2.4

Question 1

Globalisation

Answer 1

Globalisation is the process of greater integration and inter-connectedness between countries

Question 2

Globalisation chacteristics

Answer 2

Free movement of goods and services
Free movement of labour
Free movement of capital
Increased cultural exchange

Question 2

Increased investment flows

Answer 2

The greater freedom of movement of capital enables firms to invest outside their country of origin. This may lower their own costs of production and improve economic prospects and job opportunities in the invested country

Question 3

World trade rising as a proportion of world Gross Domestic Product (GDP)

Answer 3

The increased freedom of movement of goods and services increases export opportunities and therefore has a significant effect on economic welfare. This has led to a greater dependency on trade as a proportion of GDP

Countries benefit from increased specialisation where they have a comparative advantage which lowers their production costs and improves efficiency

Question 4

increased migration

Answer 4

Globalisation allows the best talent to move quickly and easily across borders, creating a ‘brain drain’

Less skilled workers can undercut wages in developed economies as the workforce of poorer countries seek to better their standard of living

Although not always visible, increased globalisation has arguably damaged traditional cultures. The proliferation of multinational companies creates a uniformity of many economies and arguably less cultural diversity

At the same time, traditional cultures have struggled to accommodate new ones, leading to social tension

Question 5

Factors contributing to globalisation in the last 50 years

Answer 5

Trade liberalisation
Capital market liberalisation
Political change resulting in the opening up of China and the former Soviet Union
Reduced costs of transportation and communications
increased significance of global (transnational) companies

Question 6

Increased significance of global (Transnational) companies

Answer 6

Capital inflows and inward investment

Global companies are principally driven by profit motives
If they can spot opportunities for new markets or the chance to reduce production costs by moving to low-wage economies, they may take advantage of these openings,

Economies of scale

Global companies can seek low production costs and spread their production over greater units of output, which allows them to reduce unit prices

Employment
Create employment opportunities for local workers

Question 7

impact of Globalization induvials

Answer 7

pos
higher standard of living
reduction of poverty
better average income

neg
longer hours
stress/obesity
enviromental issues

Question 8

Indicators of growth

Answer 8

gpd/population

Question 10

Human Development Index

Answer 10

life expectancy
years in school
purchasing power

Question 11

Absolute Advantage

Answer 11

Absolute advantage is a situation where a country can produce a good or service using fewer resources than that of another country