4.1.1-Globalisation

• What is globalisation characterized by?

  Increased interdependence of economic agents.
• What are the main characteristics of globalisation?

  • Increased trade in goods and services
  • Increased foreign direct investment (FDI)
  • Increased foreign ownership of companies
  • Free movement of labour
  • Free interchange of technology and intellectual capital
  • De-industrialisation in developed countries
  • Increasing global media presence
• By what percentage did trade as a proportion of GDP increase from 1960 to 2010?

  From 25% to 57% of GDP.
• Why do manufacturing firms move to low-waged developing countries?

  To take advantage of lower labor costs.
• What is an example of a company that targets low-wage countries for manufacturing?

  Foxconn.
• What does increased foreign ownership of companies indicate?

  It reflects the free movement of capital.
• What was the estimated number of Eastern Europeans moving to the UK between 2004 and 2006?

  600,000.
• How does technology transfer occur in globalisation?

  Through MNCs/TNCs moving operations and sharing skills.
• What economic sector has the UK specialized in due to globalisation?

  Financial services.
• What was the percentage of manufacturing industry in the UK GDP in 2014?

  10.3%.
• What role does social media play in globalisation?

  It facilitates awareness and establishment of global brands.
• What are the factors contributing to globalisation in the last 50 years?

  • Improvements in transport infrastructure
  • Improvements in communications technology
  • Trade liberalisation and reduced protectionism
  • Increase in trading blocs
  • Influence of multinational companies
  • Collapse of Communism and end of the Cold War
  • Development of international financial markets
  • Deregulation of capital markets
• How has containerisation impacted global trade?

  It has reduced transportation costs, making offshoring profitable.
• What technology has facilitated greater efficiency in business communications?

  The internet.
• What has been the effect of trade liberalisation on world trade?

  It has resulted in increased world trade and integration.
• How do trading blocs affect globalisation?

  They can promote trade among members but inhibit trade with non-members.
• What is a potential downside of multinational companies in developing countries?

  They may exploit workers and pay low wages.
• What significant economic reform occurred in China in the late 1970s?

  Opening up of the economy.
• What has been a consequence of the financial crisis of 2008/9 on globalisation?

  It restricted the rate of further global integration.
• What are the economic effects of globalisation?

  • Lower prices for goods and services
  • More consumer choice
  • Higher incomes and job creation
  • Higher living standards
  • Reduced income inequality
  • Economies of scale
  • Increased tax revenue
  • High levels of economic growth
• How does globalisation affect consumer prices?

  It generally lowers prices due to competition.
• What is a negative consequence of increased production and trade?

  Exploitation of natural resources.
• How has globalisation impacted income inequality in developing countries?

  It has reduced income inequality by increasing employment and incomes.
• What is a potential risk of high levels of economic integration?

  Increased susceptibility to economic shocks.
• What is the impact of economies of scale on firms?

  It allows firms to lower average costs and increase profitability.
• What is a consequence of TNCs engaging in transfer pricing?

  Less tax revenue for governments.
• How can deregulation of capital markets affect businesses?

  It facilitates the free movement of capital, making operations easier.
• What is the relationship between globalisation and job creation in developing countries?

  Globalisation can lead to job creation but may also cause job losses in developed countries.
• What is the effect of globalisation on the standard of living?

  It can improve living standards but may also lead to negative externalities.
• What is a potential consequence of the exploitation of natural resources due to globalisation?

  Negative externalities such as pollution.
• How does globalisation affect the competitive advantage of countries?

  Countries specialize in sectors where they have a comparative advantage.
• What is the impact of globalisation on the labour market in developed countries?

  It can lead to job losses in traditional industries.
• What is the role of MNCs in the context of globalisation?

  MNCs facilitate integration and economic growth through investment and job creation.
• What is the effect of increased foreign direct investment (FDI) on local economies?

  It can lead to job creation and economic growth.
• How does globalisation influence consumer choice?

  It increases consumer choice through a wider variety of goods and services.
• What are the implications of globalisation for economic policy?

  Governments must balance benefits of globalisation with potential negative impacts.