4.14.1 Globalisation

Question 1

Globalisation

Answer 1

increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies

Question 2

What was the value of global trade in 2000?

Answer 2

approximately $6.45 trillion

Question 3

What was the value of global trade by 2020?

Answer 3

$19 trillion

Question 4

What are 2 of the most significant factors that have led to the rapid increase in the pace of globalisation?

Answer 4

improvements in containerised shipping and the innovation in communication technology

Question 5

Containerised shipping

Answer 5

A system in which goods are placed in large metal containers for transportation in bulk

Question 6

Give 6 other cause of globalisation

Question 7

How is economies of scale a cause of globalisation?

Answer 7

Economies of scale generated by containerisation in the shipping industry

Question 8

How is technology a cause of globalisation?

Answer 8

The improved ability for firms to easily connect and promote themselves internationally as a result of the internet and improvements to communications technology e.g Skype, WhatsApp, WeChat etc

Question 9

How is the growth of the WTO a cause of globalisation?

Answer 9

The Increased effectiveness of the World Trade Organisation (WTO) in negotiating new trade agreements and in helping countries to open up to free trade (trade liberalisation), thus increasing international specialisation and the volume of trade

Question 10

How are multinational corporations a cause of globalisation?

Answer 10

A rapid growth in the number and influence of transnational corporations

Question 11

How are geopolitical changes a cause of globalisation?

Answer 11

The end of the cold war between Russia and the West in 1990 opened up former communist countries around the world enlarging the global supply of labour

Question 12

How many people migrated from East Germany to West Germany between when showing impact of geopolitical change?

Answer 12

800,000 between 1990-1991

Question 13

How is deregulation a cause of globalisation?

Answer 13

In the 1990’s there was deregulation of many financial markets which resulted in the expansion of global financial services & provided more access to capital

Question 14

4 main characteristics of globalisation

Answer 14

Increasing foreign ownership of companies

Increasing movement of labour & technology across borders

Free trade in goods/services

Easy flows of capital (finance) across borders

Question 15

What has unfortunately become easier for global firms with increased globalisation?

Answer 15

Tax avoidance

Question 16

Tax avoidance

Answer 16

Legal methods used by businesses to minimise their tax liability

Question 17

How do firms engage in tax avoidance?

Answer 17

Exploiting loopholes or taking advantage of differences in tax laws amongst countries

Question 18

Consequences of globalisation for less economically developed countries

Answer 18

Reduction in absolute poverty

Employment opportunities

Depletion of natural resources

Increased power of monopolies

Question 19

How can increased globalisation cause a reduction in absolute poverty in less developed countries?

Answer 19

Globalisation facilitates the flow of taxes from multinational corporations (MNC’s) to host countries, enabling investment in vital public services such as healthcare, education, and infrastructure. This improves economic development

Question 20

How can increased globalisation cause increased employment opportunities for less developed countries?

Answer 20

Increased involvement in global markets can generate jobs and higher incomes, potentially triggering a multiplier effect that stimulates overall economic growth.

However, concerns arise regarding MNCs’ exploitation of low-wage labour and poor working conditions in some instances, such as sweatshops

Question 21

How can increased globalisation bring about depletion in natural resources in less developed countries?

Answer 21

Some MNC’s may exploit legal loopholes like transfer pricing and engage in corrupt practices, leading to the depletion of natural resources in developing countries.

This phenomenon has been likened to a form of ‘new colonialism’

Question 22

Transfer pricing

Answer 22

Technique used by MNCs to shift profits out of the country where they operate and into tax havens

Question 23

How can increased globalisation increase the power of monopolies in less developed countries?

Answer 23

Large firms can dictate prices and production levels across various regions. They may manipulate governments and gain access to raw materials through bribery and corruption

Question 24

Consequences of globalisation for more economically developed countries

Answer 24

Increase trade

Increase capital flow

Question 25

How is increased trade through globalisation a benefit for developed countries?

Answer 25

Trade favours more economically developed countries. They export more manufactured goods at much higher prices and import cheaper raw materials from poorer countries

Question 26

How is increased capital flow through globalisation a benefit for developed countries?

Answer 26

The profits earned by MNCs are often repatriated to their home country

Question 27

What is a Multinational Corporation (MNCs) ?

Answer 27

Company that has business operations in at least one country other than its home country

Question 28

Give an example of an MNC and how it is one

Answer 28

Starbucks headquarters are in Washington, USA but they have 32,000 stores in 80 countries

Question 29

Give 4 factors of MNCs that demonstrate their roles in globalisation

Answer 29

Cross-border trade Technology flow Labour mobility Capital flow

Question 30

Explain cross-border trade through MNCs

Answer 30

MNCs has facilitated increased trade and a greater choice of goods on the global market They have also increased cultural globalisation, as western values replace local cultures and goods with global brands such as Coca-Cola, Nike, and Apple

Question 31

Explain technology flow through MNCs

Answer 31

MNCs often bring a rapid spread of technologies and production methods to the countries where they operate Containerised shipping and the innovation in communication technology by MNCs has enabled quick and efficient trade and spread of goods across borders

Question 32

Explain labour mobility through MNCs

Answer 32

Increased opportunities from large MNCs has influenced the movement of labour It also impacts the structure of employment in a country. Deindustrialisation has meant that entire productions have been outsourced to less economically developed economies due to cheaper resources and labour. This may cause structural unemployment in more economically developed countries

Question 33

Explain capital flow through MNCs

Answer 33

There is a increased flow of international capital through FDI across borders Better roads, transportation and access to electricity improve international connections, increasing global networks