home countries, benefitting multinationals.
➢ Well-educated and highly skilled- migrants can help to fill ‘skills gaps’ in professions such as doctors, teachers and Premier League footballers.

Question 12

migration definition

Answer 12

the temporary or permanent movement of people around the globe

Question 13

are migrants responsible for globalisation?

Answer 13

citizens and their families across the world are partly responsible for globalisation
e.g. as transport has become cheaper the migration of workers between countries becomes more feasible.
also the global labour force has grown significantly because the world population is increasing with people living and working longer

Question 14

how can migration stimulate economic growth?

Answer 14

Larger work force & Migrants work harder and contribute to the growth in economies

Question 15

why do businesses benefit from lower costs as a consequence of migration?

Answer 15

Migrants would be happy to work at minimum wage

Question 16

how else can migrants benefit large multinational businesses?

Answer 16

Learning the language, send back their earnings to their home countries as well as spending it themselves in these countries- £ for the country.

Question 17

growth of the global labour force

Answer 17

The world population is increasing, with people living and working longer, and with more women in work. This means that the global labour force is rising.
The global labour force has grown significantly thanks, in part, to the growth of workers in China and India—> helped to drive global demand, since people in employment earn money to spend on goods and services—>a s a consequence, millions of people have been lifted out of poverty.

Question 18

structural change

Answer 18

As economies develop, their industrial structure changes, moving from agriculture towards manufacturing and then services. The growth of the service sector has meant that Western economies rely less and less on income from the primary and secondary sectors. Furthermore, many tertiary sector businesses can locate anywhere, provided there is a market. Due to the competitiveness of the service sector, firms often find that they need to trade internationally to obtain the market share required to maximise economies of scale.

Question 19

evaluation

Answer 19

Although globalisation cannot be attributed to one factor, the ability to move freely around the world has had a big impact on the interconnectedness of nations.

In much the same way, businesses have invaded foreign countries with their products- made possible by the reduction of barriers and opportunities to trade in other countries.

Question 20

quota definition

Answer 20

physical limits on the quantity of a type of good that can be imported in a year