4.1.1 - Globalisation

Question 1

What is the importance of Globalisation?

Answer 1

An expansion of trade in goods and services between countries
An increase in transfers of financial capital across national boundaries
Development of global brands
Shifts in production and consumption
Increased level of labour migration
Shifts in economic and political strength

Question 1

What is globalisation?

Answer 1

Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade, communication and cultural exchange.

Question 2

How much has trade increased?

Answer 2

4411% increase between 1950-2024

Question 3

What has contributed to increasing world trade

Answer 3

Innovation in technology
Improvement in communications
Free trade agreements
Peace

Question 4

Why would trade have fell in the periods 1950-2024?

Answer 4

2008 financial crisis and Covid

Question 5

What are the 6 reasons why Globalisation has increased?

Answer 5

Improved communications
Improved transportation
Free trade agreements
Global banking
Growth of MNC’s
Labour cost and skills

Question 6

How has development of communication increased globalisation?

Answer 6

Development of communication technology such as the internet have caused vital growth to globalisation because they help MNC’s to operate around the world. Development of satellite to provide world wide market avenues.

Question 7

How has improved transport increased globalisation?

Answer 7

Development of container transport bulk shipping and improved air transport allowed the easy mass movement of goods around the world that assists globalisation. Shipping costs 1-3% of product cost.

Question 8

How has free trade increased globalisation?

Answer 8

Rich capitalist countries have always promoted global free trade which increases their own wealth and influence. International organisations such as WTO and IMF promote free trade.

Question 9

How has Global banking increased globalisation?

Answer 9

Modern communication tech allows vast amounts of capital to flow freely and instantly world wide. 1.3 trillion traded each day through international stock. Exchanged in large cities.

Question 10

How has growth of MNC’s increased globalisation?

Answer 10

Rapid growth of big MNC’s such as Microsoft cause and are as a consequences of globalisation. Investment of MNC’s in farms and factories across the world is a part of globalisation allows them to produce at lower costs.

Question 11

How has costs and skills increased globalisation?

Answer 11

India and Thailand have very low labour costs and also high level of skills and specialisation. Labour intensive industries like clothing take advantage of lower labour costs and reduced regulation in LEDC’s

Question 12

How relevant are the causes of globalisation currently?

Answer 12

Behaviour of MNC’s - still relevant still lots of developing nations which MNC’s invest in.

Transport improvements - Not relevant not much can be done to improve transport

Financial flows - Still relevant developing nations benefit from investment by banking systems becoming better

Labour skills and costs - Not relevant for developed countries as labour costs are never going to become cheaper and productivity hard to increase however opposite for developing countries

Freedom of trade - Still relevant still new trade agreements that are formed

Communication - Not relevant cannot improve communication however can in developing countries.

Question 13

What are some of the costs of Globalisation?

Answer 13

Low-skilled workers may face rising income inequality compared with high-skilled workers.

Chief among the losers of globalisation are shareholders in industries that cannot compete with foreign manufactures

Faced with unemployment, workers in declining industries will need temporary assistance and longer term assistance

Question 14

What are some of the benefits of globalisation?

Answer 14

Moving less-skilled labour to low-wage countries increases the relative demand for higher-skilled workers

Without competition from international trade, product quality would not be as good as it is today

Increases in the demand for skilled labour are clear market based incentives to workers to boost their education levels

People and nations can produce more goods and services when they specialise

Question 15

What are the key benefits of globalisation?

Answer 15

Standards of living can improve.

Specialisation which can allow workers to demand higher pay country can have a competitive advantage

Opportunities for economic growth in developing countries reducing poverty

Structural changes developing nations have opportunities for industrialisation

Interdependence connections with other countries grow increased choice

Environmental impacts reduced due to increased access to new tech

Question 16

What are the some of the key costs of globalisation?

Answer 16

Standards of living may fall through increased unemployment and domestic demand will fall

Specialisation creates dependency and MNC exploit developing nations

Economic growth creates inflationary pressure and greater effects on poverty

Structural changes cause environmental damage

Interdependence may cause tension downside for domestic industries

Question 17

What are the impacts of globalisation on workers?

Answer 17

Increased migration may affect workers by lowering wages but migrants can offer skills and increase in AD increasing jobs

International competition leads to a fall in wages for low skilled workers in developed countries, whilst increasing those in developing countries

The wages for high skilled workers are increasing since there is greater demand for their work increasing inequality

TNC’s provide training for workers and create new jobs

Question 18

What are the impacts of globalisation on producers?

Answer 18

Firms are able to source products for more countries and export in more countries. Reducing risk if a collapse of the market of one country has a smaller impact on business.

Able to employ low skilled workers much cheaper in developing countries and exploit comparative advantages have a larger market increasing profits

Firms who cannot compete internationally lose out

Question 19

What are the impacts of globalisation on the government?

Answer 19

The government might receive higher taxes, since TNCs pay tax and so do the people they employ. Possible tax avoidance

TNC’s also have the power to bride and lobby governments leading to corruption

If government uses the correct policies they can maximise gains and minimise losses.

Question 20

What are the impacts of globalisation on the environment?

Answer 20

Increase in world population increases demand for raw materials bad for environment.

Increased trade and production leads to more emissions.