Globalisation
~40 min · WEC14 · 4.3.1
WEC14 · 4.3.1 · 40 min
is really three separate questions Pearson asks in a fixed order — what it looks like, why it happened, what it produces — and a documented way marks are lost on this topic is answering one with the content that belongs to another.
Key terms in this lesson
Before you read on
Two or three questions on exactly what this lesson teaches. Being wrong here is fine — it's the fastest way to find out what to pay attention to next.
Three different questions, not one
Pearson's spec asks about in exactly three separate ways, in this order: what it looks like (its characteristics), why it has happened (its causes), and what it produces (its effects — benefits and costs). These aren't three ways of saying the same thing. A rising trade-to-GDP ratio is a characteristic, not a cause, of globalisation — it's part of the definition of a more globalised world, not a reason one came about. Confusing the three is a documented way marks are lost on this topic, though the sample behind it is thin — globalisation is rarely a standalone Section A MCQ topic on its own: one real examiner report confirms candidates answering a 'causes' question with 'effects' content, and a different real examiner report confirms the reverse, going tangential into causes on a 'costs' question — both directions are covered as their own named trap below, not a hypothetical warning, but the two citations point opposite ways rather than establishing either as the more common failure.
Characteristics — what a globalised world looks like (spec 4.3.1.1). Three, named explicitly: (a) a rising share of world trade in world GDP — more of what countries produce crosses a border before it's consumed, and Pearson's own June 2025 mark scheme puts a real number on exactly this: world exports as a % of GDP rose from 20% in 1980 to 26.3% in 2020, a genuine 6.3-percentage-point increase, not just a qualitative 'trade has grown' claim; (b) the growth of and — firms owning and controlling production in more than one country, and the cross-border investment that makes that possible; (c) rising international — people, not just goods and capital, moving between countries in greater numbers. All three describe a state of the world, not an explanation for how it got that way.
Causes — why it has happened (spec 4.3.1.2a). Five named factors: (governments removing tariffs, quotas and other barriers); (a group of countries dismantling barriers between themselves, multiplying the liberalisation effect across every member at once); political change (the confirmed example the mark scheme itself uses is the collapse of the Soviet Union and China's post-1978 opening-up — bringing economies that were largely closed to world trade into it for the first time); falling transport and communication costs; and the growing significance of TNCs, whose global supply chains and cross-border sourcing decisions actively organise trade rather than just responding to it. Falling transport/communication costs is the one worth deriving rather than just listing — see the mechanism below.
FDI by TNCs — reasons, and impact on recipient countries (spec 4.3.1.2b). This is its own named sub-point, separate from TNC significance generally. A TNC's reasons for choosing FDI over exporting include: market-seeking (getting closer to a growing customer base), efficiency-seeking (accessing cheaper labour or other inputs), resource-seeking (securing access to a raw material only available in the recipient country), and tariff-jumping (building locally specifically to avoid a border tariff that exporting the finished good would still be liable for). The impact on the recipient country is genuinely two-sided — new jobs, tax revenue and technology transfer on one side; profit repatriation and the risk of crowding out domestic firms on the other — which is exactly why this topic gets its own conditional-judgement drill below rather than being treated as an automatic win.
