Globalisation
The growing interdependence between countries.
Characteristics of Globalisation
- Free trade across national boundaries.
- Free movement of labour between countries.
- Global supply chains.
- Free interchange of technology and knowledge.
Causes of Globalisation
- Trade in goods: Rich countries increasingly manufacture goods abroad.
- Trade in services: Growth in tourism.
- Opening of trade borders: 1978 in China and 1991 in India.
- Increased political alliances: USMCA and WTO in 1995.
- Multinational companies.
Impact on Consumers
- Consumer choice: Availability of goods and services have increased with
globalization.
- Prices: Relative price of goods is changing as there are cheaper costs of production.
- Incomes: Globalisation has risen incomes generally.
Impact on Workers
- Employment: Globalisation has created employment but also unemployment. E.g.,
there is more employment in developing countries such as China but growing
unemployment in USA and Europe due to the shift in production.
- Migration: Increased migration as they move to countries with better working
conditions and prospects.
- Wages: International competition has tended to depress wages of lower skilled work.
Impact on Producers
- Specialisation and economic dependency: Economic agents are increasingly more
dependent on each other.
- Costs and markets: Allow firms to source products from a wider variety of countries
to the costs will likely be lower.
- Footloose capitalism: Ability to move production from country to country (creating
and destroying jobs and prosperity) in order to maximise profits.
The growing interdependence between countries.
Characteristics of Globalisation
- Free trade across national boundaries.
- Free movement of labour between countries.
- Global supply chains.
- Free interchange of technology and knowledge.
Causes of Globalisation
- Trade in goods: Rich countries increasingly manufacture goods abroad.
- Trade in services: Growth in tourism.
- Opening of trade borders: 1978 in China and 1991 in India.
- Increased political alliances: USMCA and WTO in 1995.
- Multinational companies.
Impact on Consumers
- Consumer choice: Availability of goods and services have increased with
globalization.
- Prices: Relative price of goods is changing as there are cheaper costs of production.
- Incomes: Globalisation has risen incomes generally.
Impact on Workers
- Employment: Globalisation has created employment but also unemployment. E.g.,
there is more employment in developing countries such as China but growing
unemployment in USA and Europe due to the shift in production.
- Migration: Increased migration as they move to countries with better working
conditions and prospects.
- Wages: International competition has tended to depress wages of lower skilled work.
Impact on Producers
- Specialisation and economic dependency: Economic agents are increasingly more
dependent on each other.
- Costs and markets: Allow firms to source products from a wider variety of countries
to the costs will likely be lower.
- Footloose capitalism: Ability to move production from country to country (creating
and destroying jobs and prosperity) in order to maximise profits.
