globalisation
- Created by: Fi Alade
- Created on: 01-04-14 13:43
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- Globalisation
- The process by which most economies have become more interdependent. This has been accompanied by rapid growth in global trade and capital movements
- Characteristics
- increased international specialisation and division of labour
- growing importance of TNCs and FDI
- free movement of goods&services, labour and capital between countries
- free interchange of technology and intellectual capital e.g. licencing technology from abroad
- Factors contributing to Globalisation
- fall in transport costs
- fall in cost of communications
- falling trade barriers
- collapse of communism
- opening up of China
- increasing TNCs
- increasing trade in services e.g. tourism, call centres
- foreign ownership of firms
- Benefits
- application of the law of comparative advantage
- ability of one country to produce goods at a lower OC to other countries
- increase in world output and living standards
- real GDP growth
- wider choice of goods at a lower price for consumers
- lower production costs due to offshoring and economies of scales
- increase in third world employment
- application of the law of comparative advantage
- Disadvantages
- exploitation e.g. farmers, childen, environment
- health and safety laws are less restrictive in LEDCs
- external costs of trade e.g. food miles
- increased inequality
- rich have greater access to communications and technology
- increased dependedence, global instability e.g. credit crunch
- countries adopt protectionist policies to preserve domestic employment
- decline in specialisation and trade
- e.g. car subsidies on car industry in USA
- countries adopt protectionist policies to preserve domestic employment
- first world structural unemployment
- changing culture, politics, social behaviour
- exploitation e.g. farmers, childen, environment
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