1. Globalisation
A2 Economics

2. Aims and Objectives Aim: Understand globalisation Objectives:
Define globalisation
Explain the role of MNCs
Analyse the effects of globalisation on firms and LDCs

3. Globalisation
Trend towards worldwide markets in products, capital, labour and unrestricted trade barriers.
Fewer tariffs (taxes on products imported/exported)
Fewer quotas (limits on number of exports/imports)

4. Aspects of Globalisation
Growth of International Trade
World imports and exports have increased annually by 10% between 2000 and 2006 (WTO)
Growth of MNCs
Large firms moving into global markets and the developed world to benefit from economic growth. McDonald’s / Ford/ Coca Cola

5. Speed of globalisation has been influenced by the following factors….

6. Transportation Improvements
Growth of the internet and communications allows global trade
Technological Change
Containerisation has allowed firms to reduce costs and transport goods more easily and efficiently
Transportation Improvements
Former USSR states attract MNCs who wish to benefit from cheap FofP
Growth in Eastern Europe
Trade in various industries and countries has been liberated by WTO
Liberated Trade

7. Globalisation has increased competition in all markets and led to the following outcomes…

8. New Competition in Foreign Markets
E.g. Eon – German firm in UK supplying 9 million people
New Competition in Foreign Markets
Occurs as MNCs move out of countries into developing ones. E.g. Black and Decker move to Czech loss of 1,000 jobs
Unemployment
Greater economies of scale as MNCs can spread fixed costs over units of output
Economies of Scale
Aimed at reducing costs, synergy benefits
Mergers/Alliances

9. Effects of Globalisation on Developing Countries
MNCs play a vital role in developing countries
There are benefits to the firm and country, however some MNCs are having a negative impact on LDCs.
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