5.2 Globalisation Flashcards
What is globalisation - when did it occur?
Economic interdependence among countries, increasing flow of goods and services as well as flow of factors - capital and labour
Long history of globalisation, first wave being in the 19th century to 1914:
- Steamships, trains, EofS, cargo ships
Second/Third wave after the world wars - air travel, trade deals
General pattern - low between 1700 and 1820, starts to rise up after 1860, rockets after WW2
What was the impact on air travel and world trade?
Heavy saving in travel time - India saved over 1000 hours, UK around 250, China 500 hours
1865: US and UK united, demand from cootton millers rose in Liverpool area, stimulated by increasing firmness of Manchester market
- Prices higher in New York, prices immediately jumped up under favourable advices from England - exports increased by large quantity
World trade rose from $505bn to $8164bn between 1950 to 2004 (in 2000 prices)
Air travel cost from 1955 to 2004 dropped significantly, with 2000 being the index value, the price in 1955 was around 1200, by 1965 fell to around 400, continued to drop.
What are Global Trade Agreements?
General Agreement on Tariffs and Trade, 1947
WTO Established in 1995, 164 members since 29 July 2016:
- Trade engotiations, implementation and monitoring
- Dispute settlement
-Building trade capacity
- Outreach
WHat are regional trade agreements
2020 - regional comprehensive economic partnership - 15 members in Asia and Australasia
Trans Pacific Partnership 2016 - Comprehensive and progressive agreement for trans pacific partnership
North American Free Trade Agreement - US Canada and Mexico
European Union
What is the effect of trade deals?
Causing trade costs to fall, was around 40% in 1947 but has fell to 15% by 2007
What are the UK trade deals? What are the EU trade deals? What are the China trade deals?
Trades with hella countries, on week 5 page 5
What is the global value chain
Decomposing production activities in order, adding value further along
- Production of final products splits into 3:
Pure domestic e.g. hair cuts
Traditional trade (cross border for consumption) e.g. portugese wine
GVCs - cross border for prdocution (intermediate trade)
GVCs are then split into:
Simple GVC - cross border once for production - Chinese steel
Complex GVC - cross borders at least 2 times - iPhones
E.g. iPad 3 uses parts from 10 countries
Boeing 787 uses parts from 6 countries
What are the FDI inflows across country?
US - $275bn
China - $136bn
HK - $104.3bn
UK - $15bn
Singapore - $62bn
Brazil - $62bn
India - $40bn
Russia - $25bn
What are the % of migrants as a total % of populations
Australia - 20-40%
UK - 5-15%
US - 10-20%
Ukraine - 40%+
What are the impacts of globalisation?
On growth:
- Scale effect (EofS - cost advantage when increase output)
- Competition effect
- GEneral equilibrium implications - input prices low, output prices higher
- Technological diffusion - innovation spreading throughout countries
Inequality:
- Skill premium will decline in developing countries
- Extending models wit houtsourcing predicts there will be expanding global inequality
Pascali:
- Countries with initially low levels of development especially hurt, whereas most wealthy nations experienced netiher losses nor gains
Gordonichenko on globalisation and innovation:
- More foreign competition leads to more innovation
Goldberg and Pavcnik - summary of evidence from different countries
What are some questions challenging globalisation?
- Is there a choice
- To cooperate or oppose?
- Regulatory convergence? (means countries become very similar)
What is the impact of globalisation on vaccines?
- May be limited by access to raw materials and equipment such as vials, tubing, bioreactors, cell culture medium and reagants such as enzymes
For example, enzymes used to make RNA vaccines not produced in quantities approahcing those required for global scale vaccination - manufacture will need to be increased
Concerns raised about availability of glass vials to store and transport vaccines
- Supply chains at risk of being disrupted by pandemic if borders are closed, transportation and travel is limited or if staffing is reduced due to sickness or COVID safe working conditions
