Globalisation

Globalisation

1. Definition: A phenomenon of increased inter-connectedness & integration of people & activities across the world

   • Characterised by a high degree of movement of goods, services, capital flows & labour across the world

2. Causes of increasing globalisation

   • Government policies that open up their economies
     • Facilitates international flow of capital towards the uses with the greatest return
   • Rapid advancements in transport, information & communication technologies (ICT)
     • Lower costs & thus greater profitability of doing businesses
   • Rise in consumer demand
     • Wider array of G&S being produced & offered for sale

3. Consequences of globalisation

   • Benefits from free trade
     • Dd-side reasons: Stimulates EG, promote greater efficiency & EOS, lower prices & greater variety for consumers
     • Ss-side reasons: Enjoy higher SOL
   • Benefits from attracting labour & capital into the country
     • Sustain EG in the long term
     • Achieve AG & PG; enhances productive capacity
   • Opportunities for capital & labour to earn higher rates of returns
   • Benefits on a global level
     • Raise the economic welfare of the majority
   • Costs from free trade
     • Rising unmeployment (Structural)
     • Rising income inequality
     • Greater vulnerability
     • Environmental damage
     • Unequal gains from globalisation