Discuss the impact of Globalisation on UK Economy
Globalisation involves the increase integration and interdependence of economies throughout the world.
The process of it has led to increased trade, increased inward investment and greater communication.
It’s also led to an increased mobility of labour and capital between different economies.
There has also been an increase role of multinational corporations and international bodies such as the IMF.
Globalisation has been characterised by an increase in international trade. This has created several benefits for the UK. The
law of comparative advantage states that there will be an increase in economic welfare if countries specialise in the goods
where they have a lower opportunity cost.
It’s also enabled a reduction in tariffs and transport costs leading to cheaper imports. This increases the consumer surplus of
UK consumers.
It also allowed a wider choice of goods and services. For example, supermarkets are now able to stock a wide range of fruit
and vegetables throughout the year.
However, even though globalisation provides greater choice of goods and services, some have criticised globalisation for an
increased homogeneity of products. Critics argue multinational corporations have been able to dominate, leading to big
multinational pushing out smaller independent retailers to the detriment of local firms.
For example, the growth of coffee chains like Starbucks has made it more difficult for smaller independent coffee shops. But,
others may say globalisation isn’t to blame for the decline of small shops as it can be due to other factors like out of town
shopping centres; also small shops can still exist even with globalisation occurring.
Globalisation has enabled firms to benefit from greater economies of scale. Production is increasingly specialised.; for
example, the manufacture of a car has increasingly been split up into different countries so that different parts of the car are
assembled in different countries. This process of increased specialisation and economies of scale have enabled lower
average costs of production leading to lower prices for UK consumers.
Another benefit is that it has increased the competitiveness of certain markets.
For example, domestic monopolies now face competition from firms in other countries. This increased competitiveness has
helped lower prices for consumers.
A potential drawback of this increased competitiveness is that some British firms have become uncompetitive and closed
down, leading to job losses.
For example, British industry has struggled to remain competitive against countries such as China, which benefit from lower
wage costs, leading to a decline in textiles and other manufacturing sectors in the UK. This is reflected in a persistent UK
trade deficit. This decline in manufacturing output has also lead to some structural unemployment, especially amongst the
low skilled manual workers in the UK.
However, this process of changing industries is not a new phenomenon and whilst globalisation has led to the decline of
some industries, it has led to the growth of others.
For example, the UK has increasingly specialised in financial services and higher education, therefore, whilst some sectors
have lost from globalisation, others have benefited.
Globalisation involves the increase integration and interdependence of economies throughout the world.
The process of it has led to increased trade, increased inward investment and greater communication.
It’s also led to an increased mobility of labour and capital between different economies.
There has also been an increase role of multinational corporations and international bodies such as the IMF.
Globalisation has been characterised by an increase in international trade. This has created several benefits for the UK. The
law of comparative advantage states that there will be an increase in economic welfare if countries specialise in the goods
where they have a lower opportunity cost.
It’s also enabled a reduction in tariffs and transport costs leading to cheaper imports. This increases the consumer surplus of
UK consumers.
It also allowed a wider choice of goods and services. For example, supermarkets are now able to stock a wide range of fruit
and vegetables throughout the year.
However, even though globalisation provides greater choice of goods and services, some have criticised globalisation for an
increased homogeneity of products. Critics argue multinational corporations have been able to dominate, leading to big
multinational pushing out smaller independent retailers to the detriment of local firms.
For example, the growth of coffee chains like Starbucks has made it more difficult for smaller independent coffee shops. But,
others may say globalisation isn’t to blame for the decline of small shops as it can be due to other factors like out of town
shopping centres; also small shops can still exist even with globalisation occurring.
Globalisation has enabled firms to benefit from greater economies of scale. Production is increasingly specialised.; for
example, the manufacture of a car has increasingly been split up into different countries so that different parts of the car are
assembled in different countries. This process of increased specialisation and economies of scale have enabled lower
average costs of production leading to lower prices for UK consumers.
Another benefit is that it has increased the competitiveness of certain markets.
For example, domestic monopolies now face competition from firms in other countries. This increased competitiveness has
helped lower prices for consumers.
A potential drawback of this increased competitiveness is that some British firms have become uncompetitive and closed
down, leading to job losses.
For example, British industry has struggled to remain competitive against countries such as China, which benefit from lower
wage costs, leading to a decline in textiles and other manufacturing sectors in the UK. This is reflected in a persistent UK
trade deficit. This decline in manufacturing output has also lead to some structural unemployment, especially amongst the
low skilled manual workers in the UK.
However, this process of changing industries is not a new phenomenon and whilst globalisation has led to the decline of
some industries, it has led to the growth of others.
For example, the UK has increasingly specialised in financial services and higher education, therefore, whilst some sectors
have lost from globalisation, others have benefited.
