4.1.1 Globalization
Def: The integration of national economy in terms of trade, financial flow, ideas,
technology and information and the movement of people
Developed countries: richer and industrialized countries such as UK with high GDP
Developing countries: Rely on manufacturing and agriculture industries e.g. Angola
MNC: Business that has operation in many different countries
a) Characteristics of globalization
Free movement of capital and labor
Increase trade (Trade liberalization)
Increase the use of tech. on international scale
The world become interdependent
FDI (MNCs)
b) Factors contributing to globalization in the last 50 years
Trade liberalization (WTO)
Political change (EU)
Reduce in transport costs (containerization)
Growth of MNCs (EOS) (can be offshoring or outsourcing)
Growth of FDI
c) Impacts of globalization and global companies
Stakeholder Benefits: Costs:
Individual 1. Increase living standard 1. Over dependence due to
country (theory of CA) a country specialization
will be specializing in a E.g. Saudi Arabia 50% oil
good increase real GDP export
increase living standards 2. Overdependence on other
countries coz interconnected
Government 1. Increase tax revenue from 1. Tax avoidance: transfer
(tax, social MNCs and TNCs pricing
interest,
environment
)
Producers 1. Reduce production costs 1. Might actually kick small
Def: The integration of national economy in terms of trade, financial flow, ideas,
technology and information and the movement of people
Developed countries: richer and industrialized countries such as UK with high GDP
Developing countries: Rely on manufacturing and agriculture industries e.g. Angola
MNC: Business that has operation in many different countries
a) Characteristics of globalization
Free movement of capital and labor
Increase trade (Trade liberalization)
Increase the use of tech. on international scale
The world become interdependent
FDI (MNCs)
b) Factors contributing to globalization in the last 50 years
Trade liberalization (WTO)
Political change (EU)
Reduce in transport costs (containerization)
Growth of MNCs (EOS) (can be offshoring or outsourcing)
Growth of FDI
c) Impacts of globalization and global companies
Stakeholder Benefits: Costs:
Individual 1. Increase living standard 1. Over dependence due to
country (theory of CA) a country specialization
will be specializing in a E.g. Saudi Arabia 50% oil
good increase real GDP export
increase living standards 2. Overdependence on other
countries coz interconnected
Government 1. Increase tax revenue from 1. Tax avoidance: transfer
(tax, social MNCs and TNCs pricing
interest,
environment
)
Producers 1. Reduce production costs 1. Might actually kick small
