The International Economy + Globalisation

Question 1

What is Globalisation?

Answer 1

Globalization refers to the spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures. In economic terms, it describes the interdependence and integration of nations around the globe, fostered through free trade.

Question 2

Causes of Globalisation?

Answer 2

• Trade Liberalisation
• Technological
  advancements
• Mobility of labour and capital.

Question 3

Advantages AND Disadvantages of MNC’s?

Answer 3

https://www.investopedia.com/terms/m/multinationalcorporation.asp#:~:text=Multinational%20corporations%20conduct%20business%20in,countries%20in%20which%20it%20operates.

Question 4

Causes and effects of Globalisation?

Answer 4

https://www.slideshare.net/AislingMOConnor/the-causes-and-effects-of-globalisation

Question 5

Advantages of Globalisation?

Answer 5

• AD growth / export / access to larger mkt —> greater employment.
• lower prices (sourcing) (competition)
• Potential for eos + increase investment
• Free movment of FDI

Question 6

Disadvantages of Globalisation?

Answer 6

• Collapse of infant firms = unemployment
• growing inequality (trickle down)
• dependancy (shocks)

Question 7

What is “Comparative advantage”?

Answer 7

An economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is used to explain why companies, countries, or individuals can benefit from trade.

Question 8

How can it be argued using theory that “Globalisation” promotes “falling inequality”?

Answer 8

• Theory of COMPARATIVE ADVANTAGE:

It says that poor countries produce goods requiring large amounts of unskilled labour.
Rich countries focus on things requiring skilled workers. Thailand is a big rice exporter, for example, while America is the world’s largest exporter of financial services.
As global trade increases, the theory says, unskilled workers in poor countries are high in demand; skilled workers in those same countries are less coveted.
With more employers clamouring for their services, unskilled workers in developing countries get wage boosts, whereas their skilled counterparts don’t. The result is that inequality falls.

Question 9

Why can it be argued that “Globalisation” struggles to foster equality?

Answer 9

1) MNC’s prefer to hire skilled workers and pay high wages.
^ Offer better prod.^

These individuals are already receiving greater income compared to their poorer counterparts.

By contrast, unskilled workers, or poor ones in rural areas, tend not to have such opportunities to make higher incomes.

• The result is that inequality rises*

2) Those who had a little bit of money to begin with could see big gains from investment, and could thus benefit from growth, whereas those with nothing would stay rooted in poverty.