Help on Globalisation (1 Viewer)

[khoshgelleh]

i was just doin some short answer q's on topic one , and one question asked "demonstrate the difference between a real shock and a finanical shock and how each might be transmitted btween econmies" 4 marks

I am a bit clueless... is it refering to capital flight and contagions when is say financial shock?? please help

Also i understand that globalisation has both negative and postive impacts , generally positvie for developed nations and negative to less dveloped but can some one give me a list of a few example of the impacts.

I know that for positive:
* Higher standards of living
*increased trade flows, investemnt
* dipolmatic relations

negative
* environmental consequences
*disadvantages less developed nations --> widening gap between rich and poor


I was hoping you guys could add to my list


thanks

 

[klaw]

don't know about the first one but for the second one, globalisation has resulted in:
* A more efficient allocation of resources
* Increased international investment and technology, finance, labour, trade
* International convergence and international business cycle and interdependence between nations
* The development of global organisations such as the WTO, IMF and World Bank
* The development of TNCs
* Increased competition, resulting in greater consumer sovereignty
* Individual governments becoming less important because international influences have a greater impact than before on policy decisions.
* Less job and wage stability, as businesses feel they can move their production elsewhere if wages are too high.

can't remember any more

 

[pete_mate]

"demonstrate the difference between a real shock and a finanical shock and how each might be transmitted btween econmies"

thats a good question, i was looking at it today

yes your right, financial shocks involve capital flight and perhaps contagion.
a financial shock could be caused by negative speculation (such as asia fin crisis)
an increase in the interest rate differential and poor share market performance (eg. tech stock collapse of 2000) these are transmitted via capital flight and (resulting in) exchange rate depreciations.

a real shock is changes in real things, like world output changes (from flooding perhaps), changes in commodity prices (oil crisis of 1973-5 and 1979-1984) these result in cost push inflation, and then staglfation. but right now its just cost push inflation (rising milk prices etc.)

 

[khoshgelleh]

thanks guys

 

[Haku]

what is contagion?

and where did you get these practice questions?

 

[khoshgelleh]

a contagion as far as my understading goes refers to the cause of capital flight as in, the withdrawal of financial flows from one economy is contagious in a sense as people have a "herd mentality" --> an example in the asian economic crisis .

And i got these questions from the resource page--> some one put up some sample short answer questions so im just using them top revise

 

[Haku]

can u post it up as a attachment? too many resource, hard to go through all.

thanks

 

[khoshgelleh]

sorry nosadness i made a mistake i got the question off the eco forum... its the second thread and its called short answers

 

[Haku]

hehe, thanks dude