Chapter 3

Chapter 3

1. Levels of Development

   • Advanced e.g. US
     • high Y levels
     • slower growth recent decades
     • large service/advanced manufacturing industries
   • Emerging e.g. China
     • fast growing Y levels
     • strongest growth rates
     • industrialising economy
   • Developing e.g. Ethiopia
     • low Y levels
     • moderate growth rates
     • high pop. growth
     • heavily reliant on agric.

2. Causes of Inequality

   • Domestic Factors
     • expanding trading blocs exclude poorer nations
     • many developing nations have foreign debt burdens
     • aid promised vs aid delivered disparity
     • aid often represents military and political considerations
     • loopholes in financial rules cause tax havens
   • Global Factors
     • location of natural R's
     • labour supply and quality
     • access to capital and investment funds
     • political stability

3. Effects of Globalisation

   • Economic Growth
     • fastest growing econs have been emerging who have embraced trade and FDi
     • globally integrated econs experienced relatively weak growth
     • effect of GFC
     • therefore, globalisation can stimulate growth as well as constrain growth
   • Economic Development
     • growth can lead to higher development
     • growth can also lead to inequality and climate impacts
   • Trade
     • globalisation caused a huge increase in trade
     • increased prevalence of vertical specialisation
   • Investment
     • more access to overseas funds
   • TNCs
     • greater prevalence of TNCs w/ removal of restrictions
     • can lead to environmental degradation
   • Y inequality
     • increased trade leads to export opportunities
     • lower tariffs= lower prices
   • Global Business Cycle
     • increasing synchronisation b/w economies and global business cycle
     • greater synchronisation leads to increased need for macroeconomic policies