The Global Economy & Wellbeing

Globalisation

The freer movement of goods, services, investment, ideas and people around the world.

Global markets

Movement of financial capital (foreign investment) and person movement (tourists, migration and workers).

Global markets in Australia

Trade accounts for ¼ of Australia’s GDP, 22% of Australian workers are directly involved in trade related activities, immigration is an importatnt source of labour and skills in Australia.

Arguements against globalisation

Rich get richer/unfair wealth distribution, worker exploitation, environmental degregation due to increased industrialisation, mcdonaldisation.

Arguements for globalisation

Open countries to trade, enables jobs, employment opportunities, increased incomes, wider variety of goods and services available available, increased efficients (using factors of production better), increased living standard (particularly for 3rd world countries), sharing of culture and understanding and reduction of trade barriers.

The global economy

The interconnected network of economic activities that takes place worldwide. Includes production, trade and consumption of goods and services, movement of capital, labour and tech.

Drivers of the global economy

International trade agreements, financial flows, political relations and technology innovation.

Wellbeing

A combination of a person’s physical, mental, social and emotional health.

Weaknesses of GDP data

Doesn’t account for second hand sales and black market/illegal transactions.

Strenghts of GDP data

Determines the strength of a countries economy and therefore can (limited) data of wellbeing.

The Lorenz Curve

A graphical representation of the distribution of income (or level of income inequality) within an economy.

The Gini Coefficient

A measure of the degree of inequality in the income distribution.

Importance of income equality

• Unfair wealth distribution means that the majority of people will suffer and the expense of the few wealthy individuals

• More equitable income distribution means that the poor will have greater access to healthcare and education

  • Improving the quality and quantity of the factors of production in the long run

• Equitable income distribution could lower incentives for people to work more and businesses to take risks

Short term solutions to income inequality

• A progressive tax system

  • Taxing higher income groups more than lower income means that income can be redistributed from the rich to the poor

Long term solutions to income inequality

• Improve access to healthcare, education, create more jobs and lower corruption

• This ensures that all citizens have the opporunity to advance and accumulate wealth regardless of their beginnings

OECD

Stands for Organisation for Economic Co-operation and Development. An international organisation that works to build better policies for better lives. Association of 38 European nations, the Americas and the Pacific. Members and key partners represent 80% of world trade. Aids developing countries and promotes reform.

Goals of the OECD

Shape policies that foster prosperity, equality, opportunity and better wellbeing for all by collecting evidence and finding solutions to social, economic and environmental problems.