1 - Globalisation

Question 1

Define Globalisation

Answer 1

The deepening of relationships between countries,reflected in an increasing level of cross-border trade and investment and migration

Question 2

Define de-globalisation

Answer 2

A reversal of the process of globalisation

Question 3

Characterisitics of globalisation

Answer 3

• increased trade
• more capital transfers and capital liberalisation
• global branding
• greater specialisation and division of global labour force
• labour migration
• shifting balance of economic and financial power from developed world to emerging markets
• de-industrialisation and structural unemployment in developed economies
• increased global media presence, greater connectivity
• greater investment spending on infrastructure and innovation, more integrated global supply chains
• increasing interdependency of economic agents

Question 4

What’s an MNC/TNC?

Answer 4

A company that operates in more than 1 country

Question 5

Causes of globalisation

Answer 5

• containerisation and falling transport, freight and travel costs
• increasing influence of powerful corporations (MNCs/TNCs)
• lower trade barriers (trade liberalisation)
• increasing size and number of trading blocs
• more FDI flows between countries
• greater labour migration and emergence of global labour force
• rapid spread of technology, manufacturing systems and management techniques (knowledge transfers)
• faster communication and information flows, emergence of new markets, especially global media presence
• improvements in infrastructure
• geopolitical change
• new emerging markets

Question 6

Benefits of globalisation

Answer 6

• Econs of scale
• more cost-reducing innovation
• lower consumer prices
• better quality
• faster economic growth
• freer movement of labour
• increased awareness

Question 7

Costs of globalisation

Answer 7

• rising inequality
• environmental costs
• macroeconomic fragility (external shocks spread rapidly)
• trade imbalances
• jobs (structural unemployment)
• tax avoidance
• brain drains (emigration- some countries lose most productive workers)

Question 8

Examples of economic shocks due to globalisation

Answer 8

• pandemics
• financial crises / currency crises
• natural disasters
• extreme weather
• geo-political shocks
• risks from terrorism, commodity price volatility
• unexpected changes in global interest rates

Question 9

Causes of de-globalisation

Answer 9

• protectionism
• economic shocks
• changing trade agreements
• environmental concerns
• health crises
• economic nationalism (governments might adopt policies to protect domestic industries and jobs, even if it means reducing international trade)

Question 10

Benefits of globalisation on developed countries

Answer 10

• increased access to foreign markets
• attraction of FDI
• improved productivity and innovation

Question 11

Costs of globalisation on developed countries

Answer 11

• job displacement/structural unemployment
• rise in income inequality
• environmental degradation

Question 12

Benefits of globalisation on developing countries

Answer 12

• increased access to global markets
• increase in FDI
• increased access to knowledge and tech

Question 13

Costs of globalisation on developing countries

Answer 13

• economic dependence such as primary product dependency
• exploitation of labour and issues with emigration
• environmental degradation