Globalisation

Define globalisation.

The process of increasing economic integration of the world’s economics. It involves the free trade of goods and services, the free movement of capital and labour and the free interchange of technology and intellectual capital.

What are the causes of globalisation?

Improvements in information and communication technology as well as developments in transports and new technology. E.g internet, containerise, increased capital mobility, the collapse of communism resulting inn free trade, the growth of MNC.

What is the World Trade Organisation?

Created in 1955 to promote free trade.

What is the role of the International Monetary Fund?

1) Tracks economic and financial events.

2) Advices its members on how to improve their economies.

3) Issues short term loans and assistance to countries who are struggling.

What does the World Bank do?

Deals mainly with internal investment projects. 1960 it set up the International Development Association which lends only to nations with a low income per capita at no interest rate with long repayment periods.

How has trade openness (the ratio of exports to imports) changed over the last 30 years?

For industrialised economies, it has risen from 25% to 40%, for emerging economies it was risen form 15% to 60%.

What happened in 1986?

The Big Bang- deregulation of financial markets.

What happened in 1991?

The World Wide Web was commercially implemented.

What happened in 1992?

The Chinese Socialist Market economy.

What are the main characteristics of globalisation?

1) Trade liberalisation (the growth of international trade and the reduction of trade barriers).

2) Greater international mobility of capital and labour.

3) An increase in the power of international capitalism and multinational cooperations.

4) Deindustrialisation of older industrial regions and countries.

5) A decrease in government power to influence MNCs decisions to shift economic activity between countries.

What are the consequences of globalisation for less developed economies?

Low payed workers in ‘sweatshops’, the growing dominance of US cooperation culture ‘coca-colonisation’ which involves the destruction of local and national products, identities and cultures

What is the issue with globalisation regarding equality?

Globalisation has contributes to widening levels of inequality as the biggest beneficiaries tend to be large MNCs established in developed countries and the profit from them gets largely shared with shareholders and the owners of the company. 2005-2007, the top 1% of income owners in the Uk owned. Around 15.5% of the Uks total income.

What is a risk with globalisation?

As a result of globalisation, countries become heavily reliant on certain industries within the global economy, increasing countries vulnerability to shocks. E.g the financial crisis.

Outward shift in LRAS, outward shift in AD, outward shift in SRAS.

What are benefits of inward investment via MNCs into an economy?

Improved quality of local infrastructure and provision of training and education from workers taken on by MNCs

What are the consequences of globalisation for more developed countries?

Some argue that the moving of MNCs from developed economies to less developed economies reduces the wages and living standards in developed economies (depending on the job type).

What is the role of multinational cooperations in globalisation?

Define multinational corporations.

Enterprises operating in several counties but with their headquarters in one country.