The international economy essay plans
Globalisation
45. Explain the term ‘globalisation’ and the role that multinational
companies play in the development of globalisation. (15)
Globalisation = the integration of markets within the world economy
which increases the interconnectedness of national economies
MNCs = organisations which own or control the production of goods
and services in multiple countries
Increases international trade which brings countries together
The greater openness allows development of a country’s
comparative advantage which is greater when there is greater
freedom from protectionist policies
They use marketing to become global
By growing they have been able to take advantage of economies of
scale especially risk bearing economies of scale
They lower costs of production through the spread of technological
knowledge and economies of scale
MNCs find labour to be cheaper abroad so move production abroad
o Economies remain highly interconnected in order to smoothly
import and export goods produced between different sates of
the production line which often happen in different countries
o Represents flow of physical goods such as raw materials,
energy, food, parts and consumption goods between countries
This causes developed countries to trade with developing countries
so they cam access the same manufactured goods
Comment economies through flows of information and cause other
countries to innovate through the new information they can build
upon to lower costs
Different operating centres in different nations
Increases migration
More countries participate in global trade
Higher levels of FDI injected into host economy
Examples of MNC – amazon, Starbucks
AD/ AS diagram
o Shift right in supply
o Multiplier effect shift twice right in demand
, To what extent, if at all, have the economic consequences of globalisation
differed between developed and developing countries? (25)
Shared effects
Lower prices
Choice competition
Knowledge sharing
Financial flows and investment
Allocative efficiency
Specialisation
Comparative advantage
Unemployment
Systemic risk
Developed
Deindustrialisation
Structural unemployment
Profits from MNCs
Strong currency so cheap imports
Depend more on imported goods
MNCs and TNCs are more present in developed countries
o Amazon, apple, google
Depends on country
o USA and UK
o China – good example
Developing
Race to the bottom
Exploitation
Primary product dependency
Over exploitation of resources
Benefit from investment
Financial flows
Knowledge sharing
MNCs use developing countries for labour
Depends on country
o Vietnam – good example – transitioned to a socialist
orientated market economy and successfully attracted inward
FDI from companies like LG and Samsung
Conclusion
Globalisation
45. Explain the term ‘globalisation’ and the role that multinational
companies play in the development of globalisation. (15)
Globalisation = the integration of markets within the world economy
which increases the interconnectedness of national economies
MNCs = organisations which own or control the production of goods
and services in multiple countries
Increases international trade which brings countries together
The greater openness allows development of a country’s
comparative advantage which is greater when there is greater
freedom from protectionist policies
They use marketing to become global
By growing they have been able to take advantage of economies of
scale especially risk bearing economies of scale
They lower costs of production through the spread of technological
knowledge and economies of scale
MNCs find labour to be cheaper abroad so move production abroad
o Economies remain highly interconnected in order to smoothly
import and export goods produced between different sates of
the production line which often happen in different countries
o Represents flow of physical goods such as raw materials,
energy, food, parts and consumption goods between countries
This causes developed countries to trade with developing countries
so they cam access the same manufactured goods
Comment economies through flows of information and cause other
countries to innovate through the new information they can build
upon to lower costs
Different operating centres in different nations
Increases migration
More countries participate in global trade
Higher levels of FDI injected into host economy
Examples of MNC – amazon, Starbucks
AD/ AS diagram
o Shift right in supply
o Multiplier effect shift twice right in demand
, To what extent, if at all, have the economic consequences of globalisation
differed between developed and developing countries? (25)
Shared effects
Lower prices
Choice competition
Knowledge sharing
Financial flows and investment
Allocative efficiency
Specialisation
Comparative advantage
Unemployment
Systemic risk
Developed
Deindustrialisation
Structural unemployment
Profits from MNCs
Strong currency so cheap imports
Depend more on imported goods
MNCs and TNCs are more present in developed countries
o Amazon, apple, google
Depends on country
o USA and UK
o China – good example
Developing
Race to the bottom
Exploitation
Primary product dependency
Over exploitation of resources
Benefit from investment
Financial flows
Knowledge sharing
MNCs use developing countries for labour
Depends on country
o Vietnam – good example – transitioned to a socialist
orientated market economy and successfully attracted inward
FDI from companies like LG and Samsung
Conclusion
