The impact of globalisation

Question 1

Globalisation

definition

Answer 1

the growing integration and interdependance of the world’s economies

Question 2

employment levels in developing countries

implications

Answer 2

-multinational companies are known to use cheap foreign Labour to produce goods, the lack of regulations in developing countries has caused pollution and suffering to these developing countries.

Question 3

Employment levels in developed countries

implications

Answer 3

-the outsourcing of labour also leaves a lack of jobs in industrialised countries where labour is more expensive, when aus outsources manufacturing labourers lose their job this leads to people being laid of and unemployment rises. this leads to less tax revenue for the gov so spending on hospitals, roads and public goods must fall.

Question 4

Global spread of skills and technology

(how)

(why)

Answer 4

(how)
-the effect of technological changes on the global economic structure have changed the way nations and companies carry out business. e.g trading goods, investing capital, developing new products and processes and organising production.
-it does this through instant communication, new materials, supply chain improvements.

(why)
-improved skills as developing nations utilize new tech, leading to higher standards of living
-global movement of workers, gov encouraged migration of skilled workers
-for developing countries being able to skip the long process of developing industrial countries brings rapid growth.

Question 5

Tax minimisation

Answer 5

(legally) made arrangements to reduce the tax you pay by minimising tax burdens, companies can access more funds for global growth.

Question 6

Tax minimisation

(Tax haven)

how

why

key features x2

Answer 6

(How)
a country that offers non-residents and business low tax rates with little to no financial information shared with foreign tax authorities.

(why)
-encourages foreign deposits, many have severe laws to protect business or people, depositing money in a tax haven is legal as long as the depositor pays the tax’s required by the home country (tax haven).

key features
1.) lack of transparency
2.) lack of information exchange

Question 7

Tax minimisation

(Transfer pricing)

definition

how

why

Answer 7

when a cooperation sets up companies in tax havens to manipulate where revenue is earned and costs are incurred to avoid paying tax

(How)
-multinational companies charge a price fir it’s good or service to another part of the same company. this allows them to allocate earnings to different parts of the company.

(Why)
-to legally reduce their tax obligations.

Question 8

International cooperation

Question 9

Domestic market

definition

Effect

Benefit to trading domestically

Answer 9

-refers to the supply and demand of goods and services within one country. firms that operate in a domestic market are based in the country in question and sell their goods or services to those countries people.

Globalisation (effect)
-enlarged competition, changes the way in which the domestic market conducts business and companies from all around the world may compete with domestic companies for market share.

(Benefit)
- companies can access information about customer needs and wants, understand economy and cultural awareness.