globalisation essay economics

Home — Essay Samples — Sociology — Globalization — The Economic and Social Impact of Globalization

The Economic and Social Impact of Globalization

• Categories: Globalization

About this sample

Words: 760 |

Published: Aug 1, 2024

Words: 760 | Pages: 2 | 4 min read

Table of contents

The economic impact of globalization, the social impact of globalization, the environmental impact of globalization.

Cite this Essay

To export a reference to this article please select a referencing style below:

Let us write you an essay from scratch

• 450+ experts on 30 subjects ready to help
• Custom essay delivered in as few as 3 hours

Get high-quality help

Dr Jacklynne

Verified writer

• Expert in: Sociology

+ 120 experts online

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy . We’ll occasionally send you promo and account related email

No need to pay just yet!

Related Essays

3 pages / 1142 words

1 pages / 713 words

6 pages / 2896 words

7 pages / 3495 words

Remember! This is just a sample.

You can get your custom paper by one of our expert writers.

121 writers online

Still can’t find what you need?

Browse our vast selection of original essay samples, each expertly formatted and styled

Related Essays on Globalization

Globalization is the key word of having this huge world coming very small. It has changed the way many people think, behave, react, talk, dress and take actions in different fields. It made the international aspects from all [...]

Globalization, the process of increased interconnectedness and interdependence among nations and cultures, has had a profound impact on various aspects of human society, including religion. This essay explores the intricate [...]

The impact of globalization on employment is a multifaceted phenomenon that has brought about significant changes in the world of work. As economies and societies become increasingly interconnected, the dynamics of employment [...]

In the last few decades, the number of immigrants in South Korea has been drastically increasing. Therefore, it is inevitable that South Korea has transformed from a homogeneous nation-state to a ‘multicultural society’. So what [...]

Globalization is the interconnectedness and interdependence of nations. It helps in spreading the products, technology, information, and jobs that transcend the national border and its cultures. The Marxists believe that [...]

I’d like to begin with explaining the term Globalization with help of the definitions as follows: Globalization refers to all those processes by which the peoples of the world are incorporated into a single world society, [...]

Related Topics

By clicking “Send”, you agree to our Terms of service and Privacy statement . We will occasionally send you account related emails.

Where do you want us to send this sample?

By clicking “Continue”, you agree to our terms of service and privacy policy.

Be careful. This essay is not unique

This essay was donated by a student and is likely to have been used and submitted before

Download this Sample

Free samples may contain mistakes and not unique parts

Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

Please check your inbox.

We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

Get Your Personalized Essay in 3 Hours or Less!

We use cookies to personalyze your web-site experience. By continuing we’ll assume you board with our cookie policy .

• Instructions Followed To The Letter
• Deadlines Met At Every Stage
• Unique And Plagiarism Free

• High School
• You don't have any recent items yet.
• You don't have any courses yet.
• You don't have any books yet.
• You don't have any Studylists yet.
• Information

ECON11 T11 Essay 1 Causes of Globalisation

Bcom in financial management (eco 2601), university of south africa, recommended for you, students also viewed.

• Vacancy Circular 04 09 2023
• CRI2601-paper 4 - This will be useful for students when they prepare for examination
• Econ Assignment solutions
• Learning unit 8
• Written assessments S2 2023
• Bankproducten - MPPP

Related documents

• 240-77471651 Annexure C 1 High Medium Risk Category June 2019
• Fin3701 study notes summary financial management
• Companies Act
• DSC2604 Assignment 3 S1
• Role Profile - Project Administrator
• Macroeconomics jeka - ecs6862 economics

Preview text

Grade 11: contemporary economic issues paper 2, essay 1 – globalisation.

