Question

Decide whether each item is a benefit or cost of economic globalization.

Answer 1

Answer:

Benefits:

1. Access to a larger market
2. Increase in production of goods

Costs:

1. Loss of jobs in developed countries
2. Depletion of natural resources.

Explanation:

On the one hand, a global market means that a company or firm can potentially reach a larger market to sell its products and services. And in turn, make more profit. On the other hand, it also means that the competition is global and that a firm has to compete in this larger market with hundreds of firms. This often means that to be competitive, companies have to lower their costs. One easy way of doing that is by outsourcing or moving parts of their production process to countries with lower salaries. This leads to the loss of jobs in the home countries.

The increased competition and the larger market also mean that more goods are produced at a better price for the customer. However, this production can easily get out of hand and deplete natural resources.