4.1.3 Factors contributing to increased globalisation Flashcards

1
Q

What are the factors that contribute to increased globalisation?

A
  • reduction of international trade barriers
  • political change
  • reduced costs of transport/communication
  • increased significance of global companies
  • increased fdi
  • migration of workers
  • growth of the global labour force
  • structural change
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2
Q

Trade liberalisation

A

-Trade liberalisation is the process by which international trade is made easier through a relaxation of the rules which govern it

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3
Q

Rationale for trade liberalisation

A
  • Makes markets more competitive
  • Creates opportunities for business
  • Consumers benefit through lower prices and wider range of quality goods and services
  • Companies benefit as it can help diversify risks and allocate resources more efficiently (where returns are greatest)
  • With domestic policies, trade openness facilitates competition, investment and increases in productivity
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4
Q

Why are there tariffs?

A
  • governments want to protect their domestic businesses so they use tariffs, quotas to slow the rate of imports coming into a country
  • tariffs are important sources of income for poor countries
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5
Q

Benefits of trade liberalisation

A
  • allows a business to diversify and spread risk across channels
  • results in competition, investment and increases productivity
  • provides access for opportunities
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6
Q

Drawbacks of trade liberalisation

A
  • competition can become intense - profit margins are squeezed
  • employment made lower trade barriers may only be temporary
  • developing nations become too dependant
  • pollution and over-cultuvation
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7
Q

Political change

A
  • happens in a global scale with regular meetings
  • led to fewer protectionist policies and more open trade barriers between countries
  • created trade blocs - EU, ASEAN, NAFTA
  • G7,G20
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8
Q

Reduced cost of transport/communication

A

-Fallen transport costs since the 1970s
-Low fuel costs, oil scores grow
-Lower transport costs have contributed to global trade.
-New technologies have also helped to keep transport
cost down
-The increase in air travel has also allowed for more
goods to be transported globally.

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9
Q

How has reduced costs of transport impacted globalisation?

A

-Internet allows for easier comparison for cheaper alternatives
-Allows cheaper outsourcing to foreign countries
-Technology advancements leads to easier
communication
-Contributed to an increase in world trade
-Changed the way many business services are
bought and sold e.g. offshoring of call centres

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10
Q

Increased significance of global companies

A
  • Cultural diffusion as world culture becoming culturally assimilated
  • Capital transferred between economies through repatriation
  • Increase in global supply chains
  • MNC’s headquarters
  • Transport costs usually discourage trade due to their high costs but the recent lower transports costs have encouraged trade further
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11
Q

How has the increased significance of global companies impacted globalisation?

A

-Increased spread of cultures
-Westernisation
-global flows
• Transfer of skilled workers with MNCs
-TNC’s monopolise the market
-Without the improved technology, they would not have been an interdependence between economies and countries which would have made transnational companies near to impossible to exist – this is because of a lack of global communication

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12
Q

Increase FDI

A
  • As a country grows it appears more lucrative as an investment opportunity therefore attracts greater FDI
  • FDI may affect growth positively because FDI, which moves in general from capital-rich countries to capital-scarce economies, lowers the costs of borrowing and increases production by enhancing labour productivity and introducing new technology embedded in the capital
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13
Q

How has the increased FDI impacted globalisation?

A

-Better technology
-Lower prices for consumers
-Develops human capital
-Increased risk of a global financial crisis as
globalised financial markets have increased the risk of global financial crises, originating in one country and spreading internationally
- An increase in FDI will increase the demand for the currency of the receiving country, and raise its exchange rate

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14
Q

Migration of workers

A
  • More movement of people due to trade liberalisation
  • Social acceptance of women working growing globally
  • Trade Blocs create labour opportunities to move to
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15
Q

How has the migration of workers impacted globalisation?

A
  • Cultural diffusion -Increased income for worker
  • Impact negatively on domestic situation if leaving the home/moving the family
  • Greater pool of skilled labour; impact on wages
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16
Q

Growth of the global labour force

A
  • Reduced cost of transport
  • More movement
  • Growth in global labour force
  • greater pool of workers
17
Q

How has the growth of the global labour force impacted globalisation?

A

-Positive multiplier for local economy
-Business can select higher skilled employees
from abroad

18
Q

Structural change

A
  • Economic condition that occurs when an industry changes the way it operates
  • As a country develops it moves away from primary sector to manufacturing as it industrialises
  • It can then develop into a knowledge economy which specialises in tertiary sector businesses
19
Q

How has structural change impacted globalisation?

A
  • This move away from primary sector reliance can help pull a country out of poverty
  • As an economy grows there is more secondary sector activity/productivity therefore manufacturing increases and net incomes rise