Effects — what globalisation produces (spec 4.3.1.3). Possible benefits, verified against Pearson's own October 2022 mark scheme (Q9, 'evaluate whether the benefits of globalisation outweigh the costs'): lower prices and more choice for consumers from stronger international competition, that same competition also pushing firms toward greater productive efficiency in its own right (not just facing cheaper rivals), firms achieving economies of scale by selling into a global rather than a purely domestic market, faster technology diffusion between countries, higher growth from countries specialising according to , rising tax revenue for governments to spend on public services, reduced absolute poverty in low-income countries whose real GDP has grown as a result, and — the mark scheme's own example — labour migration narrowing geographical wage gaps, as with Eastern European workers migrating to Western Europe for work after EU enlargement. Possible costs, from the same mark scheme: structural unemployment in industries that lose out to import competition, rising income inequality both within a country (between the groups that gain and the groups that don't — see the beyond-spec section for the theory behind this) and between developed and developing economies, a deteriorating current-account position for a country that becomes over-dependent on imports, exploitation of labour in some traded-goods supply chains (children and women, lower wages and longer working hours, poor health and safety conditions), negative externalities such as pollution from the extra production, air freight and shopping activity increased trade generates and faster depletion of non-renewable resources, the free movement of labour placing pressure on a receiving country's housing and public services while risking a 'brain drain' from the country migrants leave, TNCs using tax avoidance or transfer pricing to shrink the tax revenue a host government actually collects, loss of policy sovereignty as governments compete to attract mobile international capital, and greater exposure to shocks originating elsewhere in the world economy — the same mark scheme cites the real 2008 global financial crisis and the COVID-19 health crisis directly as evidence for this exact point. Every one of these is a *possible* benefit or cost, not a guaranteed one — which country, which industry and which time period you're asked about changes which of them actually apply. One structural quirk of this exact essay type is worth knowing directly from the mark scheme itself: candidates may write benefits as the KAA band and costs as the Evaluation band, or the reverse — the marks track whichever side is actually developed with reasoning and evidence, not a fixed 'benefits = KAA, costs = Evaluation' assignment.
Mechanism
Why falling transport and communication costs is a cause, not just a correlate
A good only gets traded internationally if it's worth someone's while to move it — and 'worth it' has a precise meaning: the price gap between what the good costs in the two countries has to be bigger than the cost of getting it from the cheaper country to the more expensive one. Every good in the world economy sits somewhere on a spectrum of price gaps, from goods where one country has a huge cost advantage down to goods where the two countries' costs are nearly identical. At any given transport/communication cost, everything with a price gap bigger than that cost gets traded, and everything with a smaller price gap doesn't — not because nobody would like to trade it, but because the cost of moving it eats the entire advantage and then some. This is exactly why falling transport and communication costs is classified as a cause of globalisation rather than something that merely coincides with it: it doesn't make existing trade marginally cheaper in some vague sense, it mechanically redraws the boundary of which goods clear the threshold at all, pulling a specific, identifiable band of previously-non-tradable goods into the tradable category. Communication costs work through the identical channel, not a separate one — arranging a contract, tracking a shipment, or coordinating a supply chain across a border used to require expensive, slow, high-friction communication; as that friction fell (international phone calls, then email, then real-time logistics tracking and digital payments), the *effective* cost of managing a cross-border transaction fell right alongside the physical cost of moving the good, widening the same threshold from both sides at once. Pearson's own January 2022 mark scheme mines a real, striking confirmation of the scale of this from world trade data — global shipping container volumes rose from 100 million tonnes in 1980 to 2 billion tonnes by 2020, a twenty-fold, roughly 1,900% increase — cited in that mark scheme's own evaluation band as the reason falling transport costs is the single most significant of the five named causes, not just one among equals. But the same threshold doesn't fall by the same amount for every country or every person, and the same mark scheme credits exactly this as evaluation content: a landlocked country, or one without a deep-water seaport, cannot capture containerisation's falling-T effect the way a coastal trading nation can, and has to rely on costlier air cargo instead — and even the 'falling' part of falling transport costs isn't guaranteed, since the same mark scheme notes freight costs actually rose during the global health crisis. The identical caveat applies on the communication-cost side: people excluded from the internet and mobile technology by poverty, illiteracy, or lack of access to a computer system don't get the effective-cost reduction described above at all, so the same falling-T mechanism widens trade for some countries and populations while leaving others exactly where the old, higher threshold left them. Theodore Levitt named the resulting phenomenon 'globalization' itself in a 1983 Harvard Business Review article, arguing this same falling-cost mechanism was converging consumer tastes worldwide (see the beyond-spec block below for his argument, and for two further theories — Stolper-Samuelson and Rodrik's trilemma — explaining globalisation's distributional and sovereignty costs).
Worked, in full
Deriving the trade threshold — and showing falling transport costs cross it, with real numbers
- 01
Assume a good has a domestic (home-country) price of P_home and a foreign production price of P_foreign, with P_home > P_foreign — the price gap is ΔP = P_home − P_foreign. Assume also a transport/communication cost T per unit to move the good from the foreign producer to the home market.
