Topic 1: Globalisation

Question 1

Evidence that globalisation is occurring

Answer 1

• increased trade as a proportion of GDP e.g world exports are increasing as a percentage of world gdp
• increased foreign direct investment (FDI) when manufacturing plants have moved from developed countries to low wage developing countries e.g Toyota manufacturing plant moving from developed to a low wage countries
• increased capital flows between countries, stock exchange, currency, bond market,real estate, mergers and acquisitions
• increased movement of labour between countries

Question 2

Globalisation

Answer 2

Is the increased economic, cultural, political and social integration between countries

Question 3

Causes of globalisation

Answer 3

• decrease in cost of transport (containerisation):large q’s of g’s can be transported by sea and roads at v low costs due to economies of scale
• decrease in cost of communication e.g Internet (social media)
• reduction in trade barriers due to WTO&GATT
• growth in trading blocs (free trade between member countries e.g NAFTA, SADC, EU, ECOWAS)
• increase in importance of transnational companies e.g offshoring
• higher real incomes>increase D for imported goods

Question 4

Benefits of globalisation

Answer 4

1. )higher living standards:countries specialising in a comparative advantage e.g financial service in UK is exported most
2. ) economies of scale: firms produce on a large scale➡️benefit from falling long run average costs
3. ) lower prices: offshoring/internet businesses = more competitive consumer more for their ££
4. ) increased consumer choice
5. )⬇️in absolute poverty in developing countries ⬆️in real GDP
6. ) increased tax revenues: ⬆️GDP➡️gov will receive ⬆️tax revenues➡️spend on public services
7. ) technology:TNCs invest in new countries ➡️bring modern technology➡domestic firms/compan copy➡️⬆️in productivity
8. ) new managerial techniques ➡️⬆️productivity

Question 5

Costs of globalisation

Answer 5

1. )Negative externalit:⬆️trade + ⬆️production ➡️⬆road/air transport CO2 emissions➡️ poll
2. ) over dependance/reliance on imports
3. ) increased inequality: demand for unskilled labour has ⬇️ in developing countries ➡️⬆️earnings gap (high and low paid workers)
4. )exploitation of labour:migrant workers&child labo
5. ) exploitation of resources: depletion of natural resources, pollution
6. ) ⬆️tax avoidance: TNCs engage in transfer pricing➡️minimise tax burden by claiming profits in countries with much lower corporation tax