Quick globalisation question. (1 Viewer)

[bawd]

Explain why globalisation has made it more difficult for individual governments to manage their domestic economy.

Just a quick 3 - 4 line answer. Thanks in advance!

 

[gibbo153]

globalisation's influences on trade and financial flows affect government policy, because the increased implications that each have on an economy.

while a government is trying to maximise its trade performance, changes in global trading conditions can cause the government to need to implement more contractionary or expansionary monetary policy.

another problem is the rapid changes that portfolio investment can be subject to. fund managers can take funds out of an currency which in turn reduces the value of that currency, and thus raises inflation, which the government then has to deal with.

another globalisation effect on governments is trade agreements and trade organisations, where national sovereignty can be pressured by the decisions of others in the agreements. it can cause the government to need to adapt its policy to fit in with other guidelines.

hope that helps

 

[bawd]

globalisation's influences on trade and financial flows affect government policy, because the increased implications that each have on an economy.

while a government is trying to maximise its trade performance, changes in global trading conditions can cause the government to need to implement more contractionary or expansionary monetary policy.

another problem is the rapid changes that portfolio investment can be subject to. fund managers can take funds out of an currency which in turn reduces the value of that currency, and thus raises inflation, which the government then has to deal with.

another globalisation effect on governments is trade agreements and trade organisations, where national sovereignty can be pressured by the decisions of others in the agreements. it can cause the government to need to adapt its policy to fit in with other guidelines.

hope that helps

Woah. Thanks a lot!

 

[moll.]

globalisation's influences on trade and financial flows affect government policy, because the increased implications that each have on an economy.

while a government is trying to maximise its trade performance, changes in global trading conditions can cause the government to need to implement more contractionary or expansionary monetary policy.

another problem is the rapid changes that portfolio investment can be subject to. fund managers can take funds out of an currency which in turn reduces the value of that currency, and thus raises inflation, which the government then has to deal with.

another globalisation effect on governments is trade agreements and trade organisations, where national sovereignty can be pressured by the decisions of others in the agreements. it can cause the government to need to adapt its policy to fit in with other guidelines.

hope that helps

That was just unrelated crap. You get 2/5 marks.

 

[gibbo153]

That was just unrelated crap. You get 2/5 marks.

you're a douche. that wasn't an exam style answer, just information on what he asked.

 

[moll.]

you're a douche. that wasn't an exam style answer, just information on what he asked.

Yes. Unrelated information. You didn't answer the question.

 

[gibbo153]

dude the info is there. its up to her to 'answer' the question. i'm pointing her in the right direction. quit your trolling troll

 

[gnrlies]

Ok Ok Ok, lets keep things friendly here...

If you want to make a positive contribution we would appreciate it moll.

Some comments about the original post. Governments are not so concerned with trade performance when examining the potential stance of macroeconomic policies. Trade policies are usually structural and have historically aimed at achieving structural change through the removal of tariff barriers etc. but this is a bit away from the point.

A good point is capital flight. Definately a keeper. Also policy interdependence is important. Australia cannot control the economy in the same way as we perhaps could with a closed economy because of course consumers wil go elsewhere if a cheaper alternative is found. For example historically Australia has had a very high minimum wage, but it will be hard for governments to continue this policy given the way in which it could potentially harm our manufacturing sector (and other low skill / labour intensive industries).

Plenty to think about...