Earns: K — the two prices and the transport cost stated as explicit variables, not left implicit.
- 02
The good is only worth importing if the delivered foreign price, P_foreign + T, is below the domestic price P_home — i.e. if T < ΔP. If T > ΔP, the foreign producer's price advantage is entirely wiped out by the cost of moving the good, and the good is not traded even though a genuine production-cost gap exists.
Earns: An1 — the tradability condition (T < ΔP) derived directly from comparing the two delivered prices, not stated as a rule to memorise.
- 03
Take a good with P_home = £120 and P_foreign = £100, so ΔP = £20. At a transport cost of T = £25, delivered price = £100 + £25 = £125 — above the £120 domestic price, so T > ΔP and the good is not traded, confirmed by direct calculation, not estimation.
Earns: An2 — the condition applied to real numbers, showing exactly why this particular good sits on the non-tradable side.
- 04
Now suppose transport and communication costs fall — say to T = £15, driven by containerisation, cheaper shipping fuel, or cheaper freight-booking and tracking technology. Delivered price = £100 + £15 = £115 — now below the £120 domestic price. Nothing about either country's production cost changed at all; only T fell, and the same good has crossed from non-tradable to tradable purely as a result.
Earns: Eval — the direct, causal link from 'transport costs fell' to 'trade increased' shown as a forced consequence of the same inequality, not a separate empirical claim asserted alongside it.
- 05
Trade liberalisation and trading blocs work through exactly the same inequality, not a different mechanism: a tariff behaves mathematically as an addition to T — it's an extra cost a foreign good must clear before it can undercut the domestic price — so a tariff cut is just another way of lowering T. This is why the spec lists transport/communication costs and trade liberalisation as separate causes of globalisation (4.3.1.2a) even though they operate on the identical underlying threshold: two different real-world levers pulling on the same variable.
Earns: Eval2 — unifying two spec-named 'separate' causes under one derived mechanism, rather than teaching them as an unrelated list to memorise.
- 06
The identical inequality runs in reverse too, and Pearson's own June 2025 mark scheme credits exactly this as evaluation content on this exact 'examine two factors' question: rising uncertainty in global shipping — port congestion, pandemic-era delays, disrupted shipping lanes — raises the effective risk/cost a TNC must clear before an offshored supply chain is still worth running, pushing some previously-profitable production back below the same threshold from the other side. The mark scheme's own evaluation band names this directly: "Delays/uncertainty in global shipping (1) are encouraging some TNCs to reshore production/simplify their supply chains (1)" — and separately credits a real, quoted 'peak globalisation' caveat on the trend the whole mechanism predicts: "Time: globalisation has slowed (1) between 2011 and 2020 (1)". Falling T pulled goods across the threshold for decades; nothing about the inequality itself guarantees T keeps falling forever.
Earns: Eval3 — the real-world limit and reversal of the same derived mechanism, credited as genuine AO4 evaluation content on a real 8-mark Section B question (June 2025, Q7(b), Publications Code WEC14_01_2506_MS), not a separate empirical claim bolted on afterward.
Source — Mark scheme, June 2025
"Between 1980 and 2020, world exports, as a % of GDP, rose from 20% (1) to 26.3% (1) / 6.3 percentage points (1+1)"
x-axis: Goods, ranked from largest to smallest price gap between two countries (ΔP) · y-axis: Cost per unit, £
- ΔP(good)
- A downward-sloping line ranking every good by the size of its cross-country price gap, from the good with the biggest gap (traded first) to the smallest (traded last, if at all).
- T (before)
- A horizontal line showing the combined transport, communication and tariff cost of moving a good between the two countries, before the fall.
- T (after)
- A lower horizontal line — the same cost after transport/communication costs fall or a tariff is cut.
- Tradable region (before)
- Every good to the left of where ΔP(good) crosses T (before) — its price gap exceeds the cost of moving it, so trading it is profitable.
- Newly tradable region
- The band of goods between the old and new crossing points — price gaps too small to clear the old threshold but large enough to clear the new, lower one. This band is the entire mechanism by which falling T raises trade as a share of GDP.
