Globalisation overview for A2 ECON4

1. Aquinas College Economics Department
Globalisation
The Rise of International
Consumerism
ECON4

2. Aquinas College Economics Department
Globalisation
Companies who operate globally will now make
decisions based on what is happening in the
global market rather than the former national
economies
Worldwide growth of multinational
companies, international integration, the spread of free
markets and policies of liberalisation and free trade

3. Aquinas College Economics Department
It is not a new thing!
The World Economy was integrated since before
WW1 and definitely up to the Wall Street Crash
The World Wide Depression or ‘Great Depression’ in the 1930s showed
Globalisation at its worst

4. Aquinas College Economics Department
Aspects of Globalisation
Rise in international trade as a proportion of
world trade – increasing annually by 10% since
2000
Growth in Multi-National-Corporations (MNCs)
who trade internationally

5. Aquinas College Economics Department
Multi National Corporations

6. Aquinas College Economics Department
Factors Affecting Globalisation
Factor Explanation
Technological Change Inventions such as mobile phones and the
internet have lead to a ease of doing
business internationally
Transportation More advanced and cheaper methods of
transportation have made it even easier
to get goods aboard
Opening Up of New Economies Collapse of Communism in Eastern Europe
and the far east has lead to economies
opening up and becoming more accessible
Liberation of Trade World organisations such as the GATT
[WTO] and the IMF have made world trade
easier

7. Aquinas College Economics Department
Outcomes of Globalisation
Outcome Explanation
Foreign Competition Firms are now subject to international
competition such as the UK Energy
Market, Scottish Power now competes
with E.ON(German) and EDF (France)
Unemployment As companies seek cheaper labour and
cheaper costs they outsource their
production from developed countries to
less developed nations
Economies of Scale Cheaper Raw Materials and Labour abroad
lead firms to achieve maximum economies
of scale
Mergers and Joint Ventures More and more companies merge and join
up to increase supply or reach new
markets abroad

8. Aquinas College Economics Department
Role of MNCs
Large contributors of Foreign Direct Investment
Impact in a developing country is reliant on
several key factors
– Willingness to meet local economic needs
– Willingness of national government to regulate
effectively
– Expectation of incentives