Globalisation - Edexcel Unit 4

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Harry Bindloss
Globalisation: In the international economy it refers to the process by which there is both
an increasing world market in goods and services and increasing integration in world capital
Causes of Globalisation
Improved transport, making global travel easier
Improved Technology which makes it easier to communicate and share information
around the world.
Growth of multinational companies with a global presence
Growth of global trading blocs which have reduced national barriers. (e.g. EU)
Reduced Tariff barriers encouraging global trade
Growth of global media
Global Trade Cycle. Economic growth is global in nature. This means countries are
increasingly interconnected. (E.g. recession in one country affects global trade and will
cause an economic downturn in trading partners.)
It is hard to precisely define globalisation there are different interpretations about
what we actually mean, therefore, there are differing factors that explain it.
Improved technology is very influential in helping globalisation without technology
such as the internet and global communication.
Increased free trade is important. However, there are various trade barriers still in
existence and this has not stopped the growth of globalisation. Such as Non-Tariff
Benefits of Globalisation

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Harry Bindloss
1. Free Trade Free trade is a way for countries to exchange goods and resources. This
means countries can specialise in producing goods where they have a comparative
advantage (this means they can produce goods at a lower opportunity cost). When
countries specialise there will be several gains from trade:
1. Lower prices for consumers
2. Greater choice of goods
3. Bigger export markets for domestic manufacturers
4. Economies of scale through being able to specialise in certain goods
5. Greater competition
2.…read more

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Harry Bindloss
One problem of globalisation is that it has increased the use of non-renewable resources. It
has also contributed to increased pollution and global warming. Firms can also outsource
production to where environmental standards are less strict. However, arguably the problem
is not so much globalisation as a failure to set satisfactory environmental standards.
2. Labour Drain
Globalisation enables workers to move more freely. Therefore, some countries find it
difficult to hold onto their best skilled workers, who are attracted by higher wages
elsewhere.…read more


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