Summary and Exam Tips for The effects of Globalisation (Causes and Effects of Globalisation)
The effects of Globalisation (Causes and Effects of Globalisation) is a subtopic of Developments in the Global Economy, which falls under the subject Economics in the Edexcel International A Levels curriculum.
Globalisation offers several benefits, including increased economic growth through trade openness and productivity gains, leading to higher real GDP. It also boosts tax revenue as economies grow, and enables firms to achieve economies of scale by accessing larger markets. Consumers benefit from lower prices and increased consumer surplus, as well as a wider choice of goods and services, contributing to higher living standards.
However, globalisation also presents costs. It can lead to displaced workers due to shifts in manufacturing, and exploitation of workers in countries with weaker labor laws. The environmental impact is significant, with increased production leading to more emissions. Loss of tax revenue occurs through transfer pricing by transnationals, and income inequality can rise within countries. Transnational corporations (TNCs) may exert undue influence on domestic economic policies, affecting government decisions.
Exam Tips
-
Understand Key Benefits: Focus on how globalisation leads to increased economic growth, tax revenue, and economies of scale. Be ready to explain how these factors contribute to lower prices and higher living standards.
-
Identify Costs: Be prepared to discuss the negative impacts, such as worker displacement, exploitation, environmental harm, and income inequality. Understand how TNCs can influence domestic policies.
-
Use Examples: When discussing the effects, use real-world examples, such as China's export-led growth or the impact on UK industries in the 1950s-1970s, to illustrate points.
-
Link Concepts: Connect the benefits and costs of globalisation to broader economic theories and models, such as aggregate supply and demand curves.
-
Practice Exam Questions: Familiarize yourself with typical exam questions, such as those about economies of scale and the influence of TNCs, to enhance your exam readiness.
