Globalisation

Globalisation

1. "Globalisation is like a candle. When it lights another candle, the fire of the original candle is not diminished"-Thomas Jefferson.

2. Positives of Globalisation

   • The exploitation of Comparative advantage resulting in gains from trade- China low cost labour manufacturing, specialising in labour intensive production- rise in real GDP- exponential growth
   • Encourages producers and consumers to reap the benefits of economies of scale resulting from the increased size of markets
     • Lower prices, increased competition, and access to products from the cheapest source possible.
   • Higher living standards derived from participating in a growing economy. Huge reductions in extreme poverty in countries such as India and China
     • Higher wages allow families to not need children's income allowing more children to participate in schools improving the productive capacity of the economy
       • Higher incomes= local multiplier effects
   • Dissemination of knowledge through the rise of MNCs
     • Technology transfers so that the less developed parts of the world benefit from new more productive technology from the developed world
   • Increased consumer choice, greater variety of goods available to purchase

3. Drawbacks of Globalisation

   • The benefits of globalisation have not been shared equitably throughout the world.
   • MNCs are seeking countires with the lowest and poorly enforced levels of regulation so they can exploit cheap labour costs (Fox Con), This 'race to the bottomeant that as MNCs move to less regulated countries they take with them their jobs and FDI.
   • Increased pollution levels due to the rise in factories and transportation of goods. "Carbon emissions do not respect countires' borders".
     • Increased atmospheric damage has also led to the loss of global commons and clean water supplies.
       • Greater labour migration to cities has resulted in increased squalor, noise pollution, congestion and crime. Urbanisation is a natural side effect of globalisation. This means more government intervention in some cases such as regulating congestion as well as controlling crime- opportunity cost.
     • Primary product dependency and declining terms of trade trapping developing countries in a low level of economic development and giving rise to balance of payments problems.
       • Low levels of intra industry/regional trade in Africa
   • Loss of cultural diversity- Spread of global brands (Americanisation) , McDonalds- same restaurants present in every capital city- some local businesses may lose profits and be forced to close. This is bad for a nations sense of identity. As well, Maccy D's has resulted in huge rises in obesity, meaning a large cost to health care services
   • Increased exposure to external economic shocks created by a greater dependence on developed economy markets.

4. Evaluative points

   • Globalisation has had unbalanced outcomes- it has led to a greater difference between developed and developing countries+ Greater income inequality
   • Different impacts on different developing countries- Huge reduction in poverty and increased living standards in China, South Korea, Taiwan, Vietnam. Sub Saharan African countries still lagging behind in real terms