4.1.1 Globalisation

Question 1

Define globalisation

Answer 1

Globalisation is the increased interdependence of economies through trade.

Question 2

Give three examples of global companies

Answer 2

Amazon, google, BP

Question 3

Identify 4 characteristics of globalisation

Answer 3

• Free movement of labour
• Free trade
• Free movement of capital
• Free movement of technology and intellectual capital

Question 4

Identify 3 characteristics of de-globalisation

Answer 4

• Increased trade barriers such as tariffs
• Falling trade as a % of total GDP
• Less migration

Question 5

Identify 3 causes of globalisation

Answer 5

• Lower transport and communications costs
• Increased importance of TNCs
• Lower trade barriers or trade liberalisation

Question 6

Explain how liberalisation increases globalisation

Answer 6

When trade can take place with no restriction, this reduces the transaction costs of trading. When the cost of trade reduces, more trade will take place.

Question 7

Explain how reduced transport and communication costs causes globalisation

Answer 7

As transport and communications are both costs of production, when these are reduced the world supply increases. This means that it can be cost effective to move production abroad which also increases the chance of specialisation.
As communications have improved and continue to improve, workers are able to effectively communicate without any physical presence, allowing firms to move production to multiple different locations.

Question 8

Explain how the existence of Transnational Corporations will cause globalisation

Answer 8

There are three reasons to expand internationally:

• in search of resources
• in search of markets to sell their products
• in search of more efficient locations to produce

Question 9

Identify 3 benefits of globalisation

Answer 9

• Reduction in absolute world poverty by giving countries access to inflows of money
• Improved quality and choice for consumers
• Facilitation of the transfer of knowledge and technology

Question 10

Identify 3 disadvantages of globalisation

Answer 10

• Externalities from transport and increased production
• Inequalities within and between countries
• Structural unemployment.

Question 11

Explain why there has been a backlash against globalisation in recent years

Answer 11

When a TNC moves to LEDC and they become the biggest opportunity for locals to find work meaning that the supply of labour for other local business has decreased.

Question 12

Identify 3 benefits of FDI in a host country

Answer 12

• Transfer of technology and capital
• Provides tax revenue
• Provides employment and income in the short term

Question 13

Identify 3 disadvantages of FDI in a host country

Answer 13

• Exploitation of workers: low wage
• Bringing in an overseas employees rather than employing the locals
• Environmental damage if ‘government turns a blind eye’

Question 14

What are global supply chains and give an example?

Answer 14

When sequences in the production process can take place in different countries. i.e the raw materials for a pencil are found in Zambia but the production of it occurs in the UK