Globalisation

Question 1

Globalisation definition

Answer 1

process by which economies and cultures have been drawn deeper together and have become more interconnected to through global networks of trade, capital flows + rapid spread of technology

Question 2

Advantages from Globalisation

Answer 2

• Encourages deeper division of labour -> more economies of scales
• more competitive markets through trade
• Trade can help drive faster economic growth -> higher per capita incomes
• advantages from the freer movement of labour
• Opening of capital markets e.g. bond and stock markets - opportunity for developing countries to borrow money to overcome domestic savings gap
• Increases awareness of effects of wealth/income inequality
• improved standards of governments + better labour protection

Question 3

Drawbacks from Globalisation

Answer 3

• Rising inequality/relative poverty
• Threats to the global commons e.g. deforestation
• Greater exploitation of the environment
• Macroeconomic fragility (systemic risk)
• increases in Trade imbalance (lead to protectionist tensions)
• Dominant global brands

Question 4

Causes of Globalisation?

Answer 4

• containerisation (real prices + costs of ocean and air shipping decreased using economies of scale)
• Technological advances (decrease cost in transmitting + communicating information)
• Differences in tax systems (inflows of FDI encouraged)
• Less protectionism (average import tariffs decreased)