Globalisation

Question 1

What is globalisation

Answer 1

The process of greater integration and inter-connectedness between countries

Question 2

Characteristics of globalisation

Answer 2

growth of international trade

Global branding

Trade liberalisation

Increased international capitalism

increased outsourcing

De-industrialisation in developing countries

MNCs

Question 3

Factors contributing to globalisation in the last 50 years

Answer 3

Trade agreements

Reduced tariffs and protectionism

Improved technology

Global trading blocs

Greater labour mobility

growth of MNCs

Improvements in transportation

Greater openness of former ‘closed’ economies

Question 4

Reduced tariffs and protectionism contributing to globalisation last 50 years

Answer 4

A large number of countries with significant global economic influence have lowered protectionist measures

Trump and China recently reintroduced them

Question 5

Improved technology contributing to globalisation

Answer 5

Technology has revolutionised communications, lowered labour costs and enabled businesses to access new foreign markets

Question 6

More globalised financial systems contributing to globalisation

Answer 6

Relaxation of the rules and regulations surrounding the movement of capital across the globe

Question 7

Greater ‘openness’ of former ‘closed’ economies contributing to globalisation last 50 years

Answer 7

India and China were previously largely closed to trade

Have become increasingly integrated into the global economy and play a vital role in the creation of new markets

and the provision of low cost labour

Question 8

Positive impacts of globalisation

Answer 8

Improved allocation of resources

Free trade

Inward investment

Specialisation

Question 9

Negative impacts of globalisation

Answer 9

Inequality

Environmental impacts

Structural unemployment

Movement of labour - Brain Drain

Damage to traditional cultures

Contagion e.g. Financial crisis

Question 10

Positive impacts of globalisation -MNCs

Answer 10

Capital inflows and inward investment

Employment opportunities for local workers

Infrastructure improvements

Diversification

Standards

Economic growth

Increase choice for consumers

Technology transfer

Question 11

Negative impacts of globalisation

Answer 11

Profit motive

Impact on small firms

Environmental impacts

Exploitation

Taxation

Question 12

Capital inflows and inward investment - Positive impact of MNCs

Answer 12

MNCs are principally driven by profit motives

If they spot opportunities for new markets or chance to reduce costs of production

Move to low wage economies, driving capital expenditure and investment funds into a country

Question 13

Infrastructure improvements - Impact of MNCs

Answer 13

MNCs will often invest in training the workforce, and will spend money on local roads and transport to aid their own trading opportunities and distribution

Question 14

Diversification - Impacts of MNCs

Answer 14

Developing countries may have very few industries to help them generate economic growth

The arrival of MNCs may help to diversify the economy across a wider range of businesses and sectors

Question 15

Standards - impact of MNCs

Answer 15

MNCs will often work towards the provision of minimum standards in production e.g. health and safety considerations

Or improve the final quality of goods and services

Question 16

Technology transfer - Impacts of MNCs

Answer 16

Modern technology and managerial techniques are transferred enabling local companies to develop - leapfrogging

Question 17

Economic growth - Impact of MNCs

Answer 17

Improved Balance of Payments on current account, increased employment

Question 18

Profit motive - negative impact of MNCs

Answer 18

Profit may come at the expense of consumers and employees

Question 19

Impact on small firms - Negative Impacts of MNCs

Answer 19

It is unlikely that small, local companies will be able to compete with large MNCs

consequently they may be unable to survive in the market place, reducing overall competition

Question 20

Environmental impact - Negative impact of MNCs

Answer 20

MNCs may choose to locate in countries or regions with fewer environmental laws

Whilst this may reduce costs, it may also increase pollution and create negative externalities

Question 21

Exploitation - Negative impact of MNCs

Answer 21

Exploitation of local resources and labour force for their own gain

Shareholders of the home nation enjoy the dividends from profits

Question 22

Taxation - Negative impact of MNCs

Answer 22

MNCs will often move their ‘home’ for tax purposes, usually to minimise tax liability e.g. Apple and Amazon

Question 23

The impact of globalisation depends on

Answer 23

Level of development

Education and transferrable skills

Quality of governance

Legislation

income redistribution system

Question 24

Level of development depends on factor - Impact of globalisation

Answer 24

Globalisation increases FDI and trade integration

Strong infrastructure = higher productivity and wages

However:

In developing economies, reliance on primary goods and weak infrastructure

MNCs extract resources without value added domestically

Limited multiplier effect

Depends on stage of development and ability to move up the value chain

Question 25

Education & transferrable skills - depend on factor for impact of globalisation

Answer 25

Low skills —> labour stuck in low-paid, informal sector jobs Increases inequality as skilled wages rise faster Depends on human capital investment and labour mobility

Question 26

Quality of governance as a depends on factor - Impact of globalisation

Answer 26

If governance is strong then investor confidence and FDI inflows lead to higher long-term investment Weak governance —> corruption and profit repatriation benefits leak out of economy Limited development Depends on institutional strength and corruption levels

Question 27

Legislation as a depends on factor - Impact of globalisation

Answer 27

Legislation may increase costs causing firms to relocate, leading to reduced employment Weak legislation —> attracts FDI leading to increased employment BUT poor working conditions and environmental damage Depends on balance between competitiveness and regulation

Question 28

Income redistribution system as a depends on factor - Impact of globalisation

Answer 28

globalisation can increase inequality (skill-biased growth) Effective redistribution (tax + welfare) —-> reduced income inequality Wider pop benefits from growth However: Weak redistribution —> gains concentrated among skilled/MNC owners Increased inequality and regional disparities Depends on government policy effectiveness and fiscal capacity