Course outline
Module 1
Module 1: Origins of Globalisation
Origins of Globalisation
Knowledge check
Q1. Which trade route, linking China to the Mediterranean world over many centuries, is often cited as one of the earliest large-scale networks of cross-cultural exchange?
- A. The Silk Road ✓
- B. The Atlantic Triangular Trade
- C. The Hanseatic League network
- D. The Spice Islands monopoly
Why: The Silk Road was a network of overland and maritime routes connecting East Asia with the Mediterranean, enabling the exchange of goods, technologies, religions and ideas for centuries before the modern era.
Q2. Which event in 1492 is widely regarded as a turning point that linked the Americas to Afro-Eurasian trade networks?
- A. The fall of Constantinople
- B. The publication of Adam Smith's work
- C. Columbus's voyage across the Atlantic ✓
- D. The signing of the Treaty of Westphalia
Why: Columbus's voyage opened sustained contact between the Old World and the Americas, leading to the Columbian Exchange of crops, animals, people and diseases and the integration of the Atlantic into global trade.
Q3. What was the main commodity whose global demand drove the Atlantic slave trade and the growth of plantation economies in the Americas?
- A. Tea
- B. Sugar ✓
- C. Spices
- D. Rubber
Why: Sugar cultivation on plantations in the Caribbean and Brazil created intense labour demand, which was met by the forced migration of millions of enslaved Africans, linking three continents economically.
Q4. Which technological development of the 19th century most dramatically reduced the cost and time of moving goods and people across long distances?
- A. The printing press
- B. The steamship and railway ✓
- C. The telegraph alone
- D. The compass
Why: Steamships and railways sharply cut transport costs and travel times, which expanded international trade and migration significantly during the nineteenth century, a key driver of the first wave of globalisation.
Q5. Which economic system, prominent in the late 19th and early 20th centuries, was characterised by the free movement of goods, capital and labour across borders under the gold standard?
- A. Autarky
- B. Mercantilism
- C. The classical liberal international economy ✓
- D. Central planning
Why: Before 1914, many countries operated under the gold standard with relatively open trade and capital flows, allowing a high degree of economic integration often described as the first era of modern globalisation.
Module 2
Module 2: Trade and Comparative Advantage
Trade and Comparative Advantage
Knowledge check
Q1. What is comparative advantage?
- A. The ability of a country to produce a good with fewer resources in absolute terms than every other country
- B. The ability of a country to produce a good at a lower opportunity cost than another country
- C. The total value of a country's exports minus its imports
- D. The government subsidy that makes domestic industries more competitive
Q2. According to David Ricardo's theory of comparative advantage, why should countries specialise in producing certain goods?
- A. Because specialisation guarantees that no country will ever import goods
- B. Because each country can gain from trade by focusing on goods it produces at lower opportunity cost
- C. Because only large countries are able to produce goods efficiently
- D. Because absolute advantage always determines which goods are traded
Q3. Country X can produce 10 units of cloth or 5 units of wine per day. Country Y can produce 6 units of cloth or 3 units of wine per day. What is the opportunity cost of producing one unit of wine in Country X?
- A. 0.5 units of cloth
- B. 2 units of cloth
- C. 1 unit of cloth
- D. 3 units of cloth
Q4. Which of the following best describes the effect of free trade on consumers in a country?
- A. Consumers always pay higher prices for imported goods
- B. Consumers gain access to a wider variety of goods, often at lower prices
- C. Consumers lose all access to domestically produced goods
- D. Consumers have no change in purchasing power under any trade regime
Q5. Why might trade based on comparative advantage still create losers within a country?
- A. Because trade eliminates all domestic demand for goods
- B. Because workers and firms in industries that compete with imports may lose jobs or income
- C. Because comparative advantage only benefits countries with no natural resources
- D. Because exporting industries always shrink as trade increases
Module 3
Module 3: Global Supply Chains
Global Supply Chains
Knowledge check
Q1. What is a global supply chain?
- A. A network of organisations and activities that move a product from raw materials to the final consumer across multiple countries ✓
- B. A single factory that produces goods for one domestic market
- C. A trade agreement between two governments that sets tariff rates
- D. A financial system used to transfer money between international banks
Why: A global supply chain links suppliers, manufacturers, distributors and retailers across borders, coordinating the flow of materials, components and finished goods. Option A captures this multi-stage, multi-country structure.
Q2. Why do many companies break up production across several countries?
- A. To take advantage of differences in labour costs, resources, and expertise in each location ✓
- B. Because international law requires every product to be made in at least three countries
- C. Because goods cannot be transported within a single country
- D. Because customers in every country demand identical products made locally
Why: Firms fragment production to exploit comparative advantages such as lower labour costs, access to specific raw materials or specialised skills. Option A reflects this economic logic, while the other options are not accurate descriptions of why firms do this.
