Question

What are the cost and benefits of economic globalisation?

Answer 1

Globalisation involves the process in which national economies become inter-related and integrated.

BENEFITS

1.FREE TRADE

-globalisation provides the benefits of free trade between countries for exchange of goods and resources

2.FREE MOVEMENT OF LABOR

-increased labor migration and helps countries with labor shortages fill important posts.This process helps to reduce geographical responsibilty

3.INCREASES ECONOMIES OF SCALE

-globalisation enables lower average costs and lower prices for consumers.

GREATER COMPETITION

-firms facing greater competition from foreign firms .

4.INCREASED INVESTMENT

-globalisation has increased the level of investment

COSTS OF GLOBALISATION

1.FREE TRADE CAN HARM DEVELOPING ECONOMIES-Industries in developing countries need protection from free trade to be able to develop

2.ENVIRONMENTAL COSTS

-increase the use of new non renewable resoures and has cpntribured to increased pollution and global warming

3.LABOR DRAIN

-globalisation enables workers to move more freely and some countries find it difficult to hold onto best skilled workers who are attracted by highe wages

4.TAX COMPETITION AND TAX AVOIDANCE-