Fully explain the effects/consequences of globalisation. (26) INTRODUCTION The impact of globalisation can be seen as the rich industrialised countries dominate trade because most of the trade takes place between them.  (Any other relevant introduction is acceptable) (2) BODY Interdependence between countries has increased 

• Because of globalisation countries are more and more affected by the economic success and failures of other countries.  Trade interdependence 
• There is an increase in the volume of trade between countries. 
• Higher interdependence is the effect of higher volumes of trade and labour movements between countries.  Financial interdependence 
• The financial transactions make countries interdependent. 
• There are large scale investments in businesses and shares of other countries.  Increase in competition 
• It has led to improved quality of products and services. 
• Local manufactures are forced to improve their quality to compete with foreign companies.  Unfair competition 
• The levels of competition between developed and less developed countries are not the same. 
• Industrialised countries have not opened their markets to developing countries. 
• Subsidies in developed countries enable them to sell their products at a lower price on the international markets. 
• Technical difficulties and stricter health conditions make it difficult for developing countries to compete. 

Increase in employment opportunities/changes in employment conditions  - Expansion of industries to other countries led to the increase in employment opportunities.  - It also contributed to higher wage levels and productivity.  - MNEs create many job opportunities across the world.  Increase in international cooperation  - Formation of trade blocs like North America Free Trade Agreement, European Union, Asia-pacific economic cooperation, BRICS and other bilateral and multilateral agreements.  Spread of education and technical knowhow - There is a constant flow of information between countries.  - One of the positive effects of globalisation is the spread of education.  Spread of culture/cultural change  - Different cultures can also circulate freely through labour migration.  - People can pick up and practise positive things from other cultures.  Increase in environmental concerns/environmental degeneration  - Increased production leads to increased damage to the environment.  - Exhaustion of resources such as water.  - Rich countries are the main cause.  Manipulation by multinational corporations - The ownership of companies across the world is in the hands of the multinational corporations.  - These corporations can influence economic and political decisions.  - They can also influence employment and production in the global economy. Economic growth  - The economies that are involved in globalisation grew faster than other economies.  - It is because of their access to international markets.  Changing pattern of trade/increased foreign trade  - The pattern of trade has changed due to trade agreements, removal of trade barriers, etc.  - Increased trade provided access to a wide range of foreign goods. 

• Multiple Choice

Course : Bcom in financial management (Eco 2601)

University : university of south africa.

• More from: Bcom in financial management Eco 2601 University of South Africa 50   Documents Go to course

Advantages and Disadvantages of Globalization Essay

When discussing the drawbacks and benefits of globalization, essays tend to be on the longer side. The example below is a brief exploration of this complex subject. Learn more in this concise globalization pros and cons essay.

Introduction

• Benefits and Disadvantages of Globalization

Reducing Negative Effects

In today’s world, globalization is a process that affects all aspects of people’s lives. It also has a crucial impact on businesses and governments as it provides opportunities for development while causing significant challenges. This paper discusses the advantages and disadvantages of globalization using evidence from academic sources. The report also suggests how governments and companies may implement to reduce the negative impact of the process.

Benefits and Drawbacks of Globalization

Globalization is a complex concept that can be defined by the process of interaction between organizations, businesses, and people on an international scale, which is driven by international trade. Some people may associate it with uniformity, while others can perceive it as the cause of diversification. The reason for such a difference in public opinion is that globalization has both advantages and disadvantages that should be analyzed.

The most significant positive aspects of globalization include global economic growth, the elimination of barriers between nations, and the establishment of competition between countries, which can potentially lead to a decrease in prices. Globalization supports free trade, creates jobs, and helps societies to become more tolerant towards each other. In addition, this process may increase the speed of financial and commercial operations, as well as reduce the isolation of poor populations (Burlacu, Gutu, & Matei, 2018; Amavilah, Asongu, & Andrés, 2017).

The disadvantages of globalization are that it causes the transfer of jobs from developed to lower-cost countries, a decrease in the national intellectual potential, the exploitation of labor, and a security deficit. Moreover, globalization leads to ecological deficiency (Ramsfield, Bentz, Faccoli, Jactel, & Brockerhoff, 2016). In addition, this process may result in multinational corporations influencing political decisions and offering unfair working conditions to their employees.

