Globalisation

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Advantages

  • Increases the divisions of labour
  • Increases economies of scale
  • Competitive markets reduce the power/profit of monopolies
  • Competitive markets force businesses to make cost-reducing innovations
  • Encourages higher per capita incomes
  • Reduction of extreme poverty
  • Freer movement of labour between countries
  • Dynamic efficiency as a result of sharing ideas/technologies/skills
  • Opening of capital markets helps developing countries access finance- such as funds to overcome domestic savings gaps
  • Increases awareness of income inequality/climate change
  • Improve governance as a result of competitive pressures
  • Increased labour protection as a result of competitive pressures

Disadvantages

  • Increases inequality
  • Increases relative poverty
  • Environmental damage eg. deforestation, decline in bio-diversity, water shortages & land degradation
  • Macroeconomic fragility/increased risk
  • Trade imbalances
  • Protectionist tensions as a result of trade imbalances
  • Increased structural unemployment as production shifts to lower cost centres
  • Domination of global brands at the expense of local ones
  • Exploitative behaviour of some MNCs with regards to worker's wages, environmental protection & tax avoidance

Evaluation

Overall it depends on the country involved-some may seek structural change that accompanies globalisation while others may seek to avoid it or reduce it through de-globalisation. It is usually more advantageous for MEDCs rather than LEDCs as the former is better equipped to exploit the benefits through footloose capitalism (holy trinity) etc. at the expense of the LEDCs.  

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