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?
- better transport links
- better communication
- increase in multinational corporations
- increase in trade agreements
What are two advantages of globalisation?
One benefit of globalisation is an increase in specialisation
- one benefit of globalisation is that it allows countries to specialise in specific goods and services
- countries would choose to specialise in the good or service where they have a comparative advantage
- this is the good or service they can produce at the lowest opportunity cost
- specialisation leads to an increase in total output compared to the output if countries produced multiple goods and services.
- 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.
- this can be illustrated with a right shift in LRAS
- 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
- another benefit of globalisation is an increase in free trade
- this can be seen by a diagram showing the removal of tariffs.
- removing tariffs causes the price of imports to fall.
- this means that firms can benefit from lower costs of production.
- this can be shown by a right shift in short-run aggregate supply.
- this causes an increase in real gdp from y1 to y2, and this causes a decrease in unemployment due to