Firms and governments can work on eliminating the negative effects of globalization in the following ways. For example, countries should work on microeconomic policies, such as enhancing opportunities for education and career training and establishing less rigid labor markets. In addition, governments can build the necessary institutional infrastructure to initiate economic growth. To solve the problem of poor working conditions, it is vital to establish strict policies regarding minimum wages and the working environment for employees. A decrease in the national intellectual potential may be addressed by offering a broad range of career opportunities with competitive salaries, as well as educating future professionals on how their skills can solve problems on the local level.

Companies, in their turn, may invest in technologies that may lead to more flexible energy infrastructure, lower production costs, and decrease carbon emissions. They can also establish strong corporate cultures to support their workers and provide them with an opportunity to share their ideas and concerns. Such an approach may eliminate employees’ migration to foreign organizations and increase their loyalty to local organizations. It is vital for companies to develop policies aimed at reducing a negative impact on the environment as well by using less destructive manufacturing alternatives and educating their employees on ecology-related issues.

Globalization has a significant impact on companies, governments, and the population. It can be considered beneficial because it helps to eliminate barriers between nations, causes competition between countries, and initiates economic growth. At the same time, globalization may result in a decrease in the national intellectual potential, the exploitation of labor, and ecology deficiency. To address these problems, organizations and governments can develop policies to enhance the population’s education, improve working conditions, and reduce carbon emissions.

Amavilah, V., Asongu, S. A., & Andrés, A. R. (2017). Effects of globalization on peace and stability: Implications for governance and the knowledge economy of African countries. Technological Forecasting and Social Change , 122 (C), 91-103.

Burlacu, S., Gutu, C., & Matei, F. O. (2018). Globalization – Pros and cons. Calitatea , 19 (S1), 122-125.

Ramsfield, T. D., Bentz, B. J., Faccoli, M., Jactel, H., & Brockerhoff, E. G. (2016). Forest health in a changing world: Effects of globalization and climate change on forest insect and pathogen impacts. Forestry , 89 (3), 245-252.

• Globalization of Bollywood and Its Effects on the UAE
• Globalization and Its Impact on the 21st Century Global Marketplace
• How Testosterone Deficiency Can Impact Male Health
• How Does Iron Deficiency Affect Pregnancy?
• Ecology: Definition & Ecological Fallacy
• Multinational Corporations Economic Implications
• Globalisation and Labour Market
• Impact of Globalisation on Labour
• The Origins of the Modern World
• Containerized Shipping Influence on World Economies
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, June 9). Advantages and Disadvantages of Globalization Essay. https://ivypanda.com/essays/advantages-and-disadvantages-of-globalization/

"Advantages and Disadvantages of Globalization Essay." IvyPanda , 9 June 2021, ivypanda.com/essays/advantages-and-disadvantages-of-globalization/.

IvyPanda . (2021) 'Advantages and Disadvantages of Globalization Essay'. 9 June.

IvyPanda . 2021. "Advantages and Disadvantages of Globalization Essay." June 9, 2021. https://ivypanda.com/essays/advantages-and-disadvantages-of-globalization/.

1. IvyPanda . "Advantages and Disadvantages of Globalization Essay." June 9, 2021. https://ivypanda.com/essays/advantages-and-disadvantages-of-globalization/.

Bibliography

IvyPanda . "Advantages and Disadvantages of Globalization Essay." June 9, 2021. https://ivypanda.com/essays/advantages-and-disadvantages-of-globalization/.

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Talk to our experts

1800-120-456-456

Essay on Globalisation: Its Impact on Society

• Essay On Globalisation

Essay on Globalisation

Globalization means the integration of economies and societies through the flow of information, ideas, technology, goods, services, capital, finance, and people. The true meaning of Globalization in a broad sense is connecting in all areas of human life. It is the process by which other companies or organizations enhance their international reputation or start operating internationally. 

Globalization began thousands of years ago when people and companies bought and sold in distant lands. In the Middle Ages, Central Asia was connected to China and Europe via the famous Silk Road. After World War II and the last two decades, governments of many countries have adopted free-market economies. They have greatly increased their own production potential and created countless new opportunities for international trade and investment. New routes and means to transport goods have been discovered, which has allowed the people to expand their business easily and efficiently. 

