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With global economic growth slowing and inequality rising, the case against globalisation is strengthening - Edexcel - A-Level Economics A - Question 8 - 2022 - Paper 2
Question 8
With global economic growth slowing and inequality rising, the case against globalisation is strengthening. But there are also many benefits to globalisation. Global... show full transcript
Worked Solution & Example Answer:With global economic growth slowing and inequality rising, the case against globalisation is strengthening - Edexcel - A-Level Economics A - Question 8 - 2022 - Paper 2
Step 1
Increased global trade
Answer
Globalisation is likely to increase global trade as countries engage in international markets. This is facilitated by comparative advantage, where countries specialize in producing goods they can create most efficiently. As nations trade, overall output can rise, benefiting consumers through a broader range of accessible products.
Step 2
Increased global output with reference to comparative advantage
Answer
With countries focusing on their strengths, greater global output can be achieved. By leveraging comparative advantage, nations can produce goods and services more effectively, leading to enhanced economic performance and increased GDP.
Step 3
Increased incomes in developing countries
Answer
Globalisation can lead to higher incomes in developing countries due to foreign direct investment (FDI) from multinational corporations (MNCs). These investments can help grow export industries, enabling job creation and improved living standards.
Step 4
Increased global competition between firms
Answer
As globalisation progresses, competition among firms increases. This competition can drive innovation and efficiency, ultimately reducing prices for consumers globally. Competitive pressures may also lead companies to invest in better production processes.
Step 5
Step 6
Evaluation of potential drawbacks
Answer
While there are significant benefits, there are also potential risks. Protectionism can hinder global trade and limit the benefits of comparative advantage. Moreover, reliance on global supply chains may lead to vulnerabilities, such as delays and increased costs due to international tensions or crises.
Step 7
Increased inequality and unemployment
Answer
Globalisation can exacerbate inequality by favoring skilled over unskilled labor, potentially leading to structural unemployment in certain sectors. Regions unable to compete in a global market may experience job losses, highlighting a need for retraining and education.