Examine the impact of globalisation on economic growth and the

quality of life in the global economy

Evaluate the impact of globalisation on government policies and the

distribution of wealth and income in the global economy

Globalisation is the process of increasing integration between different countries resulting

open world market and the increased impact of international influences on all aspects of life
and economic activity. Globalisation has many impacts and often leads an unequal levels
economics growth and quality of life in the world, with some people benefitting more than
others.
Globalisation can occur through trade liberalisation of free trade agreements, where trade
barriers are reduced between member countries to facilitate growth. Mention WTO. In
addition, the integration of national financial flows has created a world financial system.
This has resulted in financial deregulation in most countries e.g. Paul Keating floating the
dollar in 1983, leading to integration of capital markets and allows easier transfers of
financial flows. Finally, globalisation has increased through the technology revolution,
which has led to new types of products, services and employment in businesses and the
conducting of e-commerce. Mention sharing of technology allowing greater capital
production > economies of scale. Mention advancements in transport allows good to move
around efficiently.
Economic growth occurs when there is sustained increase in a country’s productive capacity
over time. This is commonly measured by the increase in real GDP over time. There are two
main reasons for economic growth: increased use of resources and/or capital
widening/deepening. This economic growth can lead to an outward shift in the economy’s
PPF enabling it to achieve rising national output, employment and living standards over
time. This is clearly depicted by China with its sustained growth rate of around 9% in the
past decades, bringing millions of people out of poverty.
Economic development refers to the process of structural changes needed in an economy
for growth to occur. For example, china’s redistribution of employment from agriculture to
manufacturing. It is abroad measure of welfare in a nation that includes indicators of health
education, environment quality and material living standards. Economic development can
be achieved by saving and investing into resources of better quality, which increase
productivity, leading to higher economic growth and an increase in living standards and real
incomes.
A major impact of globalisation is the rise of emerging economies such as the BRICS with
their high contribution in world output and sustained economic growth. Emerging
countries are ones that are experiencing rapid economic change and are in transition to
becoming developed economies as their economic development is increasing. These
economies have been able to achieve this through high FDI which improves their capital
equipment hence increasing production capabilities. Globalisation has provided them large
market access to capitalise on this increase in FDI, which has also caused structural changes
so that countries specialise in where they have a comparative advantage so that they can
be internationally competitive and efficient leading to a higher terms of trade and high real
incomes leading to higher quality of life. This cycle continues with economic development
being sustained. The BRICS have also benefitted as governments and private enterprise are
increasingly working together to drive the economy.
However, the success of emerging and developed economies is usually at the cost of
developing countries, such as Bangladesh and Cambodia. The contrast in the level of
economic development is called the development gap which some may say had increased
leading inequality of the distribution of income. One of the main reasons for this is the low
level per capita incomes which reduce the ability to save and invest and the supply of
capital for capital widening and deepening to assist economic development. Therefore,
they have a hard time achieving high level of productivity without any FDI, leading to
vicious cycle of poverty. These low levels of FDI usually occur because of political instability,
low levels of natural resources and an unskilled labour force. E.g. Syria
This inequality of the distribution of income is displayed as countries in central Africa earn
less than $1000 per year while countries located in eastern Europe and North America earn
more than $12000 per year. The distribution of global wealth is even more uneven as North
America consists of 34% if global wealth while they only account for 5.2% of the
population. While Africa only possess 1% of global wealth, yet accounts for 10% of the
world’s population.
Globalisation has also had a very negative impact on the environment, especially in
developing and emerging countries. This is because they may engage in behaviour that is
detrimental to the environment to attract FDI. These countries are taken advantage of and
once the resources are reaped these foreigners leave the environment with unconcern,
which leads to a lower quality of life for the individuals of that country.