The government has reduced all trade barriers and concluded new international agreements to promote trade in goods, services and investment. This profitable action has created opportunities for international trade. In foreign markets, companies with these new opportunities set up new factories and establish production and marketing relationships with foreign partners. Hence, Globalization is defined as an international industrial and financial enterprise.

Overview of Globalization

Globalization means the assimilation of economics and societies through the flow of information, ideas, technologies, goods, services, capital, finance, and people. The real meaning of Globalization in a broad sense is connectivity in all aspects of human life. It is the process where the businesses or other organizations expand international authority or start operating on an international scale.

How the Existence of Globalization Came Into Being?

Globalization had started many thousands of years ago when people and corporations were buying and selling across lands at great distances. In the middle age, Central Asia connected with China and Europe through the famed Silk Road. After the Second World War II and during the last two decades, the governments of many countries have adopted free-market economic systems. They increased their own productive potential immensely and created innumerable new opportunities for international trade and investment.

The governments have reduced all barriers to commerce and established new international agreements to promote trade in goods, services and investments. These beneficial measures gave rise to opportunities for global trade. With these new opportunities in the foreign markets, corporations established new factories and started production and marketing alliances with foreign partners. Hence, Globalization is defined as an international industrial and financial business structure.

Advantages and Disadvantages

The frontiers of the state with increased confidence in the market economy and renewed policies in the private capital and resources, a process of structural adjustment spurred by the studies and with the support of the World Bank and other international organizations have started in many of the developing countries. Globalization has also brought in new opportunities to developing countries. Greater access to developed country markets and technology transfer has promised to improve their productivity and higher standards. 

At the same time, Globalization has also created challenges like growing inequality across and within nations, instability in the financial market and environmental deterioration. Globalization is a fascinating exhibition that can be understood as a global system of competition and connectivity. It has created tough competition among countries and global corporations.

Impact of Globalization in India

The British Colonial rule had destroyed the self-sufficient economy of India and left India to be the poorest Independent country. Our first Prime Minister gave preference to a mixed economy to boost the economic condition of the country. Public sectors were set up along with the private enterprises, but because of the socialistic model of the economy, the new strategy did not produce profitable results. Due to this, a number of public sectors became sick and the growth rates of production began to fall. 

During that time, the poverty of the people in India was increasing at an alarming rate and because of low domestic savings and acute balance of payment crisis, there was no adequate capital for investment. During that time of crisis, Prime Minister PV Narsimha Rao introduced the policy of liberalization, privatization to overcome the financial situation. 

India opened up to Globalization after the economic policy of 1991 came into force. Mounting debts and pressure from the International Monetary Fund drove the nation to go global. The process of Globalization has been an integral part of the recent economic growth of India. Globalization has played a very significant role in the growth of export, leading to the expansion of the job market in India. One of the major sectors of Globalization in India has been in the growth of outsourced IT and Business Process Outsourcing services. There has been an incredible increase in the number of skilled professionals in India employed by domestic and foreign companies to cater service to the customers globally, especially in the USA and Europe. 

There was not a doubt that Globalization in India brought a monumental change in the living standards of the people. People in India realized many benefits from Globalization. The establishment of multinational companies generating billions of jobs and access to umpteen numbers of brands and an increase in the forex reserves of the country took India to a higher platform globally. Despite this monumental change in the economy of the country, India also faced the challenges of severe competition from the foreign market and the domestic producers started fearing marginalization and pulverization because of the better quality products produced by the foreign producers.

Globalization had both desirable and undesirable consequences for India and the world. Even though it has accelerated progress in some countries, it has also widened the gap between the rich and the poor.

The impact of Globalization has been both positive and negative on the entire world, but we can surely hope for more advancement in the global economy due to this process.

FAQs on Essay on Globalisation: Its Impact on Society

1. How Did Globalization Help India to Improve the Economic Conditions?

Globalization generated umpteen employment opportunities for the people of India by establishing multinational companies. The policy of liberalization and privatization invited foreign traders to do business with India. This has increased the inflow of men, money, material, labor, technology, etc., from foreign countries to India. People have access to foreign brands and the living standards have improved drastically.

