LARGE CORPORATIONS

LARGE CORPORATIONS

1. BENEFITS AND DRAWBACKS OF GLOBALISATION

   • BENEFITS
     • Can lead to improvements in efficiency and gains in economic welfare
     • Trade enhances the division of labour as countries specialise in areas of comparative advantage
     • Deeper relationships between markets across borders enable and encourage producers and consumers to benefit from economies of scale
     • Competitive markets reduce monopoly profits and incentivise businesses to seek cost-reducing innovations
     • Gains in effiecincy should bring about an improvement in economic growth and higher GDP per capita
     • It has helped many of the worlds poorest countries to achieve higher rates of growth and reduce the number of people living in poverty
     • For consumers, it increases choice when buying and there are gains in innovation
   • DRAWBACKS
     • INEQUALITY: Globalisation is linked to rising inequalities in income and wealth. Evidence for tjhis is the rise in the GINI coefficient and a growing rural-urban divide in China, India and Brazil
     • INFLATION: Strong demand for food and energy has caused a steep rise in commodity prices. Food price inflation has placed million of the worlds poorest people at risk
     • MACROECONOMIC INSTABILITY: A decade or more of strong growth, low interest rates, easy credit in developed countries created a boom in share prices and property valuations