What is the impact of Globalisation

The impact of globalisation on economic growth:

• The impact of globalisation on a country's economic growth rate is almost always wholly positive
• Globalisation raises output and average standards of living
• Globalisation enables each country to specialise
• No modern examples of autarky exist and the countries that come closest to it - North Korea - are normally deperately poor
• Some countries are better at producing goods and services than others:
  • in part this simply reflects a different endowment of resources
  • Saudi Arabia specialises in oil production because it is endowed with abundant oil-bearing strata
  • New Zealand specialises in wool and mutton because it has abundant land suitable for grazing sheep
  • Bangladesh has tens of millions of semi-skilled workers but little in the way of available land so it specialises in sewing many of the world's garments
• If each country specialises and then trades then all countries will end up with more goods than if each country tried to produce everything itself 
• Specialisation only works if it is then followed by trade
• The 'gains from trade' show how much each country has gained compared to the no-specialisation option 
• Less productive countries can gain from specialisation as they release a very productive workforce to do really well and in return they get to keep some of the 'gains from trade'
• Specialisation and trade leads to every country becoming richer, not just those which have the most to offer
• Less productive countries can still gain by specialising in the products in which they do relatively well
• If specialisation is not followed by trade, then the countries will end up with none of one good and lots of another
• This is known as the 'strategic argument' for limiting free trade in order to retain a degree of self-sufficiency 
• Britain drills for oil in the high-cost environment of the North Sea even though it would often be cheaper to buy from Saudi Arabia 
• Globalisation make each industry more competitive
• Industrial trade makes the market structures of industries much more competitive 
• When consumers and firms have many suppliers to choose from, competitive forces will reduce the prices while the quality of the products will be driven up, rising prosperity of a country
• Globalisation always increases competition 
• Each time another country tries to sell its goods in Britain, then competition in Britain will be increased
• Even if the new products are no good, then the level of competition has stayed the same; it can never decline
• Economic growth can therefore, only increase
• As unit costs are forced down in response to competitive pressues, firms become more productive - for a given quantity of resources they can produce more
• Therefore, the productive capacity of the economy will increase, enabling economic growth to take place
• At the height of public consciousness of the concept of globalisation at the turn of the century, there were a number of anti-globalisation protests:
  • 30 November 1999 - Battle of Seattle
  • The WTO Conference was disrupted by several thousand protestors who managed to control several…