Is Globalistaion Good for the UK?
Globalisation: Expansion of Global trade leading to greater international interdependence.
Globalisation first benefits the consumer - resulting in higher choice due to global competition and a bigger variety of imports.This means that the consumer is able to purchase a good much cheaper aswell as having a wider choice - meaning they have better welfare and feel better off which increases aggregate demand.
Next, Globalisation is beneficial for businesses as they are able to increase their market and therefore maximise profits.
They are also able to take advantage of countries with absolute advantages so they can produce goods at a much cheaper costs aswell as cheaper labour costs.They also can create a favourable tax environment and take advantage of lower taxes in countries aswell as government grants.Not only can these Multi Nationals then redirect money to the UK but they are also able to invest in research and development which I realise won't benefit the UK directly unless
a MNC has re alocated here.
More notably, Globalisation allows countries to specialise. For the UK it has been with financial services which we are known for in the world.This allows us to take advantage of the countries who specialise in certain industries with lower prices and therefore rely less on domestic production and depend more on imports. It also increases our market for financial services.
On the other hand, if MNCS relocate it poses the risk of increasing unemployment aswell as reducing Economic Output which can influence many factors such as inflation, and potentially the exchange rate and foreign direct investment. Additionally, as a result of more competitive labour and countries with absolute advantages, by employing free trade and globalisation, the UK loses the ability to assist infant industries. This can be especially disadvantageous if the industry has potential and has a chance to prosper and greatly improve the UK economy.
Another downside of Globalisation is that the government lose tax revenues if a multi national decides to reallocate. This combined with higher transfer payments will mean the government are in bigger debt(if they still choose to pay high transfer payments, which usually they feel obliged to) where they won't be able to afford improving Britain's infastructure or paying as much for education which then again has a domino effect on Productivity of the nation.
In conclusion, I believe Globalisation has a much better long term effect for the UK as by specialising we are able to generate more GDP for the country and in effect Economic growth.By allowing MNCs to operate in our country we are exposed to much better technology and higher employment but only if we are a country more favourable than others(with taxes probably not). We are also able to import and have a wider choice of products which we not have usually with our lack of weather conditions.The only downside of Globalisation is if a MNC desides to realocate to another country which has a negative effect on the economy but only in the short term. This is why I believe Globalisation, in the end, is beneficial for businesses but also for consumers.