2.4.1 Globalisation

Question 1

What is globalisation

Answer 1

1. Is the ever increasing integration of the world’s local, regional and national economies into a single, international market.
2. It involves the free trade of goods and services, the free movement of capital and labour and the free interchange of technology and intellectual capital.

Question 2

What has the spread of globalisation influenced (there’s 2 on here)

Answer 2

1. More trade between nations
2. More transfers of capital including FDI (foreign direct investment).

Question 3

Factors contributing to globalisation in the last 50 years (there’s 7 on here)

Answer 3

1. Trade in goods
2. Trade in services
3. Trade liberalisation
4. Multinational Corporations (MNCs)
5. International financial flows
6. Containerisation
7. Impact of emerging economies

Question 4

Trade in goods:

Answer 4

1. The efficient forms of transport make it easier and cheaper to transfer goods across international borders.
2. Some developing countries have the cost advantage of cheaper labour, so MNCs move their production abroad.

Question 5

Trade in services:

Answer 5

E.g. The trade of tourism, call centre services, and software production (particularly from India) has increased from developing countries to developed countries.

Question 6

Trade liberalisation:

Answer 6

The growing strength and influence of organisations such as the World Trade Organisation (WTO), which advocates free trade, has contributed to the decline in trade barriers.

Question 7

Multinational Corporations (MNCs):

Answer 7

1. MNCs are organisations which own or control the production of goods and services in multiple countries.

• They have used marketing to become global, and by growing, they have been able to take advantage of economies of scale, such as risk-bearing economies of scale.

Question 8

International financial flows:

Answer 8

The flow of capital and FDI across international borders has increased.

• The removal of capital controls has facilitated this increase.

Question 9

Communications and IT:

Answer 9

The spread of IT has resulted in it becoming easier and cheaper to communicate

Question 10

Containerisation:

Answer 10

That goods are distributed in standard sized containers, so it is easier to load & cheaper to distribute using rail and sea transport.

Question 11

Impact of emerging economies:

Answer 11

1. The collapse of communism has meant that more countries, especially developing countries, are participating in world trade.

• International trade is arguably more important for developing countries than developed countries. It contributes towards 20% of LDC economies compared to 8% of the US economy.