GLOBALISATION

Question 1

WHAT IS GLOBALISATION?

Answer 1

REFERS TO THE INCREASING INTERDEPENDENCE AND INTEGRATION OF ECONOMIC ACTORS (PRODUCERS, CONSUMERS, GOVT, ENTREPRENEURS).

Question 2

WHAT IS GLOBALISATION CHARACTERISED BY?

Answer 2

1. INCREASED INTERDEPENDENCE
2. INCREASED GLOBAL TRADE
   3.INCREASED LEVELS OF MIGRATION
3. GLOBAL CAPITAL INFLOWS I.E HOT MONEY
4. GROWTH OF MNCs
5. HIGHER LEVELS OF FDI
6. OUTSOURCING AND GLOBAL SUPPLY CHAINS

Question 3

WHAT R THE CAUSES OF GLOBALISATION?

Answer 3

1. TRANSPORTATION COSTS ( INCLUDING CONTAINERISATION)
2. CHANGES IN TECH E.G COMMUNICATION AND IT (THE INTERNET)
3. REDUCTION OF TRADE BARRIERS/TRADE AGREEMENTS E.G WTO
4. DEREGULATION OF FINANCIAL MARKETS
5. POLITICAL CHANGES

Question 4

WHAT R THE ADVANTAGES OF GLOBALISATION FOR COUNTRIES?

Answer 4

INCREASED EXPORT REVENUE FOR COUNTRIES LIKE CHINA, LIFTING MILLIONS OUT OF POVERTY AS A RESULT.

Question 5

WHAT R THE DISADVANTAGES OF GLOBALISATION FOR COUNTRIES?

Answer 5

1. AREAS E.G NORTH OF ENGLAND HAVE SEEN LARGE DECLINES FROM THE ENDING OF INEFFICIENT INDUSTRIES - INCREASED INEQUALITY
2. CULTURAL IMPERIALISM
3. EXTERNAL SHOCKS (CONTAGION)

Question 6

WHAT R THE ADVANTAGES OF GLOBALISATION FOR THE GOVT?

Answer 6

HIGHER GROWTH

Question 7

WHAT R THE DISADVANTAGES OF GLOBALISATION FOR THE GOVT?

Answer 7

1. PRESSURE TO LOWER TAXES AND WATER DOWN REGULATIONS TO ENCOURAGE FDI AS A RESULT OF GROWING MNCs
2. REDUCED SOVEREIGNTY OF GOVTS

Question 8

WHAT R THE ADVANTAGES OF GLOBALISATION FOR PRODUCERS?

Answer 8

1. BENEFIT FROM REDUCED COSTS FROM OUTSOURCING
2. FIND NEW MARKETS TO SELL THEIR PRODUCTS

Question 9

WHAT R THE DISADVANTAGES OF GLOBALISATION FOR PRODUCERS?

Answer 9

1. HIGH LEVELS OF MIGRATION CREATE “BRAIN DRAIN” WHERE THERE R A LACK OF SKILLED WORKERS.

Question 10

WHAT IS BRAIN DRAIN?

Answer 10

EMIGRATION OF HIGHLY SKILLED WORKERS - MAY BE SEEKING BETTER PAY, OPPORTUNITIES OR LIVING STANDARDS

Question 11

WHAT R THE BENEFITS OF GLOBALISATION FOR CONSUMERS?

Answer 11

1. INCREASED CHOICE FROM BUYING FOREIGN PRODUCTS
   LOWER PRICES FROM GLOBAL COMPETITION AND REDUCED TRADE BARRIERS

Question 12

WHAT R THE ADVANTAGES OF GLOBALISATION FOR WORKERS?

Answer 12

GREATER OPPORTUNITY TO MIGRATE IN SEARCH OF HIGHER WAGES.

Question 13

WHAT R THE DISADVANTAGES OF GLOBALISATION FOR WORKERS?

Answer 13

1. IMPORTS MAY REPLACE TRADITIONAL INDUSTRIES LEADING TO UNEMPLOYMENT
2. INCREASED COMPETITION FROM ABROAD LEADS TO LOWER WAGES

Question 14

WHAT R THE ADVANTAGES OF GLOBALISATION FOR THE ENVIRONMENT?

Answer 14

1. INCREASED COMMUNICATION LEADS TO LESS TRAVEL AND IT MAY BE EFFICIENT TO IMPORT PRODUCTS RATHER THAN USE RESOURCES GROWN DOMESTICALLY E.G CHILLIES IN ICELAND.

Question 15

WHAT R THE DISADVANTAGES OF GLOBALISATION FOR THE ENVIRONMENT?

