4.1 Globalisation Flashcards
What is globalisation
Globalisation is a process of deeper economic integration between countries and regions of the world.
Characteristics of globalisation
-Greater trade in goods and services both between nations and within regions
-An increase in transfers of capital between countries
-The development of global brands that serve markets in higher and lower income countries
-Global division of labour
-High levels of labour migration within and between countries
-New nations joining the world trading system
-A fast changing shift in the balance of economic and financial power from developed to emerging economies and markets.
Causes of globalisation
-The deregulation of markets
-Political changes
-The removal of barriers to trade
-The lowering of transportation costs
-Improved communication systems.
Winners of globalisation
-Consumers who have greater choice and much cheaper goods
-Developing countries which increase their wealth by producing goods for export.
-Developed (Western) economies have experienced low inflation because of the falling prices of imports
-Businesses who trade internationally
Losers of globalisation
-Unskilled workers in western economies who have found their real wages falling or their jobs being relocated
-Previously viable businesses who have been outcompeted by low-cost competition from overseas.
-Workers in developing countries who have been exploited.
-The environment where the huge increase in the transportation of goods contributes to global warming.
Ad of multinationals
-Provide employment and create better living standards
-Investment leads to infrastructure development
-Introduce new technology and working methods
-Increased growth in the UK economy – many businesses from supplying multinationals in their locality
Dis of multinationals
-Multinational companies can cause both small and large British businesses to go out of the business, leading to increased unemployment.
-Multinationals have been accused of destroying local culture.
-They may have negative environmental impacts, such as pollution, noise, congestion and destruction of the environment.
Business strategies in global market
-External growth- another country
-Global branding- strong brand
-Identifying target markets
-Globalisations- operate Operate a Global business but take into account local tastes and traditions in marketing
What is economic growth
-Occurs when a country producers more gooods/serivces in one years than it did the year before
How is economic growth measured
-Gross domestic product (GDP)
positive impacts of economic growth
-Increased spending by consumers leading to increased sales for business
-Increased opportunities to expand
-Increased profits and investment in business
negative impacts of economic growth
-Increase in imported goods if industry can not keep up with demand
-Increase in prices leading to inflation
-Shortage of labour leading to increased wages and costs
GDP per capita
-This measures the total output of a country divided by the population.
-It indicates the average income of people in that country
-It does not consider inequality in the country so the average figure may not be typical- there may be many poor people and a small number of very rich people
Literacy/Education
-Literacy rates are used as a measure of how educated a population is
-High literacy rates are important for businesses in terms of recruiting staff and marketing their products
Health
-Health can be measured in a number of ways: Life -Expectancy, Access to healthcare, Child mortality
-Health will impact on the productivity of workers in a country
Human development index
-HDI is a score developed by the UN to indicate how developed a country is.
-It takes into account Gross National Income per Capita, Life Expectancy and Average years of schooling
-It allows businesses to compare countries in terms of development
Developed economies
-Mature economies with a relatively high standard of living with generous welfare provision
-Most people are educated and have long life expectancy
-Workers are mostly employed in services
Developing economies
-Countries that still have very large primary sectors and relatively small secondary sectors.
-Incomes are mostly very low
-Most economic activities will be labour intensive because capital equipment is expensive
Emerging economies
-Have some features of both developed and developing economies.
-Their economies are growing fast, sometimes with rapidly rising standards of living. There will be growth in the secondary and tertiary sectors; expansion will usually be fastest in manufacturing
-People will migrate from the countryside to urban areas.
-Trade will be expanding rapidly.
Exports
Imports
-Goods and services produced by a firm in the UK and then sent to another country.
-Goods and services produced by a firm in one country and then bought by customers and businesses in the UK.
The key features of emerging economies are:
-Economies making a transition
-Going through a process of rapid industrialisation (i.e. development of secondary & tertiary sectors)
-Have potential to become developed economies
-Enjoy faster long-term economic growth than most developed economies
-Many inhabitants still in poverty, though economic growth is taking many out of poverty
-Domestic businesses still struggle to access global markets (e.g. trade barriers)
Reasons for trade
-Exchange: countries sell goods and services that they can produce relatively cheaply and buy products from other countries that they would find relatively expensive to produce
-Specialisation: countries specialise their resources in producing certain commodities and benefit from economies of scale
Benefits of International Trade
-Companies earn revenue from exports and create jobs
-Low prices for consumer as markets are more competitive due to imports
-Technology is spread, raising productivity
-Economies of scale – causing lower unit costs and prices
Drawbacks of International Trade
-Transport costs and impact on the environment
-Loss of jobs due to increased competition from abroad
-Rising inequality – some gain from trade while others lose out
-Pressure on wages and working conditions
-Risks from global (external) shocks
What does specialisation involve?
International specialisation happens when countries use comparative advantage to produce just a small range of products in high volume. Mass production allows a surplus of good to be produced, which can then be exported.
Ad of specialisation
-Allows a country to make full use of their economic resources
-Increases the scale of production – leads to lower costs and prices
-Surplus can be exported, leading to more earnings for the country
Dis of specialisation
-World prices for a product might fall leading to declining revenues
-Risk of over-specializing and structural unemployment
-Might lead to over-extraction of a country’s natural resources