Q3. Which of the following is a common example of a 'loser' from global supply chain restructuring?
- A. Consumers who gain access to cheaper imported goods
- B. Multinational firms that reduce their production costs
- C. Workers in manufacturing regions whose factories close after production moves overseas ✓
- D. Shareholders in companies that expand into new markets
Why: When production shifts to lower-cost locations, workers in higher-cost regions can lose jobs and income. The other options describe groups that generally benefit from supply chain globalisation.
Q4. What is the 'bullwhip effect' in supply chain management?
- A. A phenomenon where small changes in consumer demand cause increasingly large fluctuations in orders further up the supply chain ✓
- B. A government policy that imposes sudden tariffs on imported goods
- C. The practice of storing goods in multiple warehouses across different countries
- D. A dispute between shipping companies over port access rights
Why: The bullwhip effect describes how demand information gets distorted as it moves upstream through suppliers, causing amplified swings in orders and inventory. This makes long, complex global supply chains harder to manage efficiently.
Q5. Which event highlighted the vulnerability of global supply chains to disruption?
- A. The invention of containerised shipping in the 1950s
- B. The COVID-19 pandemic, which caused factory shutdowns and shipping delays worldwide ✓
- C. The introduction of the euro as a common currency
- D. The expansion of online retail platforms in the 2000s
Why: The COVID-19 pandemic led to factory closures, port congestion and shortages of components and goods across many industries, exposing how dependent global supply chains can be on distant suppliers. The other events did not primarily cause widespread supply disruption.
Module 4
Module 4: Winners: Gains for Consumers and Emerging Economies
Winners: Gains for Consumers and Emerging Economies
Knowledge check
Q1. Which of the following is a primary way globalisation benefits consumers in wealthy countries?
- A. Higher prices for imported goods
- B. Access to a wider variety of goods at lower prices ✓
- C. Reduced choice due to trade barriers
- D. Fewer products available in shops
Why: Global trade allows consumers to buy goods produced where labour and inputs are cheaper, increasing variety and lowering prices.
Q2. What is a common term for countries that have experienced rapid economic growth and industrialisation in recent decades?
- A. Developed economies
- B. Emerging economies ✓
- C. Subsistence economies
- D. Centrally planned economies
Why: Emerging economies are countries undergoing fast growth and industrialisation, often integrating into global trade and attracting foreign investment.
Q3. How has globalisation helped reduce extreme poverty in many emerging economies?
- A. By banning foreign investment
- B. By creating manufacturing and export jobs that raise incomes ✓
- C. By limiting access to global markets
- D. By discouraging technology transfer
Why: Export-oriented manufacturing and foreign investment have created large numbers of jobs, lifting millions of people out of extreme poverty, notably in East Asia.
Q4. What is 'comparative advantage' in the context of trade gains?
- A. Producing every good a country can make itself
- B. Specialising in goods that can be produced at lower opportunity cost than others ✓
- C. Relying only on domestic resources
- D. Charging the highest possible tariffs
Why: Comparative advantage, from David Ricardo, holds that countries gain from trade by specialising where their opportunity cost is lowest and trading for other goods.
Q5. Which technology transfer is an example of a benefit emerging economies can gain through globalisation?
- A. Losing access to foreign machinery
- B. Acquiring new production know-how through foreign direct investment ✓
- C. Restricting imports of all advanced goods
- D. Abandoning domestic research entirely
Why: Foreign direct investment and trade often bring managerial skills, technical knowledge and modern equipment that boost productivity in host economies.
Module 5
Module 5: Losers: Displaced Workers and Deindustrialised Regions
Losers: Displaced Workers and Deindustrialised Regions
Knowledge check
Q1. What term describes the decline of manufacturing industries in a region, often leading to job losses and economic hardship?
- A. Reindustrialisation
- B. Deindustrialisation ✓
- C. Urban renewal
- D. Agricultural modernisation
Why: Deindustrialisation refers to the sustained decline of manufacturing activity in an area, typically causing factory closures, job losses and economic decline in affected regions.
Q2. Which economist's research on the 'China Shock' showed that rising Chinese import competition caused significant job losses in US manufacturing communities?
- A. Paul Krugman
- B. David Autor ✓
- C. Joseph Stiglitz
- D. Milton Friedman
Why: David Autor, David Dorn and Gordon Hanson documented how increased import competition from China between 1990 and 2007 led to substantial manufacturing job losses and reduced wages in exposed US local labour markets.
Q3. What is the term for the phenomenon where workers who lose jobs due to trade or technological change are unable to find comparable employment and suffer long-term earnings losses?
- A. Structural unemployment ✓
- B. Seasonal unemployment
- C. Frictional unemployment
- D. Cyclical unemployment
Why: Structural unemployment arises when the skills workers possess no longer match the jobs available, often because of shifts in industry structure caused by globalisation or technology.
