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Globalisation - Coggle Diagram
Globalisation
Characteristics
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Free movement of labour nationally and internationally - easy access to transportation: planes, cars, trains
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FACTS --
Definition - Increasing integration of the worlds local, regional and national economies into a single international market.
Since the 1980s, "Globalisation" has become more used in the economic language, as the importance grew.
Causes
Trade liberalisation - loosening restrictions between countries to increase trade levels between countries, and therefore pressuring the government to lower protectionist barriers
Trade in goods = HICs are increasing the manufacturing abroad to EEs like India and China. This is partly due to cheap labour, advanced capital and efficient methods of transportation.
Trade in services = growth in tourism, call centres for customers are increasing. India has become WORLD leader in writing software, and selling those skills to companies in HICs
Transnational companies (TNCs) = Larger companies have a greater EoS and technological knowledge - oil industry, car manufacturing.
International financial flows = This has increased, partially from an inward flow of international capital and therefore having rapid economic growth, like Malaysia.
Communications and IT = the developments of IT has shortened the time needed for economic ages to communicate. As well as individuals contacting family and friends worldwide a lot easier and quicker through social media.
IMPACTS on the Consumer, Workers, Producer, Government, Environment,
CONSUMERS
Consumer choice - the availability of goods and services have increased, therefore increasing choices - products, foods, high street store goods, shopping centre, supermarkets.
Prices - globalisation has led to prices decreasing overtime, because production is switched from high to low cost areas (USA -> India)
Incomes - globalisation has increased incomes and therefore increasing consumer surplus, buying more goods/services. However, this is mainly in HICs. LICs may be exposed to earnings below average if they are employed by HICs - manufacturing work in India will have labourers working for a small income to save costs for the USA company.
WORKERS
Employment - The transfer of manufacturing to LICs (China, Poland) has caused an increase in employment opportunities for workers. However, the HICs may lack the opportunities and therefore structural unemployment has occurred. But most people tend to find a job in the service sector, but that can result into underemployment or a lower pay than before.
Migration - Many workers had been forced to moved due to war and persecution. Increasing immigration into the economy has been a controversial topic. Its great for immigrants to gain an income and a better standard of living, but then UK workers may lack the opportunity as it is populated with immigrants, hence the controversy.
PRODUCER
Specialisation and economic dependency - Specialisation and trade has increased as a result of globalisation, and agents have increasingly become dependent on one another. Its beneficial for firms to sell a wider variety of quality goods to more countries.
Tax avoidance - firms that operate in several countries (TNCs) can avoid tax through transfer pricing. This is by TNCs reducing its total profit tax by putting a high national price on the product before exporting it, so the tax is covered by the country importing the good.
Transferring production facilities to a low tax country - Ireland. They attract many firms such as Apple - Headquarters.
GOVERNMENT
They have to adopt policies which captures a large share of benefits and minimise the losses. This could be by lowering taxes or subsidies to TNCs, increasing spending on education/research and development
ENVIRONMENT
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Higher use for electricity worldwide, therefore a production in iron ore will increase, increase in emissions - pollution
TNCs dominate world extraction industries - oil and gold. As well as non-renewable energy sources for electricity use of raw materials negatively impacting the environment. However, an increase in technology to improve production like cleaner machinery, use of renewable sources may cause a decrease in negative impacts... to an extent.