Political and economic factors of globalisation

Question 1

What have international organisations promoted?

Answer 1

Free market liberalism, privatisation and encouraged foreign direct investment (FDI)

Question 2

What is free market liberalism?

Answer 2

Little / no restrictions on imports and exports between countries pushed by the UK / USA in the 1980’s

Question 3

What is foreign direct investment?

Answer 3

A financial injection by a TNC into a country

Question 4

What is privatisation?

Answer 4

Encouraging private companies to run public services

Question 5

When was the WTO founded?

Answer 5

Founded in 1995 replacing the 1948 General Agreement on Tariffs and Trade

Question 6

What is a Bretton Woods institution?

Answer 6

Established after WW2 they sought to avoid returning to the great depression of the 1930’s

Question 7

What does the WTO seek to achieve?

Answer 7

They persuade developing countries to embrace globalisation and free trade

Question 8

What percentage of the worlds trade is represented by the WTO?

Answer 8

97%

Question 9

What are the positives of the WTO?

Answer 9

• 160 countries working together with common aims

- Encourages imports and exports and enables the free movement of goods between countries

Question 10

What are the negatives of the WTO?

Answer 10

• Not all countries have equal power
• Developed countries such as the USA, Canada and the EU often act together to block or pass deals that are best for their economy

Question 11

How do national governments encourage globalisation?

Answer 11

An example is the encouraging of privatisation in order to lead to the multiplier effect

Question 12

What is the multiplier effect?

Answer 12

Investment by private sector = Direct job creation = Increased local spending by workers = Indirect job creation = Increased local demand for goods and services

Question 13

E.g. China

Answer 13

Since 1978 China has actively encouraged globalisation and achieved rapid economic growth (annual GDP growth of 10%)

Question 14

Why has China achieved such rapid growth?

Answer 14

Largely due to globalisation and the shift of global manufacturing as a result of the 1978 open door policy

Question 15

What was China’s open door policy?

Answer 15

Changes were made such as land reforms making farmer’s able to own their own land, migration reforms allowing people to migrate from rural areas to the cities’ and economic reforms e.g. the Special economic zones (SEZ) to encourage FDI in manufacturing

Question 16

Advantages of China becoming the world’s workshop?

Answer 16

Increase in human development, steady employment and investment in infrastructure and service’s by the gov

Question 17

Disadvantages of China becoming the world’s workshop?

Answer 17

Exploitation and poor working conditions, loss of culture due to the influence of TNC’s and large environmental impacts from pollution (e.g. Coal)

Question 18

What is a trade bloc?

Answer 18

A voluntary group of countries that have developed trade agreements to bring economic strength and security for members

Question 19

What is the benefit of a trade bloc?

Answer 19

Free trade is encouraged by removing tariffs