Globalisation

Question 1

What are the causes of globalisation

Answer 1

-Trade liberalisation
-Trading blocs
-Growth of multinational corporations(MNCs)
-Containerisation
-Technological advancement
-Improvement in transport (Mobility of labour and capital )

Question 2

What is globalisation

Answer 2

Globalisation is the increased integration of different economies around the world

Question 3

What are the 5 characteristics of globalisation

Answer 3

1) increased international movement of labour
2) increased international movement of financial capital
3) increased specialisation
4) increased international trade
5) increased trade to GDP ratios

Question 4

What is increased international movement of labour?

Answer 4

When people move to live in different countries to work. For example when an IT technician moves from the UK to the US to join a new software company they move their labour from the UK to the US.

Question 5

What is foreign direct investment (FDI)?

Answer 5

FDI is an investment made by a firm in one country into a firm in another country to gain control over the foreign firm.
An example would be the company Tata from India buying Jaguar

Question 6

What is one of the main ways financial capital moves across countries?

Answer 6

Foreign Direct investment (FDI)

Question 7

When a country can produce more of a good than another country, what advantage does it have?

Answer 7

When a country can produce more of a good than another country it has an absolute advantage in the production of that good.

Question 8

If a country can produce a good at a lower opportunity cost what advantage does it have?

Answer 8

It has a comparative advantage in the production of that good.

Question 9

What is a (TNC) TransNational Corporation?

Answer 9

When a firm operates in 2 or more countries

Question 10

What is increased international trade

Answer 10

When goods and services are exported and imported

Question 11

International trade is driven by…

Answer 11

80% of transnational corporations

Question 12

What does GDP tell us?

Answer 12

GDP tells us how much is produced in an economy over a period of time.

Question 13

What is Trade-To-GDP ratio?

Answer 13

Trade-To-GDP ratio show how high the value of international trade is compared to the size of a countries economy. The higher the ratio, the more important international trade is to their economy, which means they become more dependent on international trade.

Question 14

What happens if there are improvements in transport in, which is a cause of globalisation

Answer 14

Increases international movement of labour, which is a characteristic of globalisation

Question 15

What happens if there are technological advancements in globalisation which is a cause of globalisation?

Answer 15

It will increase international movement of capital, which is a characteristic of globalisation.

Question 16

What is containerisation?

Answer 16

Containerisation is the system of transporting goods.

Question 17

What is a trade barrier?

Answer 17

A trade barrier is a restraint set by a government or country on an import of a foreign goods. The most common example of a trade barrier would be tariffs which is a tax you have to pay when importing a good.

Question 18

What happens if a country reduces or removes the barriers of tariffs?

Answer 18

cost of importing foreign goods decreases which means consumers can import more, meaning the demand for imports will increase, leading to an increase in international trade

Question 19

What is trade liberalisation?

Answer 19

The reduction or removal of trade barriers, which leads to an increase in international trade, which is a characteristic of globalisation

Question 20

What are the 6 areas that are affected by globalisation

Answer 20

-individual countries
-government
-consumers
-producers
-workers
-the environment

Question 21

What are the impacts of globalisation on individual countries?

Answer 21

A good impact would be an increase in living standards. Increase in world output would increase the Real world GDP which will increase living standards.
1950 = 75% of world in extreme poverty
Decreased to 10%

A bad impact of globalisation would be over dependence because the more a country specialise, the more dependent they become
Eg Saudi oil and gas sector is 50% of RGDP

Question 22

Definition of RGDP

Answer 22

Real GDP is the amount of goods and services produced in an economy in a year

Question 23

What are the impacts of globalisation on governments?

Answer 23

One positive impact of globalisation on governments would be increased tax revenues. One example would be as countries increase trades with each other, the government generates extra tax revenue through trade tariffs. Increased tax revenue can be used upon gov spending which have positive externalities such as education.
US raised $37.8 in 2016 such as renewable energy where in NC spent £235 million so firms invest in renewable energy

One negative impact would be that globalisation enables transfer pricing, resulting in tax avoidance. For example Large TransNational Corporations (TNCs) can avoid billions in tax as they have many small companies in other countries which may have lower corporation tax.

Question 24

What are the impacts of globalisation on producers?

Answer 24

One positive impact would be lower production costs.
But this is a disadvantage for smaller businesses as globalisation allows TNCs to create high barriers to entry, making it harder for small businesses to enter the market. An example would be that McDonalds have restaurants in 119 countries, and the more restaurants McDonald opens, the higher quantity of BigMacs sold, as the quantity of BigMac sold increases, McDonalds benefit from larger economies of scale.

Question 25

What are the impacts of globalisation on producers?

Answer 25

A positive impact would be lower production costs, reduced costs through relocation
But there can be a negative impact on smaller businesses as globalisation helps TNCs create high barriers to entry.

Question 26

What are the impacts of globalisation on consumers?

Answer 26

One positive impact of globalisation on consumers is wider choice and lower prices on goods and services. Globalisation has lead to an increase in international trade, which means consumers all over the world have a wider choice of goods. An increase in international trade increased economies of scale for producers all over the world. These larger economies of scale help reduce production costs, increasing SRAS shifting it outwards.
A negative impact of globalisation is that being driven to consume more can reduce consumer happiness.

Question 27

What are the impacts of globalisation on workers?

Answer 27

One positive impact of globalisation on workers would be that there is an increase in international opportunities for workers. Improvement in transport has lead to an increase in international movement of labour. Improvements in transport and IT has lead to an increase in international opportunities.
A negative impact would be an increase in structural unemployment. Comparative advantage and trade liberalisation lead to an increase in specialisation, which means that many manufacturing jobs has been transferred to developing countries.

Question 28

What is a remittance?

Answer 28

A remittance is a transfer of money by a foreign worker to an individual in their home country

Question 29

What are the impacts of globalisation on the environment ?

Answer 29

One positive impact of globalisation on the environment would be an increase in global cooperation to fight climate change. Globalisation has lead to an increase inn international trade which has made economies around the world more dependent on each other. This means that governments across the world have better relationships, which increases global cooperation and solve global problems together.
One negative effect would be an increase in global warming as there is more transportation, meaning more carbon emission into the atmosphere.

Question 30

Explain different causes of globalisation e.g containerisation

Answer 30

Costs decreased from 5.83 to 0.16 which decreases COP, increasing profits incentivising firms to supply more goods internationally.
Prices decrease and quantity demanded increases
Has led to a 790% increase in international trade

Question 31

Explain different causes of globalisation e.g transports

Answer 31

In the 1930s it took 8 days for workers to travel from London to California.
Due to introduction of planes, it only now takes 7 hours to get to California

Improvements in transport has led to increases in mobility of labour

Question 32

Explain different causes of globalisation e.g trade liberalisation

Answer 32

Removal of tariffs leads to cost of imports to decrease, demand for imports increase causing production of foreign goods to increase
International trade increases
Average trade tariff has decreased from 10% to 2% in developed countries