Globalization
Globalization = Process in which national economies have become
increasingly integrated and interdependent
Integrated = Closer together
Interdependent = Countries more reliant on each other for development
Causes:
Trade Liberalization - Led to reduction of trade barriers - more free trade
between nations
Trading Blocks More trading blocs/deeper trading blocs - countries have
integrated together.
Growth of MNCs - Bigger MNC - more they have dispersed around the
world - greater integration
Technological advancement - in transport made it easier transports
goods and services around the world
Allowed business to have outlets around the world
Mobility of labor and capital - Allowed for nations to become more
integrated - govt policy migration and trading blocs have caused this
Benefits:
Greater International Trade -
Lower Prices -
As nationals have become more integrated - bigger market - more
competition - reduces price - increases efficiency - reduces costs - lower
prices .
Consumer benefits of greater choice/new products/lower prices.
Businesses access raw materials from different locations via lower prices.
Benefits of Trade
- COuntries benefits from greater growth/tax revenues
- Promoting economic development in developing countries.
Greater employment
, As market size rises - firms grow in size as they have greater potential for
trade - need to hire more workers to supply output - greater employment -
people benefit from higher incomes - improving living standards.
Benefits from large EOS
Market size gets bigger - business increase output - achieve lower costs -
higher profits - more investment - innovation
Free movement of labor
Advancements of transports/technology
Govt policy encouraging movement of labor/business
No visas in EU - easier to get visas internationally - migration increases.
Business to move across the world is easier - loose go policy increases FDI
- economic growth in SR and LR.
Technological Transfers and innovations
Cons:
Growing inequality
Increases in profit/tax revenue - not distributed evenly - people living in
poverty still living in poverty.
Trickle down effects have not taken effect
Higher Structural Unemployment
If globalization is taking hold at high pace - nation struggles to compete -
business losing out to international competition - greater structural
unemployment - people losing jobs/incomes
Environmental Costs - lack of sustainability
Growth> everything else
More pollution in world
Firms depleted/degraded resources in order to produce
Future generations suffer - lack of sustainability in growing economies
Trade imbalances
Countries have realized that export led growth is very good way of growing
and developed - CHINA realized big export gains of mor
einetrgarted/gloabliased world economy
If growth falls - exports fall - lead to protectionism - to try and balance the
current account.
Trade imbalances = current account surplus and deficit.
Globalization = Process in which national economies have become
increasingly integrated and interdependent
Integrated = Closer together
Interdependent = Countries more reliant on each other for development
Causes:
Trade Liberalization - Led to reduction of trade barriers - more free trade
between nations
Trading Blocks More trading blocs/deeper trading blocs - countries have
integrated together.
Growth of MNCs - Bigger MNC - more they have dispersed around the
world - greater integration
Technological advancement - in transport made it easier transports
goods and services around the world
Allowed business to have outlets around the world
Mobility of labor and capital - Allowed for nations to become more
integrated - govt policy migration and trading blocs have caused this
Benefits:
Greater International Trade -
Lower Prices -
As nationals have become more integrated - bigger market - more
competition - reduces price - increases efficiency - reduces costs - lower
prices .
Consumer benefits of greater choice/new products/lower prices.
Businesses access raw materials from different locations via lower prices.
Benefits of Trade
- COuntries benefits from greater growth/tax revenues
- Promoting economic development in developing countries.
Greater employment
, As market size rises - firms grow in size as they have greater potential for
trade - need to hire more workers to supply output - greater employment -
people benefit from higher incomes - improving living standards.
Benefits from large EOS
Market size gets bigger - business increase output - achieve lower costs -
higher profits - more investment - innovation
Free movement of labor
Advancements of transports/technology
Govt policy encouraging movement of labor/business
No visas in EU - easier to get visas internationally - migration increases.
Business to move across the world is easier - loose go policy increases FDI
- economic growth in SR and LR.
Technological Transfers and innovations
Cons:
Growing inequality
Increases in profit/tax revenue - not distributed evenly - people living in
poverty still living in poverty.
Trickle down effects have not taken effect
Higher Structural Unemployment
If globalization is taking hold at high pace - nation struggles to compete -
business losing out to international competition - greater structural
unemployment - people losing jobs/incomes
Environmental Costs - lack of sustainability
Growth> everything else
More pollution in world
Firms depleted/degraded resources in order to produce
Future generations suffer - lack of sustainability in growing economies
Trade imbalances
Countries have realized that export led growth is very good way of growing
and developed - CHINA realized big export gains of mor
einetrgarted/gloabliased world economy
If growth falls - exports fall - lead to protectionism - to try and balance the
current account.
Trade imbalances = current account surplus and deficit.
