Globalisation 4.1.3

Question 1

Globalisation

Answer 1

The economic integration of different countries through increasing freedoms in the cross border movement of people, goods/services, technology and finance.

Question 2

Trade Liberatisation

Answer 2

The removal/reduction of barriers to trade between different countries.

Question 3

Trade Liberalisation Benefits and Drawbacks

Answer 3

Benefits: increased international trade allows businesses to increase their market size so increased output, so EOS can be benefited from by countries. Freer trade helps businesses reduce costs as imported raw materials and components can be sourced more cheaply.
Drawbacks: domestic firms, in particular infant industries (industries in the early stages of development in the economy) may not be able to compete against international firms. Some industries may be subject to dumping (when a business sells its product abroad in export markets at significantly low prices) as businesses abroad may sell excess products at unfairly low prices.

Question 4

Factors contributing to increased Globalisation

Answer 4

-Political change: changes in the government of a country can influence the country’s attitude to trade e.g. China joined the World Trade Organisation in 2001, which led to a significant increase in its exports.
-Reduced cost of transport and communication: EOS due to innovation in containerisation (use of standardised, sealed, metal shipping containers to transport goods effectively across different models of transport without unloading the contents) on large ships has reduced business costs. + Technological advancements due to internet/mobile technology have made it easier for buyers and sellers to connect with one another.
-Increased significance of global companies: TNC will have their headquarters in one country but have branches in other countries e.g. Nike. With increasing numbers of TNCs operating globally, there’s increased pressure to engage in free trade.
-Increased investment flows (FDI): FDI is important for job creation and wealth creation within an economy. It allows businesses to establish themselves in countries where they may face trade barriers.
-Migration (within and between countries): migration has led to increased globalisation as better transportation and deregulation have allowed workers to have more flexibility when looking for work.
-Growth of the global labour force: it has grown significantly, especially due to the growth of emerging economies such as India and China. Globalisation increases because more people means more income to spend on goods and services, boosting beneficial in reducing business costs, increased levels of entrepreneurship.

Question 5

Political Change

Answer 5

Changes in the government of a country can influence the country’s attitude to trade e.g. China joined the World Trade Organisation in 2001, which led to a significant increase in its exports.

Question 6

Reduced cost of transport and communication

Answer 6

EOS due to innovation in containerisation (use of standardised, sealed, metal shipping containers to transport goods effectively across different models of transport without unloading the contents) on large ships has reduced business costs. + Technological advancements due to internet/mobile technology have made it easier for buyers and sellers to connect with one another.

Question 7

Increased significance of global companies

Answer 7

TNC will have their headquarters in one country but have branches in other countries e.g. Nike. With increasing numbers of TNCs operating globally, there’s increased pressure to engage in free trade.

Question 8

Increased investment flows (FDI)

Answer 8

FDI is important for job creation and wealth creation within an economy. It allows businesses to establish themselves in countries where they may face trade barriers.

Question 9

Migration (within and between countries)

Answer 9

Migration has led to increased globalisation as better transportation and deregulation have allowed workers to have more flexibility when looking for work.

Question 10

Growth of the global labour force

Answer 10

It has grown significantly, especially due to the growth of emerging economies such as India and China. Globalisation increases because more people means more income to spend on goods and services, boosting beneficial in reducing business costs, increased levels of entrepreneurship.