- Still non-tradable
- Goods to the right of even the new, lower T — their price gap is too small to ever be worth moving, however low transport costs fall. A genuine limit on how far this mechanism alone can push trade.
Common error: Describing falling transport costs as 'making trade cheaper' in general, without naming which specific goods newly qualify for trade as a result.
Correct: Naming the newly-tradable band precisely — goods whose price gap sits between the old and new threshold — which is what turns 'transport costs fell' into a stated, derivable cause of a rising trade/GDP ratio rather than an assertion.
In your own words
In one sentence: why does a fall in international communication costs (cheaper, faster ways to negotiate contracts, track shipments, or coordinate a supply chain across borders) widen the set of tradable goods through the exact same mechanism as a fall in transport costs?
Complete it yourself
Complete the chain — FDI into a recipient country, from motive to impact
- 01
A TNC based in a high-wage developed country is deciding whether to keep exporting finished goods to a growing developing-country market, or build a factory there instead (FDI).
- 02
It chooses FDI. Building locally lets it pay the developing country's lower wage rate directly, rather than paying its home country's wage rate and merely shipping the output — and it avoids the recipient country's import tariff on the finished good, which continuing to export would still be liable for.
- 03
The recipient country's government, in turn, gains from this: a new factory means new jobs at wages typically above the local informal-sector average, a fresh source of corporate tax revenue, and manufacturing technology and management practices transferred into the local economy that domestic firms did not previously have access to.
Named traps
- explains-effects-when-asked-for-causes
- Confirmed directly in the January 2022 examiner report: on a question asking candidates to evaluate factors contributing to increased globalisation, "not many candidates were able to entirely explain the factors identified. They discussed the effects of globalisation instead." A 'causes' question wants trade liberalisation, trading blocs, political change, transport/communication costs and TNC significance — not what globalisation produces once it's happened.
- explains-causes-when-asked-for-costs
- The exact reverse confusion, confirmed in the October 2022 examiner report: on the costs side of a question evaluating whether globalisation's benefits outweigh its costs, "there were some who went tangential where they discussed reasons and did not answer the question." A 'costs' question wants consequences (structural unemployment, inequality, lost sovereignty) — not a restatement of why globalisation happened in the first place. Both directions of this confusion are independently confirmed, in different series, on different question types — it isn't a one-off.
- characteristic-treated-as-a-cause-of-itself
- Not sourced from a specific examiner quote, but a real trap that follows directly from the spec's own three-way split: writing "globalisation is caused by more international trade" is circular. A rising trade-to-GDP ratio IS one of globalisation's own defining characteristics (4.3.1.1a) — it isn't a separate cause of itself. The spec's actual causes list (4.3.1.2a) is trade liberalisation, trading blocs, political change, transport/communication costs and TNC significance; 'trade has increased' doesn't belong on that list, because it's the thing being explained, not an explanation. One genuine wrinkle, confirmed directly against the January 2022 mark scheme rather than assumed: that mark scheme's own KAA indicative content for a causes essay credits "increased movement of people between countries – immigration and/or emigration" — and migration is itself one of the three named characteristics (4.3.1.1c), the same category trade-to-GDP sits in. This isn't a contradiction of the rule above so much as its limit: real mark schemes carry an 'other relevant points must also be credited' allowance beyond the spec's own closed five-factor list, and migration is creditable there specifically when explained as itself driving further trade, remittance flows or FDI (a mechanism), not when merely restated as 'more people moved, therefore more globalisation' (the same circularity as the trade-to-GDP case). Know the difference rather than treating every characteristic as automatically off-limits as cause content.
- no-country-named-on-a-country-of-choice-essay
- The WEC14 archive confirms a country-gate N.B. — capping an answer at Level 3 maximum — on nearly every Section C essay whose stem explicitly asks for 'a country of your choice', across at least 12 of 13 mark schemes checked. October 2022's globalisation essay (Q9, 'evaluate whether the benefits of globalisation outweigh the costs') used exactly that 'country of choice' wording, which the documented rule predicts carries the same gate — though this specific mark scheme's N.B. text was not itself directly quoted in the research pass behind this lesson, so treat this as a strong, well-evidenced prediction from the general pattern rather than an independently re-verified quote for this exact question. Either way: never write a globalisation evaluation essay without naming and using a real country throughout.