2. How is Globalization a Threat to Domestic Producers?

The domestic producers fear marginalization and pulverization because of the entry of foreign and better quality products.

3. What are the advantages and disadvantages of Globalization?

With increasing confidence in market economies and new policies on private capital and resources, many developing countries are beginning to adapt to developments with the support of the World Bank and other international institutions involved in research and development. Globalization also offers new opportunities for developing countries. Greater access to markets in developed countries and the transfer of technology will increase their productivity and demand.

At the same time, Globalization has created challenges such as increasing inequality between and within countries, instability of financial markets and environmental degradation. Globalization is an interesting exhibition that can also be seen as a system of competition and international relations. This has created intense competition between countries and international companies. 

4. What do you mean by Globalization?

Globalization means the integration of economies and societies through the flow of information, ideas, technology, goods, services, capital, finance, and people. The true meaning of Globalization in a broad sense is a connectedness in all areas of human life. It is the process by which other companies or organizations enhance their international reputation or start operating internationally. Globalization has its own benefits and drawbacks. We can learn more about Globalization and how to write an essay on it in detail on the Vedantu website, which has all the necessary materials that students need in order to write an essay on Globalization. 

5. How can Globalization help India improve its economic situation?

In our present times, Globalization has been a boon to many people as it not only allows companies to expand their business but also makes things accessible for everyone. In a simple sense, we can say that it helps in connecting people with the world. Globalization has created many job opportunities in India through the creation of multinational companies. Policies of liberalization and privatization have encouraged foreign traders to trade with India. This has increased the number of people, money, materials, labor, technology and so on—inflows from abroad to India. People have access to foreign brands and the standard of living has improved significantly.

6. How does Globalization threaten domestic producers?

Domestic producers are afraid of marginalization and due to the entry of foreign and better quality products into the market. Globalization can be associated with increasing income and wealth inequality. Many of the world's poorest people lack access to basic technologies and public goods. They are excluded from treatment. Some critics of globalization point to the loss of economic and cultural diversity as international multinational giants and brands dominate domestic markets in many countries. Globalization can hinder competition if international companies with dominant brands and high technology gain a foothold in key markets, be it telecommunications, the automotive industry, and so on.

7. What are the main industries that have grown tremendously because of Globalization?

The integration of national economies into the global economy is one of the most important developments of the last century. This process of integration, often referred to as Globalization, has manifested itself in a tremendous increase in cross-border trade.

The outsourcing business has grown exponentially due to Globalization. The main industries resulting from Globalization are trade and commerce. Automobile companies, clothing manufacturers and transportation, are the three main industries taken over as a result of Globalization.

How to Write an Essay on The Impact of Globalization: 3 Best Examples

• What is Globalization?
• Components of a Good Essay on Globalization

A Strong Thesis Statement

Thorough research, organized structure, critical analysis, real-world examples.

• 3 Typical Essay Examples

Example 1: The Economic Impact of Globalization

• Introduction
• Thesis Statement
• Body Paragraphs
• Economic Growth
• Reduction of Poverty
• Challenges and Inequality
• Economic Dependence

Example 2: The Cultural Impact of Globalization

• Cultural Exchange and Diversity
• Homogenization of Cultures
• Threat to Cultural Identity
• Cultural Revitalization

Example 3: The Political Impact of Globalization

• International Cooperation
• Political Integration
• Challenges to Sovereignty
• New Conflicts
• Writing Tips for Your Essay
• Start with a Clear Outline : Plan your essay structure, including the introduction, body paragraphs, and conclusion. Keep your outline flexible to accommodate changes as you write.
• Engage with Multiple Perspectives : Discuss both the positive and negative impacts of globalization. This balanced approach demonstrates critical thinking and provides a well-rounded discussion.
• Use Credible Sources : Support your arguments with data, case studies, and quotations from reputable sources. This lends credibility to your essay and enriches your analysis.
• Include Personal Insights : Share your own views or experiences related to globalization. This personal touch can make your essay more engaging and relatable.
• Proofread and Revise : Always proofread your essay for grammatical errors, coherence, and clarity. Revising your draft ensures a polished final submission.
• Wrapping Up

How to Write an Essay on The Impact of Video Games on Youth: 3 Best Examples

Discover how to craft a compelling essay on the impact of video games on youth. Explore both the benefits and risks, backed by research and real-life examples. Dive in and learn more!

