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13 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Define Globalisation |
Globalisation refers to increased integration between countries economically,socially,culturally |
Integration |
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Key characteristics of globalisation |
1. Increased FDI 2.Increased trade as a proportion of GDP 3. Increased movement of people between countries 4. Increased capital flows |
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Define FDI |
Occurs when a company in one country establishes operation in another country |
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Causes of globalisation |
1. A decrease in transport costs-for example containerisation resulted in economies of scale and falling long-run AC 2. A decrease in costs of communications 3.A reduction in world trade barriers-for example, WTO 4.Opening up of China 5.The growth of trading blocs 6.Increased importance of TNC’s |
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Advantages of Globalisation on producers |
1. Producers can benefit from economies of scale 2. Introduction of new managerial techniques from TNC’s that can increase productivity 3. Producers can benefit from dynamic efficiency, because of technological transfers |
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Impacts of globalisation on individual countries |
1. Lower trade barriers-increased trade where country has a comparative advantage- higher global output-higher living standards. 2. Evaluative point: But, country may not have comparative advantage in a good-reliance on import-deterioration in a current account of BOP. 3. Increased inequality-decrease d demand for unskilled workers in developed countries-increased earnings gap. |
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Impacts of globalisation on governments |
-Increased tax revenue -TNC’s may avoid paying taxes |
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Impact of globalisation on consumers |
-Decreased prices-increased consumer surplus |
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Impact of Globalisation on workers |
+Increased advantages of movement between countries -TNC’s may exploit work force - Possibility of structural unemployment |
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Impact on the environment |
-Negative externalities as pollution + FDI may invest in greener productions |
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Absolute Advantage |
A.A.- implies that a country can produce more of one product than another country can with same amount of resources |
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Comparative Advantage |
If a country has a comparative advantage it means it can produce a good with lower opportunity cost than another country |
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Explain The Law of Comparative advantage |
Assumptions: -No transport costs -Constant returns to scale -No trade barriers -Perfect mobility of factors of production between different users -Externalities are ignored |
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