Positives of Globalization

Business of becoming increasingly international

Multi-national companies do business across the world
Companies like MacDonalds can be seen on high streets in most
cities
Goods are produced in one country and sold in many others
A global economy means free trade between countries
This can strengthen political relationships
Globaliation can also create opportunities for employment
!t encourages in"estment in less de"eloped countries
!t could reduce po"erty in the de"eloping world
Negatives of Globalization
Globalization is not always beneficial to everyone
Companies can move to countries where labour is cheap
This creates redundancies, or job losses
Employees cannot be confident that they have stable jobs
Companies sometimes exploit their employees in developing countries
Global trade creates more waste and pollution
The future of Globalization
There should be global regulations for salaries and working conditions
Governments should impose laws to protect the environment
5. Increased Inward Investment. The process of globalisation has encouraged firms to invest
in other countries. For example, many firms are relocating call centres to countries like India,
where wage costs are lower. This inward investment benefits developing countries because it
creates employment, growth and foreign exchange. Some foreign companies are criticised for
exploiting cheap labour. ut often the wages are higher than otherwise.
Efects of Globalisation on the UK
Economy
Globalisation involves the increased integration and interdependence of the
global economy. It means there will be a rise in trade, and increase in movement
of labour and capital.
! Comparative Advantage "# firms can benefit from specialising in goods where
they have a comparative advantage! This will also lead to lower prices for
consumers. see$ comparative advantage
%! Shifting Sectors Globalisation will lead to a shift in the sectors of the economy!
&or example the "# no longer has a comparative advantage in many manufacturing
industries, 'eveloping countries now have an advantage due to lower labour costs! This
process can lead to temporary structural unemployment! (ut these effects can be offset by
specialisation in other areas e!g! in &inancial and insurance services!
)! Increased Competition! Globalisation means that domestic monopolies will now
face more international competition! This will help reduce costs and prices for firms!
*! Migration! Globalisation makes it easier for migrants to enter and work in the
"#! This can help the "# fill job vacancies! +owever, it can also place greater stress on
"# housing and public services!
,! Global Economic Ccle! The "# is more affected by the global economic cycle!
&or example, a deep recession in the E" will affect the "#, because we rely on E" to
export many goods! The global credit crunch had a very damaging impact on "#
economy!
!ssay" #oes $lobalisation benefit both developed and developing countries%
$lobalisation involves the increased integration of national economies. It means a reduction in barriers of trade and investment between
different economies.
The benefits of globalisation are related to the benefits of free trade.
&. 'onsumers will have a wider choice of goods, and prices are likely to be lower. $lobalisation has been an important factor in the falling price
of manufactured goods.
(.$lobalisation gives an opportunity for domestic firms to export a wider market. !xport led growth has been an important factor in increasing
economic welfare in )sian countries.
*. $lobalisation enables increased specialisation of production. This specialisation enables firms to benefit from economies of scale. This leads
to lower average costs and increased efficiency.
+. $lobalisation causes increased competition between different firms and countries. This puts pressure on firms to be increasingly efficient and
offer better products for consumers.
5. Increased Inward Investment. The process of globalisation has encouraged firms to invest in other countries. For example, many firms are
relocating call centres to countries like India, where wage costs are lower. This inward investment benefits developing countries because it
creates employment, growth and foreign exchange. Some foreign companies are criticised for exploiting cheap labour. ut often the wages are
higher than otherwise.
Problems of Globalisation
&. #eveloping 'ountries ,ay Struggle to compete.
If a developing country wishes to develop a new manufacturing industry, it may face higher costs than advanced industries in the west, who will
benefit from years of experience and economies of scale. To develop an industry it may be necessary to have protection from cheap imports-
this gives the firm chance to develop and gain economies of scale.
(. $lobalisation keeps #eveloping countries producing primary products. #eveloping countries may have a comparative advantage in primary
products, however, this offers little scope for economic growth. .rimary products have a low income elasticity of demand. Therefore, with
economic growth demand for products increases only slowly. .rimary products often have volatile prices, this can cause the economy to be
sub/ect to fluctuations in income
*. ,ulti national 'ompanies may be able to force out local retailers, leading to less choice for consumers and less cultural diversity.
+. ,ovement of 0abour. globalisation enables workers to move easily around. however, this may cause the highest skilled workers of developing
countries to leave for better paid /obs in developed countries.