OxfordAQA International GCSE Economics: Globalisation: benefits and drawbacks (9214) – Revision Notes

These revision notes are for the OxfordAQA International GCSE Economics (9214) specification, for exams from May/June 2025 onwards. They cover section 3.2.4.3, Globalisation: benefits and drawbacks, in Paper 2 (How economies work). For full explanations read the study guide, then test yourself with the practice questions. Course pages: hub and checklist. Not sure where to start? Take the free 10-minute diagnostics. All figures below are invented and illustrative.

Key definitions

Term	Meaning
Globalisation	Closer linking of economies, which rely more on each other, through trade, investment, people, ideas and technology
Interdependence	Countries and firms relying on each other for markets, inputs and finance
Multinational company (MNC)	A firm that operates in more than one country
Foreign direct investment	An MNC building or buying productive assets in another country
Supply chain	The linked stages of making a product, often in several countries
Developed country	A country with high average income and a large share of output from services and advanced industry
Less developed country	A country with lower average income and fewer resources for health, education and infrastructure
Sustainability	Producing and consuming in ways that leave future generations able to meet their own needs
External cost	A cost to third parties that the producer does not pay

Factors behind growth: the chain to remember

• New technology: cheaper communication and transport, so distance matters less, so firms source, make and sell abroad, so trade and investment grow. Online selling also opens export markets to small firms.
• MNCs: invest abroad, build supply chains, seek lower costs and bigger markets, and spread global brands.
• Other drivers (lower trade barriers, rising incomes) are fine as extra points, but lead with technology and MNCs.

Calculations: formulas and method

Measure	Formula
Trade as % of GDP	(exports + imports) / GDP x 100
Percentage change	change divided by the old value, x 100
Percentage-point change	new percentage - old percentage
Pay per hour	monthly pay / (hours per week x weeks)
Share of retail price	producer price / retail price x 100
Cost saving per unit	home unit cost - offshore unit cost (include shipping)
Total external cost	output x external cost per unit

Method in steps: write the formula, substitute, calculate, add the unit or the % sign, then say what it means.

Small worked reminders

Trade share. Country D has exports of 25, imports of 31 and GDP of 140. Trade share = (25 + 31) / 140 x 100 = 56 / 140 = 40%.

Percentage change. Imports rise from 80 to 92: (92 - 80) / 80 x 100 = 15%. A price falling from 250 to 205: (205 - 250) / 250 x 100 = -18%.

Cost saving. A unit costs 18 at home. Offshore, it costs 13.50 to make plus 1.50 to ship, so 15. Saving = 18 - 15 = 3 a unit, or 3 / 18 x 100 = 16.7%. On 8,000 units that is 3 x 8,000 = 24,000.

Monthly pay against hourly pay. Job A pays 450 a month for 50 hours a week; job B pays 400 for 40 hours a week (4-week month). Job A is 12.5% higher per month, but per hour A pays 450 / 200 = 2.25 and B pays 400 / 160 = 2.50. B is better per hour.

Fair price. A grower receives 0.50 of a 5.00 retail price, which is 10%. If the grower receives 0.75, the share is 15%.

External cost. A plant makes 8,000 units with an external cost of 5 each. Total external cost = 8,000 x 5 = 40,000.

Jobs. A factory cuts 120 jobs to 96: (96 - 120) / 120 x 100 = -20%. If a new plant adds 150 jobs elsewhere in the same country, the net change is 150 - 24 = +126.

Winners and losers: the grid

	Developed countries	Less developed countries
Producers	+ export markets, cheap inputs, scale; - import competition	+ markets, technology, finance; - local firms undercut
Workers	+ export and skilled jobs; - factory jobs lost, wage pressure	+ new jobs, skills, often better pay; - low pay, long hours, insecurity
Consumers	+ lower prices, more choice, higher real income; - local brands and jobs lost	+ access to goods and technology; - local products crowded out

Rule: every point needs a because. “Workers lose jobs” becomes “workers lose jobs because production moves to a country with lower labour costs, and may be unemployed for long if their skills do not match new jobs”.

