Globalization plays a major role in a countries economic growth in what an economy can produce if it is using all its scarce resources. An increase in an economy’s productive potential can be shown by an outward shift in the economy’s production possibility frontier (PPF). Globalization impact on economic growth results such factors that bring a larger economic benefit mostly to developing countries.
Increased Standard of Living
Economic globalization gives governments of developing nation’s access to foreign lending. When these funds are used on infrastructure including roads, health care, education, and social services, the standard of living in the country will ...view middle of the document...
If there is no infrastructure to help the unemployed train for the globalized economy, social services in the country may become strained trying to care for the new underclass.
Assuming the UK maintains its competitiveness, globalization is likely to increase UK growth in the long term because aggregate demand (AD) is likely to increase through increased exports (X), and aggregate supply (AS) is likely to increase because of higher levels of investment, both domestic and foreign direct investment (FDI). However, growth in the short term may become more unstable as the global economy becomes increasingly interconnected. The recent credit crunch is evidence that unstable growth is a possible consequence of globalization. Some economists have also argued that globalization has increased the process of deindustrialization in the developed countries, including the UK.
* Increased wages. Higher real wages increase disposable income and encourages consumer spending.
* Increased government spending (G).
* Fall in value of sterling which makes exports cheaper and increases quantity of exports(X).
* Increased consumer confidence, which encourages spending (C)....