How to Write an Essay on the Impact of Multinational Corporations on Local Businesses: 3 Best Examples

Globalization has brought multinational corporations to the forefront, often overshadowing local businesses. Discover how to craft an insightful essay on their economic and cultural impacts, complete with real-world examples and practical writing tips.

30 ‘In Conclusion’ Synonyms and How To Use Them Write Better Essays

A strong closing section is essential for any essay. Whether you’re writing an argumentative essay, an exposition, or a narrative essay, the conclusion needs to be one of the most impactful parts of your writing. If you’re looking at ‘in conclusion’ synonyms, then you likely need some help with crafting an impactful summary section.

Reference Library

Collections

• See what's new
• All Resources
• Student Resources
• Assessment Resources
• Teaching Resources
• CPD Courses
• Livestreams

Study notes, videos, interactive activities and more!

Economics news, insights and enrichment

Currated collections of free resources

Browse resources by topic

• All Economics Resources

Resource Selections

Currated lists of resources

• Practice Exam Questions

Globalisation and Inequality (Revision Essay Plan)

Last updated 1 May 2018

• Share on Facebook
• Share on Twitter
• Share by Email

Here is an answer to the following question: "Evaluate the extent to which globalisation inevitably leads to a rise in income inequality in one or more countries of your choice."

Essay On Globalisation And Inequality (Download a pdf version of this essay)

Globalisation is a process through which countries, businesses and people become more inter-connected and inter-dependent via an increase in trade in goods and services, cross-border investment and labour migration from one nation to another. Income and wealth inequality can be measured in various ways including the Gini coefficient and the Palma Ratio. The latter is a good indicator of the depth of inequality since it tracks incomes flowing to the top ten percent of households and divides by the incomes for the bottom forty percent. In South Africa, that figure is 7.1 whereas for Germany the Palma Ratio is just over 3.

One way globalisation can increase inequality is through the effects of increasing specialisation and trade. A rise in trade-to-GDP ratios signifies an increase in the volume and value of trade between countries and regions. Although trade based on comparative advantage has the potential to stimulate economic growth and lift per capita incomes, it can also lead to a rise in relative poverty. For example, if a country can now import cheaper steel from elsewhere, then there will be a contraction in domestic supply and a fall in employment and real incomes in that industry. This can lead to higher rates of structural unemployment and a decline in real living standards. Real wages come under downward pressure and inequality can increase. We see this in regions of the UK for example where de-industrialisation has taken place leading to much higher rates of long-term unemployment and a worsening of economic and social deprivation. In the United States, the share of national income claimed by the top 1% of the population climbed from 11% in 1980 to 20% in 2014, compared to just 13% for the entire bottom half of the population. 

However, one could argue that the benefits of globalisation can be used to offset this. If trade generates faster GDP growth, then the government will see an increase in tax revenues which might then be used to fund capital investment in public goods and merit goods and services including finance for re-training programmes and improvements to infrastructure in economically-depressed areas. Much depends on whether a government has sufficient resources and political will to implement an active regional and industrial policy to improve employment prospects for those negatively affected by globalisation.

Globalisation might also increase inequality because it usually leads to higher profits for multinational corporations such as Apple, Google and Facebook which feed into generous pay-outs for senior executives and increasing dividends for shareholders. Multinationals matter - they generate 10 percent of the world’s annual GDP and more than 50 percent of the value of world trade. One of the hot political and economic issues of the age has been the ability of businesses operating in more than one country (a transitional company) to use shadow pricing and other forms of legal tax avoidance to reduce their liability to pay tax and thereby increase the return to those with an equity stake. Because of tax avoidance, national governments do not generate the revenues needed to pay for public services and welfare systems - both of which can have a progressive effect on the final distribution of income. The UK government has estimated that, in 2017, multinational businesses managed to avoid paying nearly £6 billion in tax revenues. Oxfam estimates that tax avoidance costs developing countries $170 billion a year whereas $100 billion could provide an education for 124 million children and pay for healthcare services that could prevent the deaths of at least six million children annually.

