Globalisation

Globalisation

1. Multinational Businesses

   • Why become a multinational?
     • Obtain raw materials
     • Avoid Trade barriers
     • New markets
     • Spreads Risks
     • Low labour costs
   • Countries
     • Disadvantages
       • Use of scarce resouces
       • Influence the government and economy
       • Often only unskilled jobs created
       • Profits flow out of country
       • Existing firms in danger
     • Advantages
       • New investment
       • More exports
       • Fewer imports
       • Jobs created
       • More competition
       • Taxes paid to government
   • What are they?
     • A multinational corporation has facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they coordinate global management
       • http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation/
   • Consumers
     • Greater free trade.
       • Free trade is a way for countries to exchange goods and resources. This means countries can specialise in producing goods where they have a comparative advantage (this means they can produce goods at a lower opportunity cost).
       • Lower prices for consumers
       • Greater choice of goods
       • Bigger export markets for domestic manufacturers

2. Effects

   • Greater movement of labour
   • Increased capital flows.
   • Growth of multi-national companies.
   • Increased integration of global trade cycle.
   • Increased communication and improved transport, effectively reducing barriers between countries.