Globalisation, Trade and Development
Globalisation, Trade and Development
This domain tests globalisation processes, trade patterns, transnational corporations and measures of development. Exam answers should distinguish economic growth from development, and evaluate winners and losers rather than treating globalisation as uniformly good or bad.
Core rules
- Globalisation is the growing interconnection of economies and societies through flows of goods, capital, people, information and culture.
- Transnational corporations organise production across borders through foreign direct investment, outsourcing and global value chains. They may create jobs and transfer technology, but profits can be repatriated and supply chains can be vulnerable.
- Trade theory includes comparative advantage, but it assumes mobility, information and adjustment that may not exist. Tariffs, quotas, subsidies and trade blocs affect flows.
- Development measures include GDP or GNI per capita, the Human Development Index (health, education, income), the Gender Inequality Index and the Multidimensional Poverty Index. Each has limitations.
- Theories include modernisation, dependency, neoliberal and sustainable development approaches.
Worked example
Two countries have the same GNI per capita but different Human Development Index values. Explain. Reasoning: the index combines life expectancy, education (mean and expected years) and GNI per capita. Country A may have better health care and schooling, so its index is higher despite similar income. This shows development is multidimensional, not just income.
Traps
Do not use GDP and GNI interchangeably. Do not equate development with economic growth. Do not say globalisation benefits everyone equally. Do not ignore trade rules, debt or colonial legacies.