Firms can also outsource production to where environmental standards are less strict. It has also contributed to increased pollution and global warming. One problem of globalisation is that it has increased the use of non-renewable resources. However, developing countries are often harmed by tariff protection, that western economies have on agriculture. There is an infant industry argument which says industries in developing countries need protection from free trade to be able to develop. Free trade can harm developing economiesĭeveloping countries often struggle to compete with developed countries, therefore it is argued free trade benefits developed countries more. Investment by multinational companies can play a big role in improving the economies of developing countries. It has made it easier for countries to attract short-term and long-term investment. Globalisation has also enabled increased levels of investment. However, globalisation means that firms face greater competition from foreign firms. This greater specialisation enables lower average costs and lower prices for consumers.ĭomestic monopolies used to be protected by a lack of competition. Globalisation enables goods to be produced in different parts of the world. Countries like the US have responded to this process by actively trying to prevent migrants from other countries. Some are concerned that the free movement of labour can cause excess pressure on housing and social services in some countries. However, this issue is also quite controversial.For example, the UK needed to recruit nurses from the far east to fill shortages. This has been quite effective in the EU, with many Eastern European workers migrating west.Īlso, it helps countries with labour shortages fill important posts. This process of labour migration also helps reduce geographical inequality. If a country experiences high unemployment, there are increased opportunities to look for work elsewhere. Increased labour migration gives advantages to both workers and recipient countries. Economies of scale through being able to specialise in certain goods.Bigger export markets for domestic manufacturers.Greater choice of goods, e.g food imports enable a more extensive diet.When countries specialise there will be several gains from trade: This means countries can specialise in producing goods where they have a comparative advantage (this means they can produce goods at a lower opportunity cost). Free trade is a way for countries to exchange goods and resources.
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