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globalisation - Coggle Diagram
globalisation
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Improvements in communication (e.g., internet) and transportation (e.g., air travel) that facilitate cross-border trade and investment.
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Reduction of tariffs, quotas, and other trade barriers between countries.
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Expansion of MNCs, which invest in multiple countries, promoting global trade.
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Trade agreements (e.g., World Trade Organization) that encourage countries to open their markets to international trade.
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- Consequences of Globalisation
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Countries agree to eliminate tariffs and quotas between each other but maintain independent trade policies with non-members.
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Countries share a common currency and monetary policy (e.g., Eurozone).
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Countries integrate economically by adopting a common currency, harmonizing fiscal policies, and allowing free movement of goods, services, capital, and labor.
- Trade Creation vs Trade Diversion
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Occurs when a trade agreement allows countries to shift from high-cost domestic production to lower-cost imports from partner countries, leading to greater efficiency.
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Occurs when, due to a trade agreement, imports are shifted from more efficient producers outside the trade area to less efficient producers within the area, leading to inefficiency.
- Definition of Globalisation
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The process of increasing interconnection and interdependence between countries through trade, investment, technology, and cultural exchange.
Involves the movement of goods, services, capital, labor, and information across borders.