Globalisation, Scarcity and Opportunity Cost Explained
1. What dangers do you see from increasing globalisation in a world economy?
Globalisation refers to the integration and interdependence of the world economy and can be seen by the fact that communications, media and business spans the world, not just one given economy or even type of economy. Boyes (2011, p.6) reports that there are now close to 40,000 transnationals companies, and increase of 300% on just 25 years ago, and that these companies make up approximately 33% of all private-sector assets.
The world wide economic fact of life is that all over the world, people’s wants appear to be unlimited and exceed the resources available to satisfy those wants. Firms seem to have expanded across country boundaries in an attempt to satisfy those demands for resources and in doing so have fuelled globalisation.
Economists study the what (output), the how (techniques of output) and incomes (for whom) across and between countries. In doing so, they have come to find that world production is likely to be geared towards satisfying consumer demand in the countries that have the resources and can pay – the wealthy countries.
Dangers don’t just include the generation of products and services just for those that can pay, but also may include a homogenisation of markets, implying that the same products and services will be everywhere and dominate the market to the potential exclusion of local brands and firms. (MacDonald’s on every corner!) and therefore consumer choice may be reduced. However, the truth is that even the most global of brands varies its products and services the world over through name changes (such as 7-Up in Shanghai – since it means ‘death by drinking’ in the local dialect) to product adaptations – where some MacDonald’s burgers in Mexico come with chilli peppers. Even the Disney company had to adapt its product in Paris, by selling alcohol among other issues, and continues to do so as it opens up more parks across the globe to meet local
Globalisation refers to the integration and interdependence of the world economy and can be seen by the fact that communications, media and business spans the world, not just one given economy or even type of economy. Boyes (2011, p.6) reports that there are now close to 40,000 transnationals companies, and increase of 300% on just 25 years ago, and that these companies make up approximately 33% of all private-sector assets.
The world wide economic fact of life is that all over the world, people’s wants appear to be unlimited and exceed the resources available to satisfy those wants. Firms seem to have expanded across country boundaries in an attempt to satisfy those demands for resources and in doing so have fuelled globalisation.
Economists study the what (output), the how (techniques of output) and incomes (for whom) across and between countries. In doing so, they have come to find that world production is likely to be geared towards satisfying consumer demand in the countries that have the resources and can pay – the wealthy countries.
Dangers don’t just include the generation of products and services just for those that can pay, but also may include a homogenisation of markets, implying that the same products and services will be everywhere and dominate the market to the potential exclusion of local brands and firms. (MacDonald’s on every corner!) and therefore consumer choice may be reduced. However, the truth is that even the most global of brands varies its products and services the world over through name changes (such as 7-Up in Shanghai – since it means ‘death by drinking’ in the local dialect) to product adaptations – where some MacDonald’s burgers in Mexico come with chilli peppers. Even the Disney company had to adapt its product in Paris, by selling alcohol among other issues, and continues to do so as it opens up more parks across the globe to meet local
References: Boyes, W (2011) Managerial Economics Markets and the Firm, Cengage Learning, Mason, OH, USA. Sloman and Norris, (2011) Economics of Competitive Advantage GEC06410 (compiled from: Principles of Economics (2nd Ed)) University of Newcastle, Pearson Australia, Sydney. Tribe, J (1995), The Economics of Leisure and Tourism: Environments, Markets and Impacts, Butterworth-Heinemann Ltd, Oxford, UK.