THEME 4.1

Question 1

GLOBALISATION

Answer 1

INCREASED INTERCONNECTION OF WORLD ECONOMIES

Question 2

WAYS TO MEASURE GLOBALISATION

Answer 2

• GOODS AND SERVICES: VALUE OF IMPORTS AND EXPORTS
• LABOUR: IMMIGRATION
• CAPITAL: FDI

Question 3

FACTORS THAT HAVE DRIVEN GLOBALISATION

Answer 3

• TRANSPORT
• COMMUNICATIONS
• POLITICS
• PROTECTIONISM

Question 4

CHARACTERISTICS OF GLOBALISATION

—- NEED BETTER NOTES FOR THIS

Answer 4

• INCREASE IN FDI
• GLOBAL SUPPLY CHAINS
• MORE GLOBAL BRANDS
• INCREASING CONNECTIVITY
• SPECIALISATION
• HIGH LEVELS OF LABOUR MIGRATION

Question 5

KEY CAUSES OF GLOBALISATION

Answer 5

• CONTAINERISATION
• MORE TRADE DEALS
• TRANSNATIONAL ACTIVITY
• TECHNOLOGICAL ADVANCES

Question 6

REASONS FOR DE-GLOBALISATION

Answer 6

• COUNTRIES WANT TO BE MORE INDEPENDENT
• REDUCED RESOURCES AVAILABLE
• NATIONALISM

Question 7

THREATS TO GLOBALISATION

Answer 7

• HIGH PROFILE TARIFF WARS
• RISE IN NON-TARIFF BARRIERS TO TRADE
• SHIFT TOWARDS MANAGED EXCHANGE RATES RATHER THAN FREE FLOATING CURRENCIES

Question 8

MAIN GAINS FROM GLOBALISATION

Answer 8

• DIVISION OF LABOUR
• ECONOMIES OF SCALE
• COMPETITIVE MARKETS REDUCE SCALE OF MONOPOLY PROFITS
• ADVANCED GROWTH
• FREER MOVEMENT OF LABOUR
• DYNAMIC EFFICIENCY
• INCREASED OPPORTUNITY FOR DEVELOPING COUNTRIES TO BORROW MONEY

Question 9

DISADVANTAGES OF GLOBALISATION

Answer 9

• DEPENDENT ON OTHER COUNTRIES
• ENVIRONMENT

Question 10

DISADVANTAGES OF GLOBALISATION FOR HIGH INCOME COUNTRIES

Answer 10

• JOB DISPLACEMENT
• INCOME INEQUALITY
• ENVIRONMENTAL DEGRADATIONS

Question 11

DISADVANTAGES OF GLOBALISATION FOR DEVELOPING NATIONS

Answer 11

• ECONOMIC DEPENDENCE
• EXPLOITATION OF LABOUR
• ENVIRONMENTAL DEGRADATION

Question 12

ABSOLUTE ADVANTAGE

Answer 12

WHEN A COUNTRY CAN PRODUCE MORE OF ONE PRODUCT THAN ANOTHER COUNTRY CAN WITH THE SAME AMOUNT OF RESOURCES

Question 13

COMPARATIVE ADVANTAGE

Answer 13

WHEN A COUNTRY CAN PRODUCE A GOOD WITH A LOWER OPPORTUNITY COST THAN THAT OF ANOTHER COUNTRY

Question 14

ASSUMPTIONS OF DAVID RICARDO’S THEORY

Answer 14

• CONSTANT RETURNS TO SCALE
• NO TRANSPORT COSTS
• NO TRADE BARRIERS
• PERFECT MOBILITY OF FACTORS
• EXTERNALITIES IGNORED

Question 15

BENEFITS OF TRADE

Answer 15

• BETTER EFFICIENCY / PRODUCTIVITY
• CHOICE
• ECONOMIES OF SCALE
• NEW IDEAS / GLOBAL KNOWLEDGE
• INNOVATION
• SPECIALISATION

Question 16

DISADVANTAGES OF TRADE

Answer 16

• OVERDEPENDENCE
• JOB LOSS DUE TO IMPORTS
• RISK-DEPENDENCE
• DISTRIBUTION OF INCOME
• ENVIRONMENT
• LOSS OF SOVEREIGNTY
• LOSS OF CULTURE