Causes and costs of globalisation
What is globalisation?
• https://www.youtube.com/watch?v=T9lgZperW4#t=103
Factors promoting Globalisation
• A reduction in protectionist barriers to trade in the World Economy.
• A reduction in international capital movement restrictions; encouraging
Foreign Direct Investment (FDI).
• Developments in IT and falling communication costs.
• A fall in real transport costs.
• Liberalisation of domestic markets; the growth of Multinational
Companies (MNC’s).
Effects of Globalisation – Winners & Losers
http://www.youtube.com/watch?v=oh03fuIlQNI&f
eature=related
Have these workers benefited or been disadvantaged by
Globalisation?
A Blue Collar Worker
in the USA
Factory workers in
China
The bosses of MNC’s
A University Graduate
from India
Is
good or bad for the
Economy?
INCOME – increased production means more workers
are needed, this means more jobs
ADVANTAGE
DISADVANTAGE
VIDEO
Is
good or bad for the
Economy?
GROWTH – growing exports mean increasing
production, which leads to higher
economic
growth
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Competition – increased competition may benefit
consumers in terms of having cheaper goods and a
greater variety. BUT UK firms may find it difficult to
compete on price
ADVANTAGE
DISADVANTAGE
VIDEO
Is
good or bad for the
Economy?
Economic Dependency – the UK imports a large
variety of foods; interruption of this may might
threaten our survival
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Unstable commodity prices – the price of raw
materials and foodstuffs can change by large
amounts. This could make production costs higher
ADVANTAGE
DISADVANTAGE
VIDEO
Is
good or bad for the
Economy?
Choice and product differentiation – UK citizens may
now choose from goods that may not be otherwise
available
ADVANTAGE
DISADVANTAGE
VIDEO
Is
good or bad for the
Economy?
Prices – many consumer goods that we import are
from countries like China and India. These countries
have much lower labour costs than the UK.
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Competition and innovation – all companies have to work
harder to attract consumers as there are many more
potential competitors. They try to lower prices and
develop more attractive and better quality products
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Power of MNCs – are becoming very powerful. All
governments are finding it harder to control MNCs
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Social and environmental impact of trade – direct
emissions i.e. CO2
ADVANTAGE
DISADVANTAGE
Is
good or bad for the
Economy?
Raw materials – the UK is relatively poor in raw
materials, so it is essential that we import the
materials.
Can you think of any?
ADVANTAGE
DISADVANTAGE
Is
for bad for the
?
• Income – increased production means more workers are needed, and
this means more jobs.
• Growth – growing exports mean increasing production, which leads to
higher economic growth (i.e the GDP will rise each year)
• Competition and innovation – all companies have to work harder to
attract consumers as there are many more potential competitors. They
try to lower prices and develop more attractive and better quality
products.
• Raw materials – the UK is relatively poor in raw materials, so it is
essential that we import the materials (metals, gems, energy, and so on)
that we need.
• Choice and product differentiation – UK citizens can choose from goods
not otherwise available in the UK
• Prices – many of the consumer good we buy in the UK are imported from
countries like China and India. These economies have much lower labour
costs than the UK, and have relatively good levels of technology.
Is
for bad for the
?
• Competition – increased competition may benefit consumers in
terms of having cheaper goods and greater variety, but UK firms
may find it difficult to compete. Many countries have much lower
labour cost than the UK, yet their workforces are relatively well
trained
• Economic dependency – for example, the UK imports a large
variety of foods; interruption of this might threaten our survival.
• Unstable commodity prices – the prices of raw materials and food
can change by large amounts very quickly. This affects both
production costs and the prices to consumers. This can have both
good and bad effects.
• Power of MNCs – multinational corporations (MNCs) are becoming
very powerful. All governments are finding it harder to control
MNCs.
Rank them in order of importance; 1 = Most Important &
8 = Least Important
Advantages of Globalisation
Disadvantages of Globalisation
It allows developing countries to create jobs in their domestic
economies.
Manufacturing jobs that used to be located in Europe and
USA
are now located in Asia where costs and wages are lower.
Consumers across the world have access to more of the
goods and services that they want.
Has globalisation offered people too many choices and are
we
capable of making the right decisions?
It can help to relieve poverty through economic growth and
development.
It has made some jobs more insecure and made stable lives
more difficult to achieve.
It helps to improve education across the world in terms of
literacy and skills.
It has contributed towards global warming and climate
change.
Higher living standards for more people.
Widening gap between rich and poor; increased inequality.
Enjoyment of global brands. For consumers
Exploitation of workers in developing countries.
Spreading of best practice and technology transfer.
Resource depletion.
Improved medical supplies that can increase life expectancy.
MNC’s can exploit and fail to invest in the host nation.
https://www.youtube.com/watch?NR=1&v=w
GULEb3rYeg&feature=endscreen
Debate
• http://beta.tutor2u.net/economics/referenc
e/globalisation-evaluating-benefits-and-costs