Globalisation Flashcards
(38 cards)
Define globalisation
Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange.
What are MNC’s?
Multinational corporations are large and powerful businesses that have factories that make products and offices that sell products in different countries.
What are the results of globalisation? (5)
- Increased international trade.
- A company opperating in more than one country.
- A greater dependence on the global economy.
- Freer movement of capital, goods, and services.
- Recognition of companies, such as Mc Donalds, in loss economically developed countries.
What are the indicators of globalisation? (5)
- Rapid advances in communications and transport.
- Growth of MNC’s.
- Access to new markets.
- Opening up of international boarders to the flow of trade, workers, tourists and investment.
- Development of computers and the internet.
What are factors attracting transnational corporations? (5)
Factors attracting Transnational Corporations (or MNC’s) to a particular country may include cheap raw materials, cheap labour supply, good transport, access to markets where goods are sold, and favourable government policies.
Is globalisation helping to close the gap between the world’s poorest and richest countries?
Globalisation is helping to create more wealth in developing countries, however, it is not helping to close the gap between the world’s poorest and richest countries.
What are the four main reasons for globalisation?
1) Improvements in transportation.
2) Freedom of trade.
3) Improvements in communication.
4) Labour availability and skill.
Explain why improvements in transport is a reason for globalisation.
Larger cargo ships means that the cost of transporting goods between countries has decreased, and the goods and people can also travel more quickly.
The cost per item is reduced when operating on a larger scale.
Explain why freedom of trade is a reason for globalisation.
Organisations like the World Trade Organisation (WTO) promote free trade between countries, which helps to promote free trade between countries.
Explain why improvements in communication is a reason for globalisation.
The internet and mobile technology have allowed greater communication between people in different countries.
Explain why labour availability and skill is a reason for globalisation.
Counties such as India have low labour costs and also high skill levels. Labour intensive industries such as clothing can take advantage of cheap labour costs and reduced legal restrictions in less economically developed countries.
What does globalisation involve? (6)
- Greater free trade.
- Greater movement of labour.
- Increased capital flows.
- Growth of multinational companies.
- Increased integration of the global trade cycle.
- Increased communication and improved transport, effectively reducing barriers between countries.
What are the five key benefits of globalisation?
- Free trade.
- Free movement of labour.
- Increased economies of scale.
- Greater competition.
- Increased investment.
What are economies of scale?
Due to globalisation, production becomes increasingly specialised and enables goods to be produced in different parts of the world. This greater specialisation enables lower average costs and lower prices for consumers. E.g. Apple.
What are the five costs of globalisation?
- Free trade can harm developing countries.
- Environmental costs.
- Labour drain.
- Less cultural diversity.
- Tax competition and tax avoidance.
What is the definition of free trade?
Free trade is a way for countries to exchange goods and resources. This means counties can specialise in producing goods where they have a comparative advantage (where they can produce goods at a lower opportunity cost).
What are the five key gains from free trade?
- Lower prices for consumers.
- Greater choice of goods.
- Bigger export market for domestic manufacturers.
- Economies of scale through being able to specialise in certain goods.
- Greater competition.
Why is the free movement of labour controversial?
Some are concerned that free movement of labour can cause excess pressure on housing and social services in some countries. Countries like the US have to respond to this problem by actively trying to prevent migrants from other counties.
Explain the concept of environmental cost.
One problem of globalisation is that is has increased the use of non-renewable resources. It has also contributed to increased pollution and global warming. Firms can outsource production to where environmental standards are less strict. However, arguably, the problem is not so much globalisation is failure to set satisfactory environmental standards.
Does investment by multinational companies play a big role in improving the economies of developing countries?
Yes.
Explain some benefits associated with globalisation.
- Countries that trade with other countries have stronger economies than those that don’t.
- Countries which have faster economic growth have been able to improve living standards and reduce poverty. Cheaper imports also make a wider range of products accessible to more people.
- Improved wealth of a country can lead to improved health care and clean water which increases life expectancy.
- Improved environmental awareness and accountability has contributed to positive environmental outcomes.
- Improved technology has dramatically reduced costs and prices.
- Modern communications have contributed to the toppling of undemocratic regimes and a growth in liberal democracies around the world.
- Adoption of workplace standard has made an important contribution to respect of international labour standards in developing countries.
- International migration has led to greater recognition of diversity and respect for cultural identities which is improving democracy and access to human rights.
Explain some of the problems associated with globalisation.
-Countries that don’t participate in the global economy have to make changes to their economies to stay competitive, which can be costly.
-Some countries have been unable to take advantage of globalisation and their standards of living are dropping further behind the richest countries.
Increased trade and travel have facilitated the spread of human, animal and plant disease.
-Globalisation has enabled the introduction of cigarettes and tobacco to developing countries, which has major adverse health and financial costs associated with it.
-The environment has been harmed as agricultural, forest, mining, and fishing industries exploit inadequate environmental codes and corrupt behaviour in developing countries.
-Making international trade easier and technological advancements change the economy of a country, destroying traditional agricultural communities and allowing cheap imports of manufactured goods. Can lead to unemployment if not carefully managed.
-Modern communications have spread an awareness of the differences between countries, and increased the demand for migration to richer countries.
-Globalisation can force a ‘race to the bottom’ in wage rates and labour standards. Can also foster a ‘brain drain’ of skilled workers/
-Indigenous and national culture and languages can be eroded by the modern globalised culture.
Identify and explain the four economic links between countries.
MIGRATION
Movement of people between countries. Increases aggregate demand (via increased consumption). Increase in the supply of labour. Skilled migration -> e.g during the mining boom Australia relied heavily on skilled migration. Increase in the quantity of resources, particularly labour. Allows for an expansion of the PPC.
FOREIGN INVESTMENT
Insufficient domestic savings relative to high capital requirements due to the commodity driven economy. 20% of investment in Australia is foreign investment.
TRADE
Goods and services.
TOURISM
How is trade openness measured?
‘Trade openness’ is measured using the ration of a country’s trade to GDP. It measures a country’s level of integration with the rest of the world.
