globalisation Flashcards
(18 cards)
what is globalization
increasing economic integration of national economies into the global economy resulting in close links between the worlds economies
what are 5 characteristics of globalization
Migration of people
Increased trade and more global brands
Investment and production across a number of countries- global sourcing, FDI
Increased capital flows
Transfer of technology
what is an emerging economy
A country in the process of rapid economic growth and industrialization
whats an example of an emerging economy
India- rapid growth and global integration
for example, in 2023 it became the world’s 5th largest economy by GDP, surpassing the UK
what are key features of an emerging economy
Rapid industrialization of secondary sectors and tertiary sectors
transition period
Still significant inequality and poverty
stat about uk growth
Uk hasn’t even had a 2% economic growth rate in 15 years
what are 2 benefits of emerging economies
FDI- injects capital can fund investment boosting productive capacity and structural employment so higher incomes and improved living standards so greater consumer demand so further inv contributing to the global supply of goods and services, enhancing specialization and trade under comparative advantage.
gov spending- a growing economy increases business profits and household incomes, which raises tax revenues without raising tax rates this May increase fiscal dividend increasing tax revenue due to higher cooperation tax so can increase government spending on education.
what are 2 drawbacks of emerging economies
exploitation of workers- may encourage companies to outsource in low cost countries where labour is cheap and regulation is weak so firms can min cost and max prof as they lack bargaining power- reduce long term prod due to bad health so unsustainable
income inequality- FDI and trade integration raise demand for skilled labour. Unskilled workers (often in rural areas) see stagnant wages. Gini coefficient increases. Low-income households may struggle to afford education or healthcare and traps future generations in poverty, limiting long-term economic potential.
If income gains are concentrated at the top, trickle-down effects are weak. Pressure to expand welfare programs, subsidies, or infrastructure in underserved areas.
what is a developing economy
a country with low to middle level of income, where many people may have limited access to healthcare, education, and infrastructure, and the economy often relies heavily on agriculture or basic industries.
whats an example of a developing economy
Ethiopia, where agriculture makes up over 30% of GDP and around 70% of the population live in rural areas,
what are the characteristics of a developing economy
High poverty rates
Limited industrialization
Lower Human Development Index (HDI)
Heavy reliance on agriculture or raw materials
what are 2 benefits of developing economies
recieve forgein aid- provides funding for infrastructure, education, and healthcare better infra and human capital so make the economy more attractive to foreign direct investment (FDI)- structural employment and higher incomes increasing consumption and tax rev so more inv (pos mult) allowing them to be more comp in global market
FDI- By increasing exports, emerging economies can generate higher revenues. This helps stimulate economic growth which can attract FDI creates new industries, improves local skills, and raises wages, benefiting workers and local communities, leading to poverty reduction as it facilitates the transfer of advanced technologies and skills from developed economies to emerging ones so more d for g/s allows emerging economies to access international financial markets, bringing in capital to support local businesses and development projects.
what are drawbacks of developing economies
exploitation of workers- may encourage companies to outsource in low cost countries where labour is cheap and regulation is weak so firms can min cost and max prof as they lack bargaining power- reduce long term prod due to bad health so unsustainable
Foreign multinationals-enter and often bring more efficient production methods, higher-quality products, or better pricing due to EOS. Domestic firms struggle to compete and lose market share. Consumers may initially benefit from lower prices and better products, but the long-term impact is a reduction in local competition so may go out of business- failure of these firms leads to job losses and higher unemployment rates, which can worsen poverty and inequality in the short term as dom prod replaced by foreign multinationals, the country may become increasingly dependent on these large firms for both products and employment increasing economic vulnerability as if these multinationals decide to pull out or cut operations, it could lead to economic instability.
what is a developed economy
High GDP per capita
Diverse and advanced industries (especially services and technology)
Low poverty rates and high life expectancy
High levels of education and skilled labour
whats an example of a developed economy
UK with a GDP per capita of over £35,500 (World Bank, 2023), a dominant services sector (around 80% of GDP), and universal access to healthcare and education.
what are 2 benefits of an developed economy
gain from a brain drain- attract skilled workers from developing countries enhancing their human capital and addresses skill shortages in healthcare, tech, and research- bring new ideas, diverse perspectives, and advanced expertise so greater innovation in industries, boosting overall prod and helping maintain comp adv in global markets so increased econ growth and improves the int comp. Many migrants maintain strong ties with their country, creating global networks that facilitate trade, investment, and tech transfer between developed and developing econs allowing developed economies to access emerging markets and new business opportunities.
EOS- As developed economies expand their production to serve wider global markets, firms can achieve EOS so can either lower their prices or improve product quality. This enhances their ability to compete in global markets so can see higher profit margins. These increased profits can be reinvested into further innovation, (R&D), boosting LT growth generate more demand for labor, stimulating employment.
what are 2 drawbacks of an developed economy
what are 2 ways to evaluate globalisation
Protectionism by developed nations e.g EU tariffs resulting in trade diversion and unfair competition?
Control over international organisation e.g IMF & World Bank limits growth of developing nations as they favour ‘friends and the richer countries e.g Uruguay Round, WC policies.
