Causes and costs of globalisation

What is globalisation?

• https://www.youtube.com/watch?v=T9lgZper-W4#t=103

Factors promoting Globalisation

• A reduction in protectionist barriers to trade in the World Economy.

• A reduction in international capital movement restrictions; encouraging Foreign Direct Investment (FDI).

• Developments in IT and falling communication costs.

• A fall in real transport costs.

• Liberalisation of domestic markets; the growth of Multinational Companies (MNC’s).

Effects of Globalisation – Winners & Losers

http://www.youtube.com/watch?v=oh03fuIlQNI&feature=related

Have these workers benefited or been disadvantaged by Globalisation?

A Blue Collar Worker in the USA

The bosses of MNC’s

Factory workers in China

A University Graduate from India

INCOME – increased production means more workers are needed, this means more jobs

ADVANTAGE DISADVANTAGE

VIDEO

GLOBALISATION

Is good or bad for the

Economy?

GROWTH – growing exports mean increasing production, which leads to higher economic growth

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Competition – increased competition may benefit consumers in terms of having cheaper goods and a greater variety. BUT UK firms may find it difficult to

compete on price

ADVANTAGE DISADVANTAGE

VIDEO

GLOBALISATION

Is good or bad for the

Economy?

Economic Dependency – the UK imports a large variety of foods; interruption of this may might

threaten our survival

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Unstable commodity prices – the price of raw materials and foodstuffs can change by large

amounts. This could make production costs higher

ADVANTAGE DISADVANTAGE

VIDEO

GLOBALISATION

Is good or bad for the

Economy?

Choice and product differentiation – UK citizens may now choose from goods that may not be otherwise

available

ADVANTAGE DISADVANTAGE

VIDEO

GLOBALISATION

Is good or bad for the

Economy?

Prices – many consumer goods that we import are from countries like China and India. These countries

have much lower labour costs than the UK.

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Competition and innovation – all companies have to work harder to attract consumers as there are many more potential competitors. They try to lower prices and develop more attractive and better quality products

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Power of MNCs – are becoming very powerful. All governments are finding it harder to control MNCs

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Social and environmental impact of trade – direct emissions i.e. CO2

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

Raw materials – the UK is relatively poor in raw materials, so it is essential that we import the

materials.Can you think of any?

ADVANTAGE DISADVANTAGE

GLOBALISATION

Is good or bad for the

Economy?

GLOBALISATION

Is for bad for the ?

GOOD

• Income – increased production means more workers are needed, and this means more jobs.

• Growth – growing exports mean increasing production, which leads to higher economic growth (i.e the GDP will rise each year)

• Competition and innovation – all companies have to work harder to attract consumers as there are many more potential competitors. They try to lower prices and develop more attractive and better quality products.

• Raw materials – the UK is relatively poor in raw materials, so it is essential that we import the materials (metals, gems, energy, and so on) that we need.

• Choice and product differentiation – UK citizens can choose from goods not otherwise available in the UK

• Prices – many of the consumer good we buy in the UK are imported from countries like China and India. These economies have much lower labour costs than the UK, and have relatively good levels of technology.

GLOBALISATION

Is for bad for the ?

BAD

• Competition – increased competition may benefit consumers in terms of having cheaper goods and greater variety, but UK firms may find it difficult to compete. Many countries have much lower labour cost than the UK, yet their workforces are relatively well trained

• Economic dependency – for example, the UK imports a large variety of foods; interruption of this might threaten our survival.

• Unstable commodity prices – the prices of raw materials and food can change by large amounts very quickly. This affects both production costs and the prices to consumers. This can have both good and bad effects.

• Power of MNCs – multinational corporations (MNCs) are becoming very powerful. All governments are finding it harder to control MNCs.

Advantages of Globalisation Disadvantages of Globalisation

It allows developing countries to create jobs in their domesticeconomies.

Consumers across the world have access to more of thegoods and services that they want.

It can help to relieve poverty through economic growth anddevelopment.

It helps to improve education across the world in terms ofliteracy and skills.

Higher living standards for more people.

Enjoyment of global brands. For consumers

Spreading of best practice and technology transfer.

Improved medical supplies that can increase life expectancy.

Manufacturing jobs that used to be located in Europe and USA

are now located in Asia where costs and wages are lower.

Has globalisation offered people too many choices and are we

capable of making the right decisions?

It has made some jobs more insecure and made stable livesmore difficult to achieve.

It has contributed towards global warming and climate change.

Widening gap between rich and poor; increased inequality.

Exploitation of workers in developing countries.

Resource depletion.

MNC’s can exploit and fail to invest in the host nation.

Rank them in order of importance; 1 = Most Important & 8 = Least Important

https://www.youtube.com/watch?NR=1&v=wGULEb3rYeg&feature=endscreen

RECAP… SOME HELP…Debate

• http://beta.tutor2u.net/economics/reference/globalisation-evaluating-benefits-and-costs