Globalisation - Developed & developing countries - Chapter 16
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- Created on: 23-02-16 19:49
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- Globalisation
- Chapter 16
- Developed countries:
- Availability of cheap labour overseas i.e. cheap raw materials
- Reduces inflationary pressures
- Allowing lower interest rates
- Reduces inflationary pressures
- Movement of manufacturing sector = cleaner environments
- E: If developing countries can produce for cheaper= misallocation of resources if the developed countries did not move to the service sector
- Structural unemployment
- Wider choice of goods
- Allows domestic firms to export to a larger market
- Increased competitiveness = more efficient
- Lower price for goods
- Higher real incomes
- Higher standard of living
- Higher real incomes
- Lower price for goods
- Local businesses out of business i.e. tailors
- Larger output = EOS
- Availability of cheap labour overseas i.e. cheap raw materials
- Developing countries:
- Increased levels of trade
- More integrated into the world economy
- Foreign trade multiplier effect i.e. less unemployment and poverty
- More integrated into the world economy
- Demand for products are determined by developed countries
- Recession = fall in demand
- Exploitation by MNCs i.e. poverty wage
- Worsening income inequalities due to lack of tax redistributive systems
- Tariffs protect developing countries' comparative advantage from being exploited
- Protectionist policies in developed countries prevents producers accessing export markets
- Volume & volatility of capital flows
- Increased risk of banking or currency crises. Esp. for those with weak financial institutions
- Competition for foreign investment = "race to the bottom"
- Worsened environment etc.
- Loss of cultural uniqueness
- Increased levels of trade
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