Theme 4.1.1 Flashcards
(14 cards)
Define Globalisation
the ability to produce any goods or services anywhere in the world , using raw materials , components, capital and tech from anywhere, sell the resulting output anywhere, and place the profits anywhere
Name factors contributing to globalisation over the last 50 years
Improvements in the global transport infrastructure- this was required to facilitate the movement of raw material, finished goods and labour.
Improvements in global communications tech- e.g Skype - to facilitate the exchange of info between global suppliers and customers and to enable people working for the same multinational company to communicate w/ each other from wherever in the world.
The creation of single markets such as the EU- led to greater intra-regional trade through the abolition of tariff and non-tariff barriers.
Give the positive impacts of globalisation
Increase in global living standards through an increase in international trade which has led to a significant decrease in absolute poverty.
Increased consumer choice - they’re now able to source goods abroad rather than from their own economy e.g exotic fruits.
Lower prices paid by consumers (increase in domestic CS, decrease in domestic PS)- they can now source g&s from those economies w/ a comparative advantage (they produces output at a lower cost).
Give the negative impacts of globalisation
Increased interdependency of economies through more integrated trade agreements e.g reliant on Russian gas- once turned off to Western Europe we suffered.
Potential of worker exploitation- by large multi-nat corps who locate in developing countries where wages=low and there’s absence of Heath and Safety laws
Capital flight- where multi-nat corps come and strip areas in developing countries move rapidly from one country to another in search of cheap and accessible natural resources and cheap labour. Once resources= exhausted and wage rates start increasing, they relocate causing unemployment.
Explain an advantage of globalisation- increased capital flows
Increased capital flows and more inward investment which will stimulate growth , increase jobs and improve living standards. In developing economies it’ll address the foreign currency gap whilst enabling these countries to have the use of the most technologically advanced capital available to facilitate the transition from primary to secondary production.
Explain an advantage of globalisation- increased competition
Increased competition will lead to greater allocative (AR=MC) and productive (MC=AC) efficiency around the world as companies compete with each other internationally to give consumers what they want most (allocative E) at the lowest prices due to greater productivity efficiency.
It may also encourage dynamic efficiency
Explain an advantage of globalisation- extension into international markets
Successful firms will extend into international markets rather than being restricted to their domestic markets - gives more scope for growth and will lead to greater internal EOS being enjoyed which will increase CS on a global scale as COP decrease and prices for consumers decreases.
Explain a disadvantage of globalisation- power abuse of multinational corporations
Such as environmental exploitation, labour exploitation and a lack of adherence to Health and Safety concerns
Explain a disadvantage of globalisation- Brain Drain
Greater global labour mobility has led to brain drain where the brightest people from developing economies migrate to developed economies causing a loss of talent
Explain a disadvantage of globalisation- interdependency
Occurs when countries become too reliant on each other meaning that an exogenous shock in one country will quickly spread to others e.g global financial crisis 2008 and the Covid epidemic which spread quickly due to high levels of global geographical mobility
Explain the impact of globalisation on individual countries
Economic Growth: Globalisation can stimulate economic growth by increasing trade and foreign investment.
Income Inequality: It can also exacerbate income inequality within countries, as benefits may not be evenly distributed.
Explain the impact of globalisation on governments
Reduced Control: Governments may have reduced control over their economies due to international trade agreements and global market forces.
Policy Coordination: International cooperation becomes essential in areas like climate change and financial stability
Explain the impact of globalisation on producers and consumers
Access to Markets: Producers gain access to larger consumer markets, but face increased competition.
Consumer Choices: Consumers benefit from a wider variety of products and lower prices
Explain the impact of globalisation on workers and the environment
Workers:
Job Opportunities: Globalisation can create job opportunities, but it can also lead to job displacement in certain industries.
Labor Standards: Concerns arise over labor standards, worker rights, and exploitation in some countries.
Environment:
Environmental Impact: Globalisation can contribute to environmental degradation through increased resource extraction and pollution.
Sustainable Practices: There’s a growing emphasis on sustainability and responsible business practices to mitigate environmental harm.
