Exam Boards: Edexcel, AQA, WJEC, CIE, OCR Level: AS/A LEVELS/IB/IAL
Globalisation refers to countries becoming more closely integrated economically, socially and culturally.
Characteristics of globalisation
- Increased trade as a proportion of world GDP
- Increased foreign direct investment (FDI)
- Increased capital flows between countries.
- Increased movement of people between countries
What are capital flows?
Capital flows refer to the inflow and outflow of money between countries from investments.
What is Foreign Direct Investment (FDI)?
Foreign direct investment (FDI) is an investment made by a business from one country in business interests in another country by establishing business operations or acquiring business assets in another country.
What are the Causes of Globalisation?
- A reduction in world trade barriers (trade liberalisation)
- A decrease in transport cost
- An increase in trading blocs around the world
- A decrease in the cost of communication
- Increase in the growth of transnational (TNC’s) companies around the world
- China opened its economy up to the rest of the world.
What are the benefits of globalisation?
- Increased living standards
- Increase in specialisation and comparative advantage
- Lower prices and more choice of goods
- Increased real GDP
- Lower production costs
- Increase in economies of scale
- Increase or decrease in inequality
- Increase in tax revenues
- Technology transfer between countries
- Increased sharing of managerial skills
What are the disadvantages of globalisation?
- Promotion of exploitation of workers as health and safety standard is not always the same in developing countries
- Negative environmental impacts due to increased world trade
- External shocks could cause potential global instability due to the interconnectedness of countries around the world
- Negative impact on the balance of payments
Assess the view that the benefits of globalisation outweigh the negatives for a developing country of your choice? (20 Marks)