1. Globalisation

What is Globalisation

The process in which national economies become increasingly integrated and interdependent

Causes of Globalisation

Trade Liberalisation

Trading Blocs

Growth of MNC’s

Technological Advancement

Greater Mobility of Capital and Labour

Improvements in Transport

Pros of Globalisation

Lower Prices from Increased International Competitiveness

Benefits of Trade

Greater Employment

Free movement of capital and labour (FDI)

Technological transfers and innovations

Cons of Globalisation

Growing Inequality

Higher Structural Unemployment

Environmental Costs

Trade Imbalances

Greater Risk of Global Shocks

Less Cultural Diversity

Benefits of Globalisation for LEDC’s

FDI

Industrialisation

Technology Transfers

Job Creation

Export-Led Growth

Costs of Globalisation for LEDC’s

Labour Exploitation

Environmental Damage

Dependency on MNC’s

Income Inequality

Brain Drain

Race to the bottom

Benefits of Globalisation for MEDC’s

Cheaper Imports

Larger Markets

Higher Profits for Firms

Greater Consumer Choice

Technology and Innovation Growth

Costs of Globalisation for MEDC’s

Deindustrialisation

Income Inequality

Over-Reliance on Foreign Supply Chains

Tax Avoidance by MNC’s

Loss of Cultural Diversity

Benefits of MNC’s in Globalisation

Investment (FDI)

Job Creation

Technology Transfers

Export-Led Growth

Cons of MNC’s for Globalisation

Profit Repatriation

Labour Exploitation

Tax Avoidance

Environmental Damage

Evaluation Points for Globalisation

Government Regulation (Labour Laws)

Short Run vs Long Run

Depends on the Level of Economic Development

Distribution of Benefits

Dependence on Education and Human Capital

Footloose Nature of MNC’s (ability to move production from one country to another given the economic conditions)