Threats to Globalisation | Head Start in A-Level Economics

Summary

This video discusses the threats and challenges to globalization, including rising income inequality, corporate tax avoidance, trade imbalances, and the impact of the 2020 pandemic. It highlights how globalization may contribute to wealth gaps and the potential consequences, such as trade wars and protectionism, which could hinder global interconnectedness. The script also considers whether the pandemic presents an opportunity for increased cooperation or a threat to globalization.

Takeaways

• 🌐 Globalization is the process by which economies and countries have become more interconnected and interdependent.
• 🔄 There are severe threats to globalization, including increasing inequality, corporate tax avoidance, trade imbalances, and protectionist fears arising from the 2020 pandemic.
• 💰 Inequality is a significant concern, with debates on how globalization impacts income and wealth disparities, both within and between countries.
• 📊 Income inequality is measured by the gap between the rich and the poor in terms of disposable income, while wealth inequality considers the value of assets like property and savings.
• 🌍 Data shows that the income share of the poorest 40% varies greatly among countries, highlighting significant disparities in income distribution.
• 🏆 The richest 1% of a country's population often claim a disproportionate share of income, contributing to income inequality.
• 🏦 Corporate tax avoidance is a controversial issue where companies use legal loopholes to reduce their tax liabilities, impacting government revenues.
• 💼 Multinational corporations like Starbucks, Amazon, and Google have faced scrutiny for their tax avoidance practices, with significant estimated losses to global tax revenues.
• 🔄 Trade imbalances occur when a country's exports greatly exceed imports or vice versa, potentially leading to trade wars and protectionism.
• 🛑 Protectionism restricts imports from other countries through tariffs, quotas, or other interventions, posing a threat to globalization.
• 😷 The COVID-19 pandemic has exacerbated inward-looking policies and raised concerns about over-reliance on global supply chains, potentially impacting globalization.

Q & A

What is the definition of globalization mentioned in the video?

Globalization is defined as a process by which economies and countries around the world have become more interconnected and more interdependent.

What are the four main challenges to globalization discussed in the video?

The four main challenges discussed are fears over increasing inequality, the controversial debate over corporate tax avoidance, the huge imbalances in trade, and protectionist fears arising from the 2020 pandemic.

How is income inequality measured in the context of globalization?

Income inequality is measured by looking at the gap between rich and poor in terms of people's disposable income, which includes wages, salaries, savings, and other forms of income.

What does wealth inequality refer to and how is it different from income inequality?

Wealth inequality refers to the gap between rich and poor in terms of the value of assets such as property, share portfolios, savings, and other financial assets. It differs from income inequality as it measures the stock of wealth rather than the flow of income.

What is the significance of the income share flowing to the poorest 40% of a country's population?

The income share flowing to the poorest 40% is a measure of inequality that indicates the distribution of income within a country, highlighting the extent to which the bottom quartile of the population participates in the nation's total income.

What is the corporate tax avoidance and why is it controversial?

Corporate tax avoidance involves using legal loopholes to reduce tax liability to a national government. It is controversial because it is seen as an unfair practice where highly profitable companies pay minimal taxes, depriving governments of revenue that could be used for public services.

How does the scale of corporate tax avoidance impact global tax revenues?

The OECD estimates that between 4-10% of global tax revenues, which amounts to between 100 billion and 240 billion dollars a year, is lost to tax avoidance, impacting the financial health of governments worldwide.

What are trade imbalances and how do they affect globalization?

Trade imbalances occur when some nations have large trade surpluses (exports exceed imports) while others have trade deficits (imports exceed exports). These imbalances can lead to protectionist measures and trade wars, which threaten globalization by restricting international trade.

How does the 2020 pandemic pose a threat to globalization?

The 2020 pandemic has disrupted global travel and supply chains, leading to a potential inward shift in countries' economic policies. It has also raised concerns about over-reliance on global trade, with some countries considering building up their own supply chains instead.

What is the potential impact of the pandemic on international business takeovers?

The pandemic may lead to governments implementing more restrictive takeover policies, blocking business acquisitions across borders due to an inward-looking economic strategy, which could hinder the process of globalization.

What contrasting views are there on how the pandemic might affect globalization in the long term?

Some believe the pandemic could threaten globalization by encouraging countries to be more self-reliant, while others think it might offer an opportunity for countries to become more cooperative, collaborative, and supportive of each other, potentially strengthening globalization.