Globalisation | A-Level Economics Notes

These revision notes cover everything you need to know about Globalisation for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.

What is globalisation?

Globalisation is the increased integration and interdependence between different economies.

What are the main causes of globalisation?

1. better transport links
2. better communication
3. increase in multinational corporations
4. increase in trade agreements

What are two benefits of globalisation?

One benefit of globalisation is an increase in specialisation

1. one benefit of globalisation is that it allows countries to specialise in specific goods and services
2. countries would choose to specialise in the good or service where they have a comparative advantage
3. this is the good or service they can produce at the lowest opportunity cost
4. specialisation leads to an increase in total output compared to the output if countries produced multiple goods and services.
5. as an economy can produce more goods and services when all factors of production are fully employed, we can say that there is an increase in productive potential.
6. this can be illustrated with a right shift in LRAS
7. this means the economy is able to achieve long-run economic growth (potential growth), and also a fall in the price level.

Another benefit of globalisation is an increase in free-trade

1. another benefit of globalisation is an increase in free trade
2. this can be seen by a diagram showing the removal of tariffs.
3. removing tariffs causes the price of imports to fall.
4. this means that firms can benefit from lower costs of production.
5. this can be shown by a right shift in short-run aggregate supply.
6. this causes an increase in real gdp from y1 to y2, and this causes a decrease in unemployment due to

What are two disadvantages of globalisation?

One disadvantage of globalisation is that it causes structural unemployment

1. globalisation allows countries to specialise in fewer goods and services and engage in free trade
2. this means that the production of goods and services will move to countries with lower costs of production e.g. wages and raw materials
3. workers in many industries in developed countries may lose their job as a result and this leads to an increase in structural unemployment
4. this also costs the government as it means they may have to fund welfare payments and re-training schemes

Another disadvantage of globalisation is that it causes over-dependence, and countries become more vulnerable to economic shocks

1. export-led countries would face a shock if another country imposed tariffs against them
2. this would lead to a fall in exports
3. this would lead to a fall in aggregate demand
4. this can cause a fall in economic growth and an increase in unemployment

1. countries who benefit from low costs of production can be shocked if there is a sudden change in exchange rates or an external shock such as a disaster or conflict
2. this can lead to an increase in costs of production
3. we have seen this when oil prices have increased
4. this causes a fall in economic growth, an increase in unemployment, and cost-push inflation

Summary questions

1. What is globalisation?
2. What are the main causes of globalisation?

A-Level Economics Tutoring

I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique.