6.1 Globalisation Flashcards
1
Q
Globalisation definition
A
Process in which national economies have become increasingly integrated and interdependent
2
Q
What are the causes of globalisation
A
- trade blocs
- growth of MNCs
- technological advancements
- increase in communication
- improvements in transport
- containerisation
3
Q
What are the main characteristics of globalisation?
A
- greater trade in goods and services
- higher levels of labour immigration
- increased transfer of capital between countries through FDI and portfolio investment
- greater use of offshoring
- spread of ideas and technologies
- global shift
4
Q
Offshoring definition
A
When a firm hires another firm to perform part of their production in another country
5
Q
Consequences of globalisation for more developed countries
A
- outsource of production to low-cost countries = structural unemployment
- need to diversify away from manufacturing as less developed economies build up their absolute + comparative advantage in this sector
- fall in wage rate as firms can recruit individuals from overseas (migrate for work) at a lower cost
6
Q
Benefits of globalisation for more developed countries
A
- potential for higher sales and output by targeting products at fast-growing less developed economies
- economies of scale may be achieved by producing on a global scale
- increased competitiveness from foreign (lower priced) firms = lower prices
- brain drain = more skilled individuals moving in
7
Q
Consequences of globalisation for less developed countries
A
- brain drain
- exploitation of workers
- having to adopt free market macroeconomic policies in order to attract FDI
- failure of local businesses as foreign competitors move in
- environmental damage
- profits taken back to home country = withdrawal
8
Q
Benefits of globalisation for less developed countries
A
- more employment due to cheap labour
- development as jobs may give certain benefits e.g health insurance ect.
- economic growth = taxing on the large firms that have moved in e.g corporation tax
- sharing in ideas allow for certain mistakes made by previous developing economies to be prevented
9
Q
MNC definition
A
Businesses that operate in at least two countries
10
Q
Benefits of MNCs to economies
A
- employment
- wages
- tax revenues
- new products
11
Q
Drawbacks of MNCs to economies
A
- low wages
- exploitation of resources and workers
- environmental damage
- profits transferred back to home country
- lower prices goods = failure in local businesses
