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GLOBALISATION - Coggle Diagram
GLOBALISATION
Increasing integration of the world's local, regional and national economies into a single international market.
DISADVANTAGES
Consumers: could lead to higher prices, as incomes are rising hence causing higher demand for goods and services.
Many consumers worry about loss of culture:
Workers: Some countries lose employment, i.e. there's been a large scale job losses in the western world in manufacturing sectors as these are transferred to other countries such as china.
- International competition has led to a fall in wages for low skilled workers in developed countries.
- Since de demand for high skilled workers in increasing and their wages are increasing, it causes more inequality.
- Increased migration could lower wages
- Sweatshops in developing and low income countries are in poor conditions and workers are generally mistreated and only given low wages, the strenuous labour doesn't improve their quality of life at all.
Government: Can lose out on tax revenues as TNCs often participate in tax avoidance.
- TNCs have the power to bribe and lobby governments, which can lead to increased corruption.
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Environment: Increase in world production has led to increased demand for raw materials, which is bad for the environment.
- Increased trade and production has led to more emissions,
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ADVANTAGES
Consumers: have more choice as there's a wider range of goods available from around the world and not just UK.
Lower Prices, as firms produce in countries with low costs.
Workers: some people have gained jobs, e.g. certain manufacturing jobs being transferred to countries such as China and Poland increases their employment.
Increased Migration which can lead to improved skills and an increase in AD, which increases number of jobs.
Wages for high skilled workers are increasing, due to more demand for their work.
TNCs tend to provide training for workers and create new jobs.
producers: Firms are able to source products from more countries and sell them in more countries, which reduces risk as the collapse of market in one area will have smaller impact on overall company.
Able to employ low skilled workers, at cheaper rate in developing countries, can exploit comparative advantages and have larger markets, all of which can increase profits.
Government: may be able to collect higher tax revenues as TNCs as well as their employees are expected to pay taxes.
Environment: Globalisation allows the world to work together to tackle climate change through the use of shared ideas and technology.
ECONOMIC GROWTH:
increased investment within countries , which represents an injection into the economy, which will then have larger impact due to the multiplier. Also creates an incentive for countries to make supply- side improvements to encourage TNCs to operate in their countries.
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TNCs can bring world class management techniques and technology which can
have knock on benefits to all industries