- unconditional-fdi-or-globalisation-verdict
- "Globalisation has clearly benefited [country]" or "FDI is good for developing countries" are unconditional claims. This mirrors a general WEC14 marking pattern — informed, conditional judgement earning the evaluation marks rather than a flat assertion — confirmed as a cross-topic pattern in the facts bank's independent spot-check of the prior SIGNAL document's general claims, not a globalisation-specific quote. State the condition the conclusion actually depends on, in the same sentence as the conclusion — see the conditional-judgement drill below.
- trickle-down-asserted-without-evidence
- Pearson's own October 2022 mark scheme lists "higher earnings at the top of the income distribution will finally lead to more income and wealth for everyone (trickle-down theory)" as creditable KAA content on the benefits side of a benefits-vs-costs essay — but its own Evaluation band, on the very same question, immediately undercuts it: "There is very little evidence that trickle-down theory works in practice." Citing trickle-down as a benefit earns a KAA mark; leaving the claim unchallenged forfeits the evaluation mark sitting right next to it on the same real mark scheme. State the claim, then state the mark scheme's own evidential problem with it, in the same paragraph — exactly the conditional-judgement move the drill below practises, not a special exception to it.
- assumes-globalisation-only-ever-rises
- Not sourced from an examiner-report quote for its original finding — the source there is the June 2025 mark scheme itself, which has no matching examiner report published yet — but a real, credited trap: writing about causes of 'increased globalisation' as if the underlying trend were an unstoppable one-way process. The June 2025 mark scheme's own evaluation band credits both a real 'peak globalisation' caveat — "Time: globalisation has slowed (1) between 2011 and 2020 (1)" — and a genuine reversal of the falling-transport-costs mechanism itself — "Delays/uncertainty in global shipping (1) are encouraging some TNCs to reshore production/simplify their supply chains (1)" — as legitimate evaluation marks on exactly this 'examine two factors' question. An answer that lists only the forward-direction causes, with no acknowledgement that the same mechanism can run in reverse, forecloses these marks entirely — distinct from the causes-vs-effects trap above, which is about answering the wrong question type, not about treating a real cause as permanently one-directional. This isn't a one-series fluke: the January 2022 mark scheme's own evaluation band, for a different real essay on the same 'causes of increased globalisation' question type, independently credits three more reversal examples on the other four named causes — trade liberalisation ('Trade talks of Doha round, started in 2001, have been unsuccessful in reducing trade barriers/WTO also less successful in reducing non-tariff barriers/Deglobalisation resulting from the Global Financial Crisis 2008 or other external shocks'), trading blocs (countries 'leaving trading blocs (e.g. UK and the EU) and threatening to leave (Grexit, Italeave, etc)'), and political change ('Slowbalisation resulting from trade wars between countries (e.g. China versus USA)'). Every one of the spec's five named causes has now been shown, across two independent real series three years apart, to have a mark-scheme-credited reversal case — treat 'this cause can also run backward' as the default assumption to check for any of the five, not a special exception for transport costs alone.
The conditional move
Complete: "The growth in FDI into a recipient developing country is likely to raise that country's living standards only if ___."
Complete: "Falling trade barriers are likely to raise a country's overall living standards only if ___."
Beyond the spec
The spec asks you to list globalisation's benefits and costs, and to name FDI's reasons and its impact on a recipient country, without asking why a country can gain in total while specific people inside it lose, or why 'loss of sovereignty' is a specific, structural cost rather than a vague complaint. These three theories give both of those a real mechanism — exactly the kind of depth absent from every free WEC14 revision resource checked for this topic — and the closing note adds two real, mark-scheme-credited causes that sit outside the spec's own named list, for anyone who has already covered the five named factors and wants genuine extra material.
