Globalization: Importance & Impact

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Questions and Answers

What is one potential benefit of liberalization in a growing economy?

Higher unemployment rates

Reduced foreign investment

Increased taxation on foreign companies

Long term growth and stability (correct)

Which of the following is a common concern regarding large Multinational Companies (MNCs)?

They do not participate in local economies

They always pay higher taxes

They can influence government officials (correct)

They create jobs exclusively in host countries

What misconception exists regarding immigration's impact on native workers in OECD countries?

It does not significantly change economic growth

It raises native workers' wages substantially

It causes an increase in unemployment (correct)

It always leads to job creation

Which issue is NOT associated with tax policies regarding large MNCs?

Stimulating economic growth Signup and view all the answers

What has globalization increased in relation to immigration?

Immigration into OECD countries Signup and view all the answers

Which factor significantly contributed to the growth in world trade after WWII?

Establishment of international institutions Signup and view all the answers

What was a major economic effect of the Great Depression in the 1930s?

Introduction of protectionist measures Signup and view all the answers

How does globalization primarily affect national economies?

It makes national economies more interconnected. Signup and view all the answers

Which of the following is not a key concept associated with globalization according to the content?

Domestic Market Isolation Signup and view all the answers

What role does technology play in globalization?

It facilitates the interdependence of economies. Signup and view all the answers

What was the average growth rate of world trade before WWI?

5% Signup and view all the answers

Which event caused a collapse in world trade during the 1930s?

The Great Depression Signup and view all the answers

What is one of the impacts of economic liberalization in the context of globalization?

Expansion of global trade Signup and view all the answers

What is a primary purpose of protectionist plans?

To develop domestic industries Signup and view all the answers

What is meant by the infant industry argument?

New industries may need protection from foreign competition Signup and view all the answers

How does import substitution relate to protectionism?

By substituting foreign goods with domestic goods Signup and view all the answers

Which of the following is a concern regarding protectionist measures?

They can raise the price of capital Signup and view all the answers

What does economic liberalization involve?

The removal of trade restrictions and deregulation Signup and view all the answers

What is a characteristic of countries with lower tariffs?

They tend to have more growth in GDP per capita Signup and view all the answers

What is one likely outcome of increased trade restrictions?

Increased prices for goods Signup and view all the answers

Which sector is often impacted significantly by economic liberalization?

Telecoms and electricity Signup and view all the answers

Study Notes

Globalization: Importance & Impact

Globalization is the spread of business and trade from domestic to global markets, making national economies more interconnected. This interconnection is driven by technology and transport.
Key aspects of globalization include growth in global trade, inward-looking protectionist policies, economic liberalization, and immigration.
Pre-World War I (1914-18), global trade grew at an average of 5% annually. The Great Depression of the 1930s and protectionist policies significantly slowed this growth. Post-World War II, international cooperation and institutions like the IMF, World Bank, and WTO accelerated global trade growth.

Importance of Globalization

Globalization's importance encompasses growth in world trade, inward-looking domestic protectionist policies, economic liberalization, and immigration.

Economic Liberalization

Globalization leads to economic liberalization. This involves removing trade restrictions, deregulation, and tariff reductions.
Economic liberalization is associated with both potential benefits (e.g., comparative trade advantages, long-term growth, increased foreign investment) and downsides (e.g., influence of large multinational corporations on government policies, tax avoidance by companies).
Tariffs and their impact on GDP per capita were analyzed, with lower tariffs often correlating with higher GDP growth.

Immigration

Immigration is a factor of globalization, with immigration to OECD (richer) countries steadily increasing.
Studies on immigration's impact on wages and employment have shown minimal negative effects, potentially temporary increases in unemployment resulting from a 1 percentage point increase, with a corresponding 0.12% lowering in wages.

Summary

Globalization is a pivotal concept in understanding the interconnectedness of global economies. Key elements include growth in world trade, economic liberalization, and the global flow of capital and immigration.

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Description

Explore the significance of globalization and its effects on world trade and national economies. This quiz covers key aspects including economic liberalization, the growth of global markets, and historical impacts post-World War II. Test your knowledge on how globalization interconnects nations and influences policies.