In evaluation, there are steps that governments can take to increase their tax take. This can range from introducing country-by-country financial reporting so that it becomes clearer where the profits are being made, to introducing restrictions on interest rates charges from one subsidiary of a TNC to another. There are also moves to reduce the amount of intra-company loans made by TNCs which can shift profits to countries with lower corporation tax. In the US, they have introduced a one-off tax on the off-shore cash held by US businesses after it was found that US companies had built up almost $2.6tn in untaxed cash held offshore. Developing countries can also improve their governance so that multi-nationals investing pay a proper rent for the ownership of land and are less vulnerable to corruption from elected officials.

A third way in which globalisation can create increased inequality is by increasing the demand for and returns to higher-skilled work and lowering the expected earnings of people in relatively low-skill and low-knowledge occupations. One of the driving forces of foreign direct investment is that resources tend to flow where the unit cost of production is lowest. This is the case with light manufacturing for example where a lot of investment is flowing to countries such as Vietnam, Bangladesh, Ethiopia and Indonesia. FDI creates more formal employment and incomes for people employed in these sectors but perhaps at the expense of similar workers in higher-income countries whose skills are no longer in such demand. They are therefore at greater risk of unemployment and persistent relative poverty; many have been pushed into poorly paid jobs in services linked to the Gig Economy. People affected often feel that they have been left behind by the forces of globalisation and their votes may have been a factor behind the Brexit outcome and the election of Trump who has adopted a “protectionist approach” to trade policy since becoming President.

That said, it could be argued that it is technological progress – which has raised demand for skilled workers relative to unskilled workers – rather than trade and globalisation which has had most impact on these workers. Often the people who lose jobs as a result of technology are not the ones who get the new ones and the result can be hysteresis in the labour market with deep pockets of long-term unemployment and hit relative poverty. Automation threatens many jobs - ranging from fork-lift drivers to workers in farming and production lines. The onus is on government to implement and fund the right supply-side policies designed to improve the human capital of people affected including lifting investment in human capital and entrepreneurship.

Final reasoned comment

In conclusion, it is not inevitable that globalisation increases inequality of income and wealth. We have seen big changes in the workforce and in earnings between different groups but in my view, these are not solely the consequence of globalisation. One paradox of globalisation is that it has probably reduced inequality between countries but increased it within nations. What matters is how governments respond to the challenge of improving access to knowledge and skills and in making sure that the benefits from cross-border trade and investment provide enough tax revenues to pay for high quality and affordable public services. In this way, more of the positives from globalisation can be turned into a ‘public good’ rather than a ‘public bad’.

Essential Revision Resources for A Level Economics Students

Revision flashcards for a-level economics students.

Resource Collection

Economics Revision Workshop Booklets

• Globalisation
• Global economy
• Global public goods
• Financial Crisis
• External Shocks (Macro)

You might also like

The Journey of an iPhone from Factory to Retail Store

29th December 2016

Learning from Economic Shocks

25th May 2017

Deloitte "Back to School" webinar

7th September 2017

Game of Theories: The Great Recession

5th December 2017

Income and Wealth (Quizlet Activity)

Quizzes & Activities

Development Policies - Removing Government Subsidies

Study Notes

Will AI kill developing world growth?

18th April 2019

Building resilience to overcome external shocks

12th November 2019

Our subjects

• › Criminology
• › Economics
• › Geography
• › Health & Social Care
• › Psychology
• › Sociology
• › Teaching & learning resources
• › Student revision workshops
• › Online student courses
• › CPD for teachers
• › Livestreams
• › Teaching jobs

Boston House, 214 High Street, Boston Spa, West Yorkshire, LS23 6AD Tel: 01937 848885

• › Contact us
• › Terms of use
• › Privacy & cookies

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.