9708 · 11.6
Globalisation flashcards
Revision flashcards for Cambridge 9708 Globalisation (syllabus 11.6). Flip, recall, then mark a real past-paper question.
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What is globalisation?
Increasing integration of national economies through trade, capital flows, migration, technology transfer, and spread of ideas/culture.
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Drivers of globalisation?
Lower transport/communication costs, trade liberalisation (WTO), technological advances, MNC expansion, deregulation of capital markets.
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Benefits of globalisation?
Comparative advantage, lower consumer prices, technology transfer, FDI to LICs, economies of scale, greater product variety.
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Costs of globalisation?
Structural unemployment in declining industries, environmental degradation, tax competition (race to bottom), cultural homogenisation, financial contagion.
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Role of MNCs?
Coordinate global supply chains, drive FDI, exploit economies of scale — may also avoid tax, exploit weak regulation, repatriate profits.
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Winners and losers?
Winners: consumers, skilled workers, export sectors, some LICs (export-led growth). Losers: unskilled HIC workers, uncompetitive domestic firms, countries with weak governance.
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Define Foreign Direct Investment (FDI).
An investment made by a firm or individual from one country into business interests located in another country. It is a key component of globalisation, often carried out by MNCs.
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What is trade liberalisation?
The removal or reduction of barriers to international trade, such as tariffs (taxes on imports) and quotas (limits on import quantities). It is a key driver of globalisation, promoted by the WTO.
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How can globalisation cause structural unemployment?
By enabling firms in developed countries to offshore production to lower-cost countries. This leads to the decline of entire industries (e.g., textiles, manufacturing) in the developed country, making the skills of workers in those industries obsolete.
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What is 'transfer pricing'?
An accounting practice used by multinational corporations to reduce their overall tax burden. They set artificial prices for goods and services sold between their own subsidiaries in different countries, shifting profits to low-tax jurisdictions.
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What is the 'race to the bottom'?
A situation where countries compete to attract business by lowering taxes, regulations (labour, environmental), and social standards. It is a common criticism of globalisation.
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What is the Prebisch-Singer hypothesis?
The theory that the price of primary commodities declines over time relative to the price of manufactured goods, causing the terms of trade for primary-product-based economies to deteriorate.
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How does globalisation affect financial markets?
It leads to greater integration and capital mobility, which can fund investment (FDI) but also increases the risk of financial contagion, where a crisis in one country spreads rapidly to others (e.g., 2008 crisis).
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What is de-industrialisation?
The decline of a country's traditional manufacturing industry due to competition from foreign imports and the offshoring of production, a common effect of globalisation in developed economies.