The Economics of Globalisation

Question 1

What is globalisation?

Answer 1

The processes that have resulted in ever-closer links between the world’s economies

Question 2

Globalisation, in the simplest sense is the processes by which the world’s economies have developed closer links though…

Answer 2

trade, investment and production

Question 3

In more recent years the scope of globalisation has been extended to also include…

Answer 3

the migration of people and the transfer of technology

Question 4

Globalisation is manifest in different ways… give two examples

Answer 4

Global brands

Global sourcing

Question 5

What are global brands?

Answer 5

• visible characteristics of globalisation
• Not only is the same brand available in most national markets, the product is also standardised
• same quality even though price varies

Question 6

What is global sourcing?

Answer 6

The term refers to ways in which global companies now source their operations through world wide production.
In many cases, ‘local’ domestic production has been replaced by manufacturing capacity on a global scale

Question 7

What factors promote globalisation?

Answer 7

• A reduction in protection in the world economy
• A reduction in international capital movement restrictions
• Developments in IT and falling communication costs
• A fall in real transport costs

Question 8

How do reductions in protection in the world economy promote globalisation?

Answer 8

The WTO has sought to reduce the overall degree of protection in world trade. Tariffs, quotas and other trade-curbing factors in the form of non-tariff barriers are inconsistent with globalisation

Question 9

The global economy is now characterised by a number of ‘regional’ trading blocs such as…

Answer 9

The EU, NAFTA and ASEAN - many of which have established mutually beneficial links between one another

Question 10

How do reductions in international capital movement restrictions promote globalisation?

Answer 10

• This has been essential for business capital to flow freely within the global economy
• Exchange control has been gradually dismantled, allowing foreign direct investment to flow between developed economies and from developed countries to those that are emerging and developing