Globalisation

• Globalisation is the geographic dispersion of industrial and service activities, for example research and development, sourcing of factor inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets
• Globalisation benefits:

  • Increased trade
  • Greater competition
  • Economies of scale
  • Increased capital and labour mobility
• Globalisation costs:

  • Monopoly power multinationals
  • Structural unemployment
  • Tax avoidance is easier
• Factors promoting globalisation:

  • Trade in goods/services
  • Transnational companies
  • International flows
  • Foreign ownership of firms
  • Communications and IT
  • Reduction in trade barriers
  • Deregulation of financial markets
• Costs of globalisation for a developed economy:

  • Tax competition and avoidance
  • Brain drain
  • Reduced competition
  • Structural unemployment
• Benefits of globalisation for a developed economy:

  • Lower prices
  • Greater choice
  • Economies of scale
  • Free movement of labour
  • Cheaper labour
• Costs of globalisation for a developing economy:

  • Environmental costs
  • Less cultural diversity
  • Labour drain
  • Economic instabilty
  • Depletion of natural resources
• Benefits of globalisation for a developing economy:

  • Increased global investment
  • Increased world integration
  • Increased standard of living
  • Increase in GDP Per Capita