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Analyse two economic benefits of globalisation. [6]

A country is likely to benefit from higher rates of GDP growth. This is because access to a greater market size means greater export potential for countries like Malawi to exploit their comparative advantages. Specialisation according to comparative advantage maximises the potential revenue from exports because costs will be lower so the price competitiveness of exports increases. As a consequence, (X-M) in the AD equation will increase thus the curve shifts to the right; increasing Real GDP and therefore actual economic growth.

Globalisation will also bring in more FDI and encourage Multi-national corporations (MNCs) to set up in foreign countries to produce goods and services. To do this they will need workers. As a consequence, they will hire local workers leading to unemployment decreasing as labour is a derived demand. 

EXTRA:

Globalisation has also led to increased migration around the world. Increased supply of labour drives down wage cost allowing firms to produce goods/services at cheaper prices, increasing consumer surplus.

Businesses benefit from lower costs. This is because they can source raw materials from all around the world and find the cheapest price. As a consequence, businesses experience lower costs of production translating into lower prices allowing them to increase their market shares and maximise profits, promoting long term investment and dynamic efficiency.

Anish P. A Level Maths tutor, GCSE Maths tutor, A Level Economics tutor

4 months ago

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Analyse two economic benefits of globalisation. [6]

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