Answer 15

INCREASED TRADE LEADS TO MORE TRANSPORT AND HENCE POLLUTION.

Question 16

WHAT R THE REASONS WHY GLOBALISATION IS GOOD FOR THE WORLD?

Answer 16

1. HUGE INCREASES IN WORLD GDP
2. REDUCTION IN ABSOLOUTE POVERTY
3. LOWER PRICES FOR CONSUMERS
4. MORE EFFICIENT PRODUCTION THROUGH SPECIALISATION

Question 17

WHAT R THE REASONS WHY GLOBALISATION IS BAD FOR THE WORLD?

Answer 17

1. STRUCTURAL UNEMPLOYMENT
2. HIGHER INEQUALITY
3. WORKER EXPLOITATION
4. ENVIRONMENTAL DAMAGE
5. EXTERNAL SHOCKS (CONTAGION)

Question 18

WHAT R THE WAYS IN WHICH CAN THE NEGATIVE EFFECTS OF GLOBALISATION BE MITIGATED BE MITIGATED?

Answer 18

1. PROTECTIONISM TO RESTRICT TRADE
2. ANY EXPANSIONARY MONETARY/FISCAL POLICIES
3. ANY SUPPLY SIDE POLICY TO REDUCE INFLATION/INCREASE MOBILITY OF LABOUR/BOOST PRODUCTIVITY

Question 19

WHAT IS DE-GLOBALISATION?

Answer 19

THE RETREAT OF GLOBALISATION, AS COUNTRIES BECOME LESS INTERDEPENDENT.

Question 20

WHAT R THE CAUSES OF DE-GLOBALISATION?

Answer 20

1. RISE IN ECONOMIC NATIONALISM E.G BREXIT AND OTHER ANTI-EU/NAFTA PROTESTS
2. GREATER USE OF PROTECTIONISM
3. FOCUS ON BILATERAL/REGIONAL RATHER THAN INTERNATIONAL TRADE AGREEMENTS.

Question 21

WHAT R EXTERNAL SHOCKS?

Answer 21

INDIVIDUAL COUNTRIES CAN BE AFFECTED BY SHOCKS THAT OCCUR IN OTHER COUNTRIES E.G SPIKES IN COMMODITY PRICES I.E OIL CAUSING INFLATION, A FINANCIAL CRISIS, POLITICAL OR ECONOMIC PROBLEMS IN A MAJOR TRADING PARTNER.

Question 22

WHAT POLICIES CAN BE USED TO RESPOND TO EXTERNAL SHOCKS?

Answer 22

1. EXPANSIONARY FISCAL STIMULUS THROUGH INCREASED GOVT SPENDING AND LOWER TAX
2. EXPANSIONARY MONETARY POLICY - LOWER IR (POSSIBLY NEGATIVE) OR QE(THROUGH PURCHASING EITHER CORPORATE OR GOVT BONDS)

Question 23

WHAT PROBLEMS DO POLICY MAKERS FACE WHEN MAKING DECISIONS?

Answer 23

1. INACCURATE INFO
2. RISKS AND UNCERTAINTIES
3. INABILITY TO CONTROL EXTERNAL SHOCKS

Question 24

WHAT POLICIES CAN A GOVT USE TO CONTROL THE BEHAVIOUR OF MNCs?

Answer 24

1. LIMITS ON TRANSFER PRICING
2. REGULATIONS
3. LIMITS ON CONTROLLING MNCs

Question 25

WHAT R REASONS WHY GLOBALISATION IS GOOD FOR UK'S PUBLIC FINANCES?

Answer 25

1. ATTRACTS FDI 2. JOBS FOR TRADE/EXPORT 3. HIGHER PROFITS FOR UK FIRMS - TAX RECEIPTS 4. FOREIGN BUYERS OF BONDS LEAD TO CHEAPER BORROWING 5. MIGRATION IMPACTS

Question 26

WHAT R REASONS WHY GLOBALISATION IS BAD FOR UK'S PUBLIC FINANCES?

Answer 26

1. RACE TO THE BOTTOM IN TERMS OF TAX RATES 2. OFFSHORE TAX AVOIDANCE/EMIGRATION 3. COULD LEAD TO HIGHER INEQUALITY/STRUCTURAL UNEMPLOYMENT 4. SPENDING ON ENVIRONMENT

Question 27

WHY DO MORE COUNTRIES SUFFER FROM MORE SEVERE RECESSIONS THAN OTHERS?

Answer 27

1. GREATER DEPENDENCE ON EXPORTS 2. DIFFERENT POLICY RESPONSE 3. DIFFERENCES IN CONSUMER AND BUSINESS CONFIDENCE