Global Economy - Revision

Global Economy - Revision - Costs of Globalisation Benefits...

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Costs of Globalisation Benefits of Globalisation Environmental Costs One problem of globalisation is that it has  increased the use of non renewable  resources. It has also contributed to increased  pollution and global warming. Firms can also  outsource production to where environmental  standards are less strict. Globalisation enables greater trade and  competition between different economies,  leading to lower prices, greater efficiency  and higher economic growth. Labour Drain Globalisation enables workers to move more  freely. Therefore, some countries find it  difficult to hold onto their best skilled workers,  who are attracted by higher wages elsewhere. Increased investment. Globalisation has also enabled increased  levels of investment. It has made it easier  for people to attract short term and long  term investment. Investment by  multinational companies can play a big  role in improving the economies of  developing countries. Less Cultural Diversity Globalisation has led to increased economic  and cultural domination. There is arguably less  cultural diversity Intergration of markets: Markets are  interlinked- European Union  The wages in the UK are high in global terms,  and thus the UK is unable to compete in many  sectors such as manufacture of consumer  goods or other goods where the labour costs  are a significant element of the price. Thus  British workers are losing their jobs when  companies move abroad or fail to compete.  Cheaper Products for Consumer Widening of Gap between rich and poor  countries  Providing jobs in LEDC's and help develop  economy Exploitation of workers: Paying the workers in  LEDC's a fraction of what would be paid in to  workers in LEDCs. 
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Causes of globalisation 1. Technological change, especially in communications technology. For example, UK businesses and data by satellite to India (taking advantage of the difference in time zones) where skilled but cheaper data handlers input the data and return it by satellite for the start of the UK working day. 2. Transport is much cheaper and faster. This is not just aircraft, but also ships. 3. Deregulation. From the 1980s onwards (starting in the UK) many rules and regulations in business were removed, especially rules regarding foreign ownership. Privatisation also took place, and large areas of business were now open to purchase and/or take-over. This allowed businesses in one country to buy those in another. For example, many UK utilities, once government businesses, are owned by French and US businesses.
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  • Spring '14
  • ismailov
  • North American Free Trade Agreement, World Trade Organization, gross domestic product, indirect taxes

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