Globalisation

Question 1

Causes of globalisation

Answer 1

Transport costs
Communication costs
Freer trade
Freer capital / global liberalisation
Collapse of communism + rise of Asia - China, India

Question 2

Transport costs causing globalisation

Answer 2

Containerisation - allows firms to gain technical economies of scale
Infrastructure has improved - railway lines, ports, airports, canals e.g. China Belt and Road initiative

Question 3

Communication costs causing globalisation

Answer 3

Free knowledge transfer via internet allows growth of TNCs
Contestability and low BTE
Trade in services leading to offshoring

Question 4

Freer trade causing globalisation

Answer 4

More trade blocs leading to trade creation

Question 5

Economic liberalisation causing globalisation

Answer 5

Deregulation of financial markets allows for easier movement of money and capital, enabling more global transactions
Increases FDI which shifts out out LRAS

Question 6

Collapse of communism + rise of Asia causing globalisation

Answer 6

Offshoring for low labour costs and high labour quantities
Rural to urban migration increases supply of labour, decreasing wages whilst increasing output

Question 7

Greenfield

Answer 7

Start-up / new venture from scratch in a new country
e.g. Nissan in UK, Tesla in Germany

Question 8

Takeover

Answer 8

Take ownership of another company horizontally or vertically
e.g. BMW now owning Mini

Question 9

Joint venture

Answer 9

Foreign + domestic partners
e.g. VW + SAIC