Moral, ethical and sustainability issues

• Moral and ethical: child labour, unsafe or very low-paid work, unfair prices for small producers, large MNCs with bargaining power over suppliers.
• Sustainability: pollution, habitat loss, emissions from production and transport, using up resources.
• Link: many issues are external costs, so firms have little reason to act without rules or consumer pressure.
• Responses: fair-trade schemes, labour and environmental standards, consumer choice, MNC codes of conduct.
• Trade-off: higher standards raise costs, which can mean higher prices or fewer jobs.

Chains of reasoning to learn

Producers in a developed country. Lower trade barriers and cheaper transport give firms access to larger markets, so output rises, so average costs can fall through economies of scale. The same changes let foreign rivals sell at home, so less efficient firms lose sales and may close.

Workers in a developed country. A firm moves production to a country with lower labour costs, so demand for home factory workers falls, so some become unemployed. Because their skills may not suit the new service jobs, the unemployment can last. Retraining and support reduce this cost.

Workers in a less developed country. An MNC opens a plant, so labour demand rises, so jobs and incomes rise and workers learn skills. If the MNC pays little or ignores safety rules, the gain is smaller than it looks, and if the MNC leaves, the jobs go.

Sustainability. A firm’s pollution is an external cost, so the price of the good does not show the true cost to society, so too much is produced. Regulation or consumer pressure can bring the cost back to the firm.

Must-know distinctions

Pair	Difference
Benefit to a country and benefit to a group	A country can gain overall while some workers lose
Short run and long run	Job losses come first; new industries and skills take longer
Percentage and percentage point	40% to 55% is a rise of 15 percentage points, and a 37.5% rise
Moral issue and sustainability issue	Moral is about fair treatment of people; sustainability is about future generations and resources
Developed and less developed	Always state which, because the effects differ

Evaluation toolkit

Ask: who gains and who loses, how big, how long, which country, and what policy changes the outcome. End with a judgement that uses the word “because” and names the condition on which it depends.

Quick self-test

1. Define globalisation.
2. Name two features of globalisation.
3. State two ways new technology has helped globalisation grow.
4. Country E has exports of 30, imports of 36 and GDP of 120. Calculate trade as a percentage of GDP.
5. A firm cuts unit cost from 40 to 34. Calculate the percentage saving.
6. Give one benefit of globalisation for workers in a less developed country and one drawback.
7. Explain why consumers in a developed country may gain even if some local jobs are lost.
8. Job X pays 360 for a 40-hour week; job Y pays 480 for a 60-hour week (4-week month). Which pays more per hour?
9. What is an external cost? Give one example linked to trade.
10. A grower receives 0.80 of a 4.00 retail price. What percentage is this?

Answers

1. Economies becoming more closely linked and reliant on each other through trade, investment, people and technology.
2. Any two: more trade, cross-border investment, global supply chains, movement of ideas and technology, global brands.
3. Cheaper and faster communication, cheaper and faster transport, online selling.
4. (30 + 36) / 120 x 100 = 66 / 120 = 55%.
5. (40 - 34) / 40 x 100 = 15%.
6. Benefit: new jobs, often better paid than local options. Drawback: long hours, low pay or unsafe conditions.
7. Imports lower prices and widen choice, which raises real income for all buyers. This must be weighed against the loss for those workers.
8. Y: 480 / 240 = 2.00; X: 360 / 160 = 2.25. X pays more per hour.
9. A cost to third parties that the producer does not pay, such as pollution from a plant that makes goods for export.
10. 0.80 / 4.00 x 100 = 20%.

Where marks are usually lost

• Writing “lower prices” or “more jobs” with no because.
• Not saying which group (producers, workers or consumers) and which type of country.
• Describing globalisation without using the cause the question asks for, such as new technology or MNCs.
• Leaving out shipping or handling costs when comparing home and offshore production.
• Comparing monthly pay without checking hours.
• Mixing up percentage change and percentage-point change.
• Listing ethical issues without explaining who is harmed and how.
• Giving a one-sided answer to an evaluation question and no judgement.

Official syllabus

OxfordAQA International GCSE Economics (9214), specification version 1.0, for International GCSE exams May/June 2025 onwards, published by OxfordAQA. Section 3.2.4.3, Globalisation: benefits and drawbacks.