Globalisation;
Features;
- Globalisation is the increased economic integration of countries. This may involve a
growth in MNCs or increased trade
- Increased international trade
- Increased movement of finance between countries – Example; Tata buying JCR
- Increase in Foreign Direct Investment (FDI) by multinational companies (MNCs)
- Increase in outsourcing and movement of production to other countries
Main Reasons for increased Globalisation;
- Better technology; this could be better communication technology or better
transport e.g. containerisation
- Growth of organisations that lower barriers to trade e.g. World Trade Organisation
(WTO) – Consequent fall in protectionism
- More MNCs switching production to LEDCs
- The deregulation of capital markets makes it easier to move capital and finance
between economies
- Economies of Scale
Benefits to the UK;
- Wider choice and lower prices due to cheap labour etc. – Keeps cost-push inflation
low
- Wider markets help increase output which helps achieve EoS and maximises profit,
may lower prices – Example; Jaguar Landrover have increased sales to markets such
as China
- Greater competition between firms which puts pressure on firms to become efficient
and lower prices – Example; Aldi and Lidl led to price wars in grocery market
- Increased FDI – multiplier effect etc. – Example; Toyota and Nissan have created
many jobs in UK – FDI is an investment made by a company/entity based in one
country into a company/entity based in another country
Costs to the UK;
- Decline in manufacturing (deindustrialisation) – causes structural unemployment
which has had bad effects on some particular parts of the UK – Deindustrialisation is
a process of social and economic change caused by the removal or reduction of
industrial activity from a country or region, especially in heavy industry or
manufacturing
- Worsens balance of payments as leakages have increased at a faster rate than
injections
1
Features;
- Globalisation is the increased economic integration of countries. This may involve a
growth in MNCs or increased trade
- Increased international trade
- Increased movement of finance between countries – Example; Tata buying JCR
- Increase in Foreign Direct Investment (FDI) by multinational companies (MNCs)
- Increase in outsourcing and movement of production to other countries
Main Reasons for increased Globalisation;
- Better technology; this could be better communication technology or better
transport e.g. containerisation
- Growth of organisations that lower barriers to trade e.g. World Trade Organisation
(WTO) – Consequent fall in protectionism
- More MNCs switching production to LEDCs
- The deregulation of capital markets makes it easier to move capital and finance
between economies
- Economies of Scale
Benefits to the UK;
- Wider choice and lower prices due to cheap labour etc. – Keeps cost-push inflation
low
- Wider markets help increase output which helps achieve EoS and maximises profit,
may lower prices – Example; Jaguar Landrover have increased sales to markets such
as China
- Greater competition between firms which puts pressure on firms to become efficient
and lower prices – Example; Aldi and Lidl led to price wars in grocery market
- Increased FDI – multiplier effect etc. – Example; Toyota and Nissan have created
many jobs in UK – FDI is an investment made by a company/entity based in one
country into a company/entity based in another country
Costs to the UK;
- Decline in manufacturing (deindustrialisation) – causes structural unemployment
which has had bad effects on some particular parts of the UK – Deindustrialisation is
a process of social and economic change caused by the removal or reduction of
industrial activity from a country or region, especially in heavy industry or
manufacturing
- Worsens balance of payments as leakages have increased at a faster rate than
injections
1