Theodore Levitt's 1983 Harvard Business Review article "The Globalization of Markets" is generally credited with popularising the modern economic use of the word itself — his argument was that falling communication and transport costs (the same mechanism derived above) were converging consumer tastes worldwide, letting firms sell standardised products globally instead of adapting to each national market separately. Wolfgang Stolper and Paul Samuelson's 1941 theorem gives the rigorous mechanism behind why globalisation can raise a country's aggregate income while still creating losers inside it: opening to trade raises the real return to a country's abundant factor of production and lowers the real return to its scarce factor, because specialising according to comparative advantage means producing more of what uses the abundant factor intensively and less of what uses the scarce one — so a labour-abundant developing country's low-skilled wages can genuinely rise from trade even as its scarce, skilled-labour wage premium falls relative to what it would otherwise have been, and the reverse pattern shows up inside labour-scarce developed economies. This is the real mechanism behind the 'rising within-country inequality' cost named above — not a separate empirical curiosity, but a forced consequence of the same comparative-advantage logic that produces globalisation's aggregate gains. And Dani Rodrik's globalisation trilemma (The Globalization Paradox, 2011) gives 'loss of sovereignty' a specific structural shape: a country cannot simultaneously have deep economic integration with the world economy, keep the nation-state as the primary unit of policy-making, and satisfy fully democratic domestic political demands — it can have at most two of the three. A government that wants to keep attracting the kind of FDI this lesson's chain-drill describes has to accept policy constraints (tax competition, regulatory harmonisation) that a fully sovereign, fully democratic domestic politics might otherwise reject — precisely why 'loss of sovereignty' belongs on the costs side of the ledger as a structural trade-off, not a vague nationalist complaint. Finally, a real, spec-adjacent nuance worth knowing for a top answer: the spec's own five named causes (4.3.1.2a) aren't the only ones a real mark scheme will credit. January 2022's mark scheme, under its own 'other relevant points must also be credited' allowance, also names the opening up of global financial markets — the removal of capital controls in many countries, enabling more FDI and profit repatriation — and high and rising real incomes in many countries raising import demand through a higher marginal propensity to import. Neither appears on the spec's own closed five-item list, so don't substitute them for it in an answer that's asked to name the spec's causes specifically — but a top-band essay that has already covered the five named factors can use either as genuine extra material.
Retrieval — with feedback on every choice
Under Pearson's WEC14 spec, rising net international migration of workers is classified as...
Domestically, a car costs £28,000 to produce. An identical car, produced and shipped from a foreign country, costs £24,000 before any tariff is applied. The home country cuts its import tariff on cars from 20% to 5%. What happens to the foreign car's competitiveness in the domestic market?
A German car manufacturer has historically exported finished cars to Vietnam. Vietnam then raises its import tariff on finished cars. In response, the manufacturer builds an assembly plant inside Vietnam instead, so the cars it sells there no longer cross the border as finished imports. Which reason for FDI does this best illustrate?
Vietnam's manufacturing sector has expanded rapidly over the past decade, drawing FDI from many countries. By the mid-2020s, Japan had overtaken every other country to become Vietnam's single biggest source of FDI, having put $3.4 billion into the country.
Explain, using the stimulus, why this scale of Japanese FDI is not automatically a pure benefit for Vietnam's economy, even though it is a clear characteristic of globalisation deepening.
Which of the following is most accurately classified as a possible COST of globalisation, rather than a possible benefit?
Pearson's June 2025 mark scheme credits "delays/uncertainty in global shipping ... are encouraging some TNCs to reshore production/simplify their supply chains" as evaluation content on a question asking candidates to examine two factors that contributed to increased globalisation. Why is a reshoring trend a legitimate evaluative point on a CAUSES question, rather than an irrelevant tangent onto effects?
Same question, every level
Evaluate the extent to which globalisation has benefited a developing country of your choice. (VERIDIAN-original question, written in the style confirmed for Section C globalisation essays across the WEC14 archive — not a reproduction of any single past-paper question.)
20 marks available
Globalisation means countries trade more with each other and companies operate in more than one country. This can be good because people get more choice of products, and it can be bad because some people might lose their jobs. Overall, globalisation is probably a good thing for most countries.
No country named at all — on the real WEC14 pattern (confirmed across nearly every Section C country-gated essay in the archive), this alone would cap the answer well below Level 3 regardless of anything else written. Purely descriptive, no formula/mechanism, causes/characteristics/effects blurred together in one paragraph, and the closing sentence is an unconditional conclusion with no stated condition.
