Recap 1 (Globalisation)

Question 1

Definition of globalisation

Answer 1

Increased integration between countries ; politically, socially and economically

Question 2

Characteristics of globalisation

Answer 2

1. As a % of GDP, world tarde has increased
2. Increased levels of FDI, from growth of MNCs
3. Increased movement of labour
4. Homogenisation of tastes and fashions

Question 3

Factors contributing to globalisation

Answer 3

• Growth of Trade Blocs -> countries are more open to trade freely, open economies. However may just be evidence of regionalisation (Eurocentric)
• Falling cost of communication -> Growth of the internet making it easier to outsource/offshore without experiencing diseconomies of scale
• Fall in transport costs -> Containerisation, fit more on to boats, reduces cost of production
• Market Liberalisatiom -> For instance the opening up of China, export led growth, now one of thr worlds biggest economies
• Increase in MNC’s -> Operates or owns assets in more than 1 country. Trade across borders
• WTO -> To promote and police the reduction in protectionist policies

Question 4

1 benifit of globalisation on consumers

1 disadvanatge of globalisation on consumers

Answer 4

• Increased levels of specialisation with countries exploiting their comparative advantage. Increase in world output. Decrease in prices. Increase in consumer standard of living
• Some countries will not have a comparative advantage, thus higher levels of unemployment (structural), Increased levels of inequality

Question 5

2 benifits of globalisation on the government

2 disadvantages of globalisation on the government

Answer 5

• Higher tax revenues -> Corp tax from FDI/ more jobs, income tax / Spending, VAT
• Balance budget from increased revenue
• Companies may transfer price, governemnt recieve no revenue
• Structural unemployment from outsourcing

Question 6

2 benifits of globalisation on Consumers

2 disadvanatges of globalisation on consumers

Answer 6

• More choice -> more countries to choose from
• Lower prices from increased supply
• Process of creative destruction agsainst monopolies
• Emergence of a global monopoly, price setting power, increase price, exploit consumer surplus, choice decreases.

Question 7

Benifit of globalisation on producers

Drawback of globalisation on producers

Answer 7

1. Have access to larger market -> economies of scale -> Decrease cost -> increase profit margins
2. Spreads risk across markets
3. Domestic producers will get a skills transfer
4. Ability to outsource to reduce unit costs
5. Increased level of competiton
6. Domestic producers cant compete with bigger MNCs with lower average costs, may cause them to go out of business
7. Globalisation increases commodity use, Increase price for firms

Question 8

benifit of globalisation on workers

Drawback of globalisation on workers

Answer 8

1. Jobs are created in LEDC countries -> from outsourcing
2. High skill jobs are in MEDCs
3. Jobs made in LEDC will only be low skill and low pay from the low regualtion
4. MEDC suffer with structural unemployment

Question 9

benifit of globalisation on the environment

drawbacks of globalisation on the environemnt

Answer 9

1. Firms will be earning more profit -> ability to invest in greener technology
2. Consumers expecting firms to be more ethical
3. Increased pollution from increased pollution
4. lower regulation from the race to the bottom
5. Loss of habitat form industrialisation