Macro 16: Globalisation Flashcards
Globalisation - definition
> The increasing integration of economies internationally, which is making the world more like a single economy.
What caused globalisation? - list
- Improved Transport.
- Containerisation.
- Improved technology
- Growth of multinational companies
- Growth of national trading blocks
- Reduced tariff barriers
- Firms exploiting gains from economies of scale
- Growth of global media
- Global trade cycle
- Financial system increasingly global in nature
- Improved mobility of capital
- Increased mobility of labour
- Internet
What caused globalisation? - improved transport
> Improved transport, making global travel easier.
>E.g. there has been a rapid growth in air travel, enabling greater movement of people and goods.
What caused globalisation? - containerisation
> From 1970, there was a rapid adoption of the steel transport container.
This reduced the costs of inter-modal transport, making trade cheaper and more efficient.
What caused globalisation? - improved technology
> Improved technology which makes it easier to communicate and share information around the world (e.g. internet).
What caused globalisation? - growth of multinational companies
> Growth of multinational companies with a global presence in many different economies.
What caused globalisation? - growth of national trading blocks
> These have reduced national barriers.
>E.g. EU, NAFTA, ASEAN.
What caused globalisation? - reduced tariff barriers
> This encourages global trade.
>Often occurred through the support of the WTO.
What caused globalisation? - economies of scale
> Firms exploiting gains from economies of scale to gain increased specialisation.
This is an essential feature of the New Trade Theory.
What caused globalisation? - global trade cycle
> Economic growth is global in nature.
This means countries are increasingly interconnected.
E.g. a recession in one country affects global trade and causes an economic downturn in major trading partners.
What caused globalisation? - increasingly global financial system
> When the US banks suffered losses due to the sub-prime mortgage crisis, it affected all major banks in other countries who had bought financial derivatives from US banks and mortgage companies.
What caused globalisation? - improved mobility of capital
> In the past few decades, there has been a general reduction in capital barriers, making it easier for capital to flow between different economies.
This has increased the ability for firms to receive finance.
It has also increased the global inter-connectedness of global financial markets.
What caused globalisation? - increased mobility of labour
> People are more willing to move between different countries in search for work.
Global trade remittances now play a large role in transfers from developed to developing countries.
What caused globalisation? - internet
> This enables firms to communicate on a global level, this may overcome managerial diseconomies of scale.
The firm may be able to get cheaper supplies by dealing with a wider choice of firms.
Consumers are also able to order more goods online.
Diaspora - definition
> The dispersion/spread of any people from their original homeland.
