4.1.1 Globalisation
Cards (8)
- What is globalisation?Refers to the increased interconnection between countries economically, socially and culturally
- What is Foreign direct investment?Occurs when a company in one country establishes operations
- What are the characteristcis of globalisation?
- An increase in the ratio of the value overseas trade to a nation's GDP becoming more open to international trade
- Expansion of financial capital flows from one country to another increasing movement of money
- Increasing FDI flows moving across national borders
- More global brands including a rising number from emerging countries
- What are the characteristics of gloabalisation?
- Deeper specialisation of labour in making specific component parts of technology transfers
- Creation of global supply chains and new trade investment routes in the world economy
- High levels of labour migration across national borders
- Increased connectivity of people, communities and businesses through networks
- What are causes of globalisation?
- A decrease in transport costs
- A decrease in the cost of communications
- A reduction in world trade barriers
- The opening up of China and the collapse of communism in Eastern Europe
- The growth of trading blocs
- The increased importance of global companies or transnational companies
- What are the economic benefits of globalisation?
- Cheaper goods and services for consumers
- More competition in consumer markets
- Reduction in absolute poverty rates
- Gains from specialisation of factors of production
- Rapid transfers of ideas which stimulates innovation
- Gains from improved labour mobility
- What are advantages to FDIs?
- Diversifies investors portfolio
- Promotes stable long term trading
- Provides financing to developing countries
- Provides technology to developing countries
- What are disadvantages to FDIs?
- Not suitable for strategically important industries
- Investors may have less moral attachment
- Unethical access to local markets