Globalisation involves the increased integration and interdependence of the global economy. It means there will be a rise in trade, and increase in movement of labour and capital.
Some of the effects of globalisation on the UK economy
- Comparative advantage. UK firms can benefit from specialising in goods where they have a comparative advantage. This will also lead to lower prices for consumers.
- Shifting sectors: Globalisation will lead to a shift in the sectors of the economy. For example, the UK no longer has a comparative advantage in many manufacturing industries. Developing countries now have an advantage due to lower labour costs. This process can lead to temporary structural unemployment. But these effects can be offset by specialisation in other areas, e.g. in Financial and insurance services.
- Increased competition. Globalisation means that domestic monopolies will now face more international competition. This will help re
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