4.1.3 Factors Contributing To Increased Globalisation

Question 1

Define globalisation

Answer 1

Process by which the world is becoming increasingly interconnected as a result of increased trade and cultural exchange.

Question 2

What are MNC’s?

Answer 2

Multinational corporations - biggest companies with subsidiaries in many countries.

Question 3

Define trade liberalisation

Answer 3

Process by which international trade is made easier through relaxation of tariffs and barriers

Question 4

What is GATT?

Answer 4

General agreement on tariffs and trade created in 1947

Question 5

Benefits of GATT

Answer 5

• New jobs for unskilled workers
• Low labour costs creates a comparative advantage

Question 6

What is WTO?

Answer 6

World Trade Organisation- created by GATT in 1994 and exists to reduce barriers to trade

Question 7

What is the role of WTO?

Answer 7

Ensure countries keep to the agreements they’ve made

Encourages trade liberalisation by a system of trade rules

Question 8

Why are tariffs imposed?

Answer 8

To slow the rate of imports coming into a country, which will compete with state monopolies.

Question 9

Benefits of trade liberalisation

Answer 9

• Lowers prices
• Broadens the range of goods available because they’re now allowed to buy imported goods

Question 10

Drawbacks of trade liberalisation

Answer 10

• Increased competition which squeezes profit margins
• Jobs may be temporary/menial
• Increased trade can cause pollution in order to keep up with demand

Question 11

How does trade liberalisation benefit a business?

Answer 11

Diversifies risk and channels resources to where returns on investments are highest.

Trade openness means competition, investment, productivity all increases.

Question 12

How does political change increase globalisation of markets?

Answer 12

Politics happen on a global scale now, rather than individual countries. This has lead to open trade between nations.

Question 13

What are the G7 countries?

Answer 13

Major advanced economies (must have high net national wealth and HDI)

Canada, France, Germany, Italy, Japan, UK, USA

Question 14

How have costs of transport and communication been reduced?

Answer 14

• Transporting goods long distances between countries has become cheaper due to cargo containers.
• Increases EOS as a business can ship quantities at once.
• Cheaper flights for business meetings.
• Use of internet = instant
• Less isolated countries

Question 15

How does increased investment flows increase globalisation?

Answer 15

Businesses outside important market trading blocs will invest/set up a production inside the trading bloc to avoid tariffs.
This increases jobs, GDP, income = multiplier effect

Question 16

How does migration increase globalisation?

Answer 16

Many countries maintain extensive legal barriers to prevent foreigners seeking work or residency from entering their national borders.

But in the EU there is free movement of people between nations to work.

Immigration provides a source of low income, able bodied workers.

Question 17

How does growth of global labour force increase globalisation?

Answer 17

People are free to seek better jobs in other countries.

This causes resentment from host nations, where citizens feel that their jobs are being taken by immigrants.

Question 18

How does structural change increase globalisation?

Answer 18

1. As a country develops it moves from agriculture to manufacture as it becomes industrialised.
2. It can then develop into a knowledge economy.
3. The economy grows as there’s more productivity in the secondary sector.