To what extent do you think globalisation has negatively impacted UK manufacturing? Justify your answer with references to your own research examples
Globalisation is the process in which the world effectively becomes one market. Competitors in the global market need to have capabilities to operate in all the major developed and developing economies. As a result, a common complaint against globalisation is that firms that only operate nationally or locally are threatened. Multinational businesses are the main driver of globalisation, expanding into new locations with the aim of revenue and growth.
UK manufacturing firms can benefit from specialising in goods where they have a comparative advantage. This will also lead to lower prices for consumers. A comparative advantage is when a country has a margin of superiority in the production of a good or service i.e. where the opportunity cost of production is lower. The basic theory of comparative advantage was developed by David Ricardo. If each country specialises in those goods and services where they have an advantage, then total output and economic welfare can be increased (under certain assumptions). This is true even if one nation has an absolute advantage over another country.
For UK manufacturing Globalization could be seen as a bad thing as well. It means consumers here can buy products made abroad for a cheaper price than what they would have to pay should that product have been made here. This puts strain on UK manufacturers to compete on price, something they haven’t been able to do in the past. An alternative, which is currently being exploited by UK manufacturers, is to compete on quality. At Caldeira, there was often an occasion where a delivery would arrive, and a selection of the products would be sub-standard, missing components or damaged. This would result in a long complicated process to get a refund, or a replacement, and often cost the company a lot in shipping. In the UK the workers are paid significantly more, so there is motivation to produce products that are of a high quality. Quality control is also more prevalent. Through producing goods that are of a higher quality, there is less complication for the business, but it also results in a happier customer. The majority of
