Globalisation The Global Economy
Aims • In this lesson you will: • Be able to identify the characteristics of globalisation • Examine the causes and consequences of globalisation. • Identify the advantages and disadvantages of globalisation.
Objectives • By the end of this lesson all students to be able to identify the characteristics of globalisation. • Most students will be able to identify and explain the advantages and disadvantages of globalisation, as well as the causes and consequences. • A few students will able to discuss what effect globalisation has on the four main macroeconomic objectives.
Further reading Pages 145-8 Pages 235-7
Definition: The growth of inter-dependence amongst world economies. Usually seen as resulting from the removal of many international regulations affecting financial flows. Globalisation refers to the integration of markets in the global economy. Globalisation
Integration of economies • The increasing reliance of economies on each other. • The opportunities to be able to buy and sell in any country in the world. • The opportunities for labour and capital to locate anywhere in the world. • The growth of global markets in finance.
Made possible by Made possible by Technology Communication networks Internet access Growth of economic cooperation – trading blocs (EU, NAFTA, etc.) Collapse of ‘communism’ Movement to free trade
Costs and Benefits The Global Economy
Benefits of Globalisation • Comparative Advantage • Economies of Scale • Cost Competitive • Avoidance of Regulation • Increased flow of inward investment • Job Creation
Costs of globalisation • Barriers to entry for small firms. • Diseconomies of scale. • Loss of jobs • Deindustrialisation • Structural Unemployment • Inequality • Pollution
The impact of globalisation in the UK • Growth - Assuming the UK maintains its competitiveness, globalisation is likely to increase UK growth in the long term. • Employment - Long term, jobs may be destroyed in the manufacturing sector and created in the service sector, hence creating structural unemployment which could widen the income gap within countries. • Prices - Increased competition is likely to reduce the price level. • Trade - The volume of both imports and exports is likely to increase.
Essay Question • Discuss the costs and consequences on the effects of globalisation in the UK. (20 Marks)