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Impacts of Globalisation, : - Coggle Diagram
Impacts of Globalisation
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Workers
Low skill workers
Costs
Production moved to developing countries where wages are lower --> unemployment, workers lose jobs
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Macroeconomic objectives
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Inflation
It makes demand pull inflation more intertwined with foreign markets (e.g. high demand for exports can drive prices up)
It can make cost push inflation more intertwined with foreign markets (e.g. if wages go up in a developing nation, MNCs may raise prices to make up for higher costs)
It can also improve cost push inflation - firms can find cheaper materials, labour, machinery from overseas
Economic Growth
It can lead to greater economic growth, as firms have access to more demand from overseas
However, if domestic firms are uncompetitive they may lose their market share to overseas firms and MNCs
Redistribution of Income
It makes income redistribution harder. Lower income workers may have their jobs replaced, while the richest in society gain more from investments
Unemployment
may have worsened unemployment in developed nations, as now a lot of production is moved overseas
It can help lower unemployment in developing nations, as MNCs hire a lot of workers
The Environment
Costs
More use of international transport - more pollution (e.g. use of airplanes to transport goods and people)
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Impacts on countries
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Poor
Cost
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Increased chances of failure as some smaller business might not be able to compete on a global scale
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Benefits
Have more and better access to capital flows, technology, human capital as well as cheaper imports, and larger export markets.
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