4.1.1 - Globalisation

Question 1

Define globalisation

Answer 1

The deepening of relationships between countries of the world reflected in an increasing level of cross-border trade and investment and migration
OR
process in which national economies have becomes increasingly integrated and interdependent

Question 2

Containerisation

Answer 2

A system of freight transport for use in sea shipping that has reduced the transport costs of shipping many thousands of different goods across the globe

Question 3

Define FDI

Answer 3

FDI is the acquisition of a controlling interest in productive operations abroad by businesses resident in the home economy. May involve the creation of new productive capacity such as a new factory or building of infrastructure.

Question 4

Define MNC

Answer 4

A MNC has facilities and other assets in at least one country other than its home country

Question 5

Define TNC

Answer 5

TNCs base their manufacturing, assembly, research and retail operations in a number of countries.

Question 6

What does globalisation result in

Answer 6

• world economy becoming more like a single economy because it
  increases the interdependence of economies around the globe.
• Changes in economic conditions in one country consequently have a larger impact on other economies in a highly globalised world. (highlighted by GFC)

Question 7

What are the factors contributing to globalisation over the past 50 years

Answer 7

• Trade liberalisation
• Transport (helps mobility of labour and capital)
• Comms technology
• Economic and political transitions (trading blocs)
• Global TNC and growth of MNCs

Question 8

4 types of Trade liberalisation

Answer 8

Bilateral: involving two parties, especially countries.
Consensus: a general agreement.
Multilateral: involving several parties, especially countries.
Orthodoxy: authorized or generally accepted theory, doctrine, or practice.

Question 9

Define trade liberalisation

Answer 9

Trade liberalisation is the removal (or reduction) of restrictions on the free exchange of goods and services between nations.

Question 10

Trade liberalisation

Answer 10

-The EU single market is an example of
trade liberalisation.
- Firms can sell products anywhere within the EU single market without any restrictions on trade (other than transport costs) e

Question 11

Examples of trade liberalisation

Answer 11

Trade liberalisation has also occurred on a bilateral or multilateral
basis e.g. the Chile-United States Free Trade Agreement or the European Single Market

Question 12

Transport

Answer 12

• e,g aviation reduced travel times so productive operations can happens
• The cost of transport has declined over the past 50 years due to technological advancements in aerospace and shipping. Firms can more easily sell goods and services on a
  global basis as a result.
• Furthermore, with the rise of commercial aviation, workers can now crisscross the globe making business deals, working in foreign locations, etc.

Question 13

Comms technology

Answer 13

• The quality of communications has improved immensely e.g. the ability to make video calls using affordable, portable technology.
• Additionally, the cost of communications has fallen significantly too.

Question 14

Economics and Political Transitions

Answer 14

• In December 1978, the People’s Republic of China, under Deng Xiaoping, began a period of economic reform (referred to as the ‘Opening of China’ in the West).
• Reforms included the opening of the country to foreign investment, and permission for entrepreneurs to start
  businesses.
• From 1978 until 2013, due to China’s ongoing adoption of authoritarian capitalism, the Chinese economy grew by a huge amount ($155 to $7081 per capita).
• China is now the second largest economy in the world.

Question 15

Global TNCs

Answer 15

• global companies grown in size and number over last 50 years thanks to trade liberalisation and modern day comms
• use global supply chains

Question 16

What factors contributed to globalisation over last 50 year

Answer 16

global TNC
comms tech
economic and political transitions
transport
trade liberalisation

Question 17

Pros of globalisation

Answer 17

• lower prices - increased intl comp (greater choice and quality of goods/raw materials)
• benefits of trade (trade blocs and WTO): tax revenue
• greater employment; increased demand, multiplier effect
• benefits from large EOS
• free movement of labour and cpaital leads to FDI
• tech transfers and innovation

Question 18

Cons of globalisation

Answer 18

• growing inequality; relative poverty may increase, repatriation of profits
• higher structural unemployment as TNC easily move to where labour costs are cheapest
• enviro costs; land degradation, deforestation, water scarcity, loss of biodiversity
• trade imbalances: surpluses/deficits can lead to protectionist responses
• greater risk of external shocks; macro economics fragility
• less cultural diversity; cultural dilution
• tax avoidance; avoid corporation tax
• brain drain

Question 19

globalisation of financial markets

Answer 19

• growth of intl stock markets and developments of financial instrumetns like derivatives ahve enabled unvestors to invest in global assets like stocks

Question 20

migration

Answer 20

-growth of intl student exchnage programme, movement of highly skilled workers