The benefits of globalization.
1. Consumers will have a wider choice of goods, and prices are likely to be lower.
2. Globalization gives bigger export markets for domestic manufacturers
3. Globalization enables increased specialization of production. This specialization enables firms to benefit from economies of scale. This leads to lower average costs and increased efficiency.
4. Globalization causes increased competition between different firms and countries. This puts pressure on firms to be increasingly efficient and offer better products for consumers.
5. Increased inward investment. The process of globalization has encouraged firms to invest in other countries. This inward investment benefits developing countries because it creates employment, growth and foreign exchange. Some foreign companies are criticized for exploiting cheap labour. But often the wages are higher than otherwise.
6. Increased labour migration gives advantages to both workers and recipient countries. If a country experiences high unemployment, there are increased opportunities to look for work elsewhere.
Problems of globalization
1. If a developing country wishes to develop a new manufacturing industry, it may face higher costs than advanced industries in the west, who will benefit from years of experience and economies of scale. To develop an industry it may be necessary to have protection from cheap imports; this gives the firm chance to develop and gain economies of scale.
2. Globalization keeps developing countries producing primary products. Developing countries may have a comparative advantage in primary products, however, this offers little scope for economic growth. Primary products have a low income elasticity of demand. Therefore, with economic growth demand for products increases only slowly.
3. Environmental costs. One problem of globalization is that it has increased the use of non renewable resources. It has also contributed to increased pollution and global warming. Firms can also outsource production to where environmental standards are less strict.
4. Multinational companies may be able to force out local retailers, leading to less choice for consumers and less cultural diversity.
5. Movement of labour. Globalization enables workers to move easily around. However, this may cause the highest skilled workers of developing countries to leave for better paid jobs in developed countries.
6. Tax competition and tax avoidance.Multinational companies like Amazon and Google, can set up offices in countries like Bermuda and Luxembourg with very low rates of corporation tax and then funnel their profits through these subsidiaries. This means they pay very little tax in the countries where they do most of their business.
Ex.1. FindtheEnglishequivalentsinthetext.
світова інтеграція, взаємозалежність національних економік, інвестування в підприємства в інших країнах, розвиток технологій, міжнародна торгівля та інвестиції, нова стадія (фаза) економічного розвитку, виробничий потенціал, прихильники глобалізації, підвищувати стандарти життя, багатонаціональна (транснаціональна) компанія, спірне питання, робити висновки, спеціалізація виробництва, вхідні інвестиції, міграція робочої сили, країна-отримувач, економія (ефект) від масштабу, еластичність попиту, екологічні витрати, культурне різномаїття.
Ex.2. Give Ukrainian equivalents for the following words and phrases.
tidal wave,precise definition,worldwide integration,likewise,to invest in enterprises,outbreak,increased cross-border trade,qualitatively,productive potential,reductions in barriers,defining feature of globalization,controversial issue,proponents and opponents of globalization,at the expense of,resistance to globalization,pros and cons,average costs,increased efficiency, toput pressure on,inward investment,to exploit cheap labour,labour migration,economies of scale,protection from cheap imports,primary products,little scope for economic growth,elasticity of demand,environmental costs,non renewable resources,pollution and global warming.
Ex.3. Match the terms in italics with the definitions that follow. There are more terms than definitions.
economic globalization, integration, international trade, proponent, multinational corporations(MNC), specialization of production, economies of scale, inward investment, labour migration, outsourcing, tax avoidance, pollution, global warming. |
The presence in or introduction into the environment of a substance which has harmful or poisonous effects.
The movement of people from one country to another for the purpose of employment.
The integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.
A corporation that operates in two or more countries. It has headquarters in one country and offices or plants in other countries, either developing or developed.
A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.
A person who advocates a theory, proposal, or course of action
The act of combining or adding parts to make a unified whole
The exchange of capital, goods, and services across international borders or territories.
The use of legal methods to pay the smallest possible amount of tax.
Reductions in the average cost of production, and hence in the unit costs, when output is increased.
Investment made within a country from outside
A method of production where a business or area focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency within the entire system of businesses or areas.
The gradual rise in the earth's temperature caused by high levels of carbon dioxide and other gases in the atmosphere.