Q4. Which type of government policy is designed to provide income support and retraining to workers displaced by trade liberalisation?
- A. Tariff protection
- B. Trade adjustment assistance ✓
- C. Export subsidies
- D. Currency devaluation
Why: Trade adjustment assistance programmes, such as the US TAA scheme, offer income support, job search help and retraining to workers who lose jobs because of increased imports.
Q5. Why are deindustrialised regions often slow to recover after factories close?
- A. Workers always relocate immediately to new cities
- B. Local labour markets adjust slowly, and workers may be reluctant to move or lack transferable skills ✓
- C. New factories always replace old ones within a year
- D. Trade always makes local economies grow faster
Why: Labour mobility is limited by housing costs, family ties and skill mismatches, so displaced workers and local economies often adjust slowly, with effects persisting for a decade or more.
Module 6
Module 6: Inequality, Migration and Capital Flows
Inequality, Migration and Capital Flows
Knowledge check
Q1. Which of the following best describes the main argument behind the claim that globalisation can reduce global inequality?
- A. Rich countries always grow faster than poor countries once trade is opened.
- B. Developing economies can catch up by specialising in labour-intensive exports and attracting foreign investment, narrowing income gaps between countries.
- C. Trade eliminates the need for domestic institutions and public policy.
- D. Globalisation raises wages equally for all workers in every country.
Q2. What is a common argument for why unskilled workers in rich countries may lose from globalisation?
- A. Their goods become more expensive to export.
- B. Import competition and offshoring can reduce demand for their labour and depress their wages.
- C. Foreign investment always leads to higher unemployment in every sector.
- D. Trade forces governments to raise minimum wages to zero.
Q3. Which type of capital flow is generally considered the most stable and least prone to sudden reversal?
- A. Short-term portfolio investment in government bonds.
- B. Speculative currency trading.
- C. Foreign direct investment, such as building factories abroad.
- D. Short-term bank lending denominated in foreign currency.
Q4. Migration is often described as having which effect on the countries that migrants leave?
- A. It always reduces remittances sent home to families.
- B. It can generate remittance income, but may also cause a loss of skilled workers known as brain drain.
- C. It guarantees a rise in the origin country's population growth.
- D. It has no economic effect on origin countries.
Q5. Why do economists often say that the gains from globalisation are spread unevenly within countries, not just between them?
- A. Because trade affects all households and workers identically.
- B. Because workers with different skills, sectors, and regions can experience very different outcomes, with some gaining substantially while others lose jobs or income.
- C. Because globalisation only affects the financial sector.
- D. Because national governments have no tools to respond to economic change.
Module 7
Module 7: Policy Responses and the Future of Globalisation
Policy Responses and the Future of Globalisation
Knowledge check
Q1. Which policy is most commonly used by governments to protect domestic industries from foreign competition by imposing a tax on imported goods?
- A. Export subsidies
- B. Tariffs ✓
- C. Quotas on domestic production
- D. Currency devaluation
Why: Tariffs are taxes on imports that raise the price of foreign goods, making domestic products relatively more competitive. Export subsidies support exporters, quotas on domestic production limit output rather than imports, and currency devaluation affects trade indirectly.
Q2. What is the main purpose of trade adjustment assistance programmes?
- A. To eliminate all imports from low-wage countries
- B. To provide retraining, income support, and relocation help to workers displaced by trade ✓
- C. To increase tariffs on foreign goods
- D. To fix exchange rates between countries
Why: Trade adjustment assistance aims to compensate workers who lose jobs due to increased import competition, offering retraining, wage support, and job-search help. This addresses the 'losers' of globalisation directly rather than blocking trade.
Q3. Which international organisation was established in 1995 to replace the GATT and oversee global trade rules?
- A. International Monetary Fund
- B. World Bank
- C. World Trade Organization ✓
- D. United Nations Conference on Trade and Development
Why: The World Trade Organization was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT), administering trade agreements and resolving trade disputes among member countries.
Q4. What does the term 'race to the bottom' describe in the context of globalisation policy?
- A. Countries competing to achieve the highest economic growth rates
- B. Governments lowering labour, environmental, or tax standards to attract mobile investment ✓
- C. Workers competing for scarce high-skilled jobs
- D. Companies racing to bring products to market first
Why: The race to the bottom describes a dynamic where countries weaken regulations or standards, such as wages, pollution controls, or corporate taxes, to attract footloose capital, potentially harming workers and the environment.
Q5. Which policy approach aims to tax international financial transactions to reduce short-term speculation and generate revenue?
- A. Value-added tax
- B. Carbon tax
- C. Tobin tax ✓
- D. Inheritance tax
Why: The Tobin tax, proposed by economist James Tobin, is a small levy on currency transactions intended to discourage short-term speculative flows and stabilise exchange rates, while also raising funds for development or other purposes.