globalisation

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  • 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
    • 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
      • first world structural unemployment
      • changing culture, politics, social behaviour

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