- Three separate questions: characteristics (what it looks like) → causes (why) → effects (so what). Don't blend them.
- Characteristics: trade/GDP↑, TNCs+FDI↑, migration↑ (4.3.1.1).
- Causes: trade liberalisation, trading blocs, political change, ↓transport/comms costs, TNC significance (4.3.1.2a).
- A good trades only if price gap ΔP > transport/tariff cost T — falling T is what turns non-tradable goods tradable.
- FDI by TNCs: reasons (market/efficiency/resource/tariff-jumping) + two-sided recipient impact (4.3.1.2b).
- Effects: benefits vs costs (4.3.1.3) — always state which side, and state the condition, not an unconditional verdict.
- Real check: trade/GDP was 20% (1980)→26.3% (2020), but slowed 2011-20; shipping delays now push some TNCs to reshore.
Not affiliated with or endorsed by Pearson Edexcel. Every quotation and figure attributed to a mark scheme or examiner report in this lesson was independently verified against the primary Pearson document, not carried over from prior course material — and unlike several other lessons in this course, there was no prior AI-authored CODEX file covering 4.3.1 globalisation to check against at all, so no old-build error is claimed to have been corrected here.
Under Pearson's WEC14 spec, rising net international migration of workers is classified as...
- ...a characteristic of globalisation (spec 4.3.1.1c) — one of the three things that describe what a more globalised world looks like
Correct. Migration sits alongside trade/GDP and TNCs/FDI as one of the three named characteristics — a description of the pattern, not a cause of it or a verdict on whether it's good or bad.
- B...one of the factors causing globalisation (spec 4.3.1.2a)
The spec's own list of causal factors is trade liberalisation, trading blocs, political change, transport/communication costs, and TNC significance — migration isn't on that list; it's grouped with trade/GDP and TNCs/FDI as one of the three characteristics instead.
- C...a possible benefit of globalisation (spec 4.3.1.3a)
Rising migration is listed as a characteristic — what a globalised world looks like. Whether it's judged a benefit or a cost is a separate, evaluative question that belongs under item 3, not a reclassification of the migration flow itself.
- D...outside the WEC14 specification entirely
It's directly spec-named, at 4.3.1.1(c) — not an omission.
Traps tested: Migration listed under wrong item · Characteristic mistaken for effect · Overclaims absence
Domestically, a car costs £28,000 to produce. An identical car, produced and shipped from a foreign country, costs £24,000 before any tariff is applied. The home country cuts its import tariff on cars from 20% to 5%. What happens to the foreign car's competitiveness in the domestic market?
- AIt was already cheaper than the domestic car before the tariff cut, and remains cheaper after it
Check the arithmetic first: at a 20% tariff, landed price = £24,000 × 1.20 = £28,800, which is above the £28,000 domestic price — it was NOT competitive before the cut.
- It becomes price-competitive only after the tariff cut: the landed price falls from £28,800 (above the domestic £28,000) to £25,200 (below it)
Correct. £24,000 × 1.20 = £28,800 (uncompetitive) becomes £24,000 × 1.05 = £25,200 (competitive) — the tariff cut is what flips the comparison, exactly the trade-threshold mechanism above with a tariff playing the role of T.
- CIt becomes less competitive, because a lower tariff rate means the government collects less revenue to subsidise domestic producers
Nothing in the scenario describes tariff revenue being redirected to a domestic subsidy — this invents a mechanism the question doesn't support.
- DThere is no meaningful change, because the underlying £4,000 production-cost gap between the two countries is far larger than a 15 percentage point tariff cut
The relevant comparison isn't the underlying £4,000 production-cost gap — it's the much smaller £800 gap between the landed price and the domestic price after tariff. The cut saves £3,600 on the £24,000 base (15 percentage points), more than enough to close an £800 gap and flip the comparison.
Traps tested: Skips the calculation · Invents unstated mechanism · Compares the wrong gap
A German car manufacturer has historically exported finished cars to Vietnam. Vietnam then raises its import tariff on finished cars. In response, the manufacturer builds an assembly plant inside Vietnam instead, so the cars it sells there no longer cross the border as finished imports. Which reason for FDI does this best illustrate?
- AResource-seeking FDI — accessing a raw material Vietnam has that Germany doesn't
Nothing about raw materials is described; the stated trigger is the tariff rise, not resource access.
- BEfficiency-seeking FDI — relocating production to exploit Vietnam's lower wage costs
Plausible as a general reason for FDI, but not what this scenario describes: the stated trigger is specifically the tariff rise, not a wage-cost comparison.
- Tariff-jumping FDI — building locally specifically to avoid a border tariff that exporting would still be liable for
Correct. The scenario's trigger is explicitly the tariff rise, and the manufacturer's response — building inside the tariff wall rather than continuing to export across it — is the textbook definition of tariff-jumping FDI.
- DMarket-seeking FDI — moving production to be closer to a growing consumer base
Plausible as a general reason for FDI, but the scenario's stated trigger is specifically the tariff rise, not market growth.
Traps tested: Wrong fdi motive
Vietnam's manufacturing sector has expanded rapidly over the past decade, drawing FDI from many countries. By the mid-2020s, Japan had overtaken every other country to become Vietnam's single biggest source of FDI, having put $3.4 billion into the country.
Explain, using the stimulus, why this scale of Japanese FDI is not automatically a pure benefit for Vietnam's economy, even though it is a clear characteristic of globalisation deepening.
- It creates jobs, transfers manufacturing technology and generates tax revenue for Vietnam — but a share of the profit these Japanese-owned plants generate is repatriated to Japan rather than reinvested locally, and domestic Vietnamese firms may struggle to compete with the new entrants' scale and technology
Correct, and this is the fully-integrated version: it names the benefit channels specifically (jobs, technology, tax revenue), then names the specific reason the benefit isn't automatic (repatriation, crowding out) — not just 'there are pros and cons.'
- BIt is automatically beneficial, because $3.4 billion is a large enough sum that any economy would clearly gain from it
This asserts an unconditional conclusion purely from the size of the figure, without naming any mechanism by which the benefit could be offset — exactly the trap the conditional-judgement drill above targets.
- CIt is not a benefit at all, since FDI simply transfers Vietnamese assets into Japanese ownership
This asserts the cost side only and ignores the job-creation, tax-revenue and technology-transfer channels the stimulus doesn't rule out — it overstates the cost while ignoring the benefit side entirely.
- DIt cannot be assessed from the data given, since the stimulus does not state Vietnam's GDP
The question doesn't require comparing FDI to GDP — it asks you to explain the mechanism by which the benefit isn't automatic, which the stimulus supports without needing a GDP figure.
Traps tested: Unconditional conclusion · Overstates cost ignores benefit · Overclaims uncertainty
Which of the following is most accurately classified as a possible COST of globalisation, rather than a possible benefit?
- ALower prices and greater product choice for consumers from increased international competition
This is a possible benefit — stronger competition disciplining prices and widening choice.
- BFirms achieving economies of scale by selling into a larger, global market
This is a possible benefit — a bigger market lets firms spread costs over more output.
- CFaster diffusion of new technology and production methods between countries
This is a possible benefit — technology transfer between trading and investing partners.
- Structural unemployment in industries that cannot compete once trade barriers fall
Correct. This is a possible cost — a genuine downstream consequence for the workers and industries globalisation leaves behind, distinct from the benefits it produces elsewhere in the same economy.
Traps tested: Benefit mistaken for cost
Pearson's June 2025 mark scheme credits "delays/uncertainty in global shipping ... are encouraging some TNCs to reshore production/simplify their supply chains" as evaluation content on a question asking candidates to examine two factors that contributed to increased globalisation. Why is a reshoring trend a legitimate evaluative point on a CAUSES question, rather than an irrelevant tangent onto effects?
- AIt isn't legitimate — reshoring is an effect of globalisation, so citing it here repeats the causes-vs-effects trap named above
This mistakes the move actually being credited: the point isn't 'globalisation produces reshoring as a downstream consequence' — it's evaluating how permanent the falling-transport-cost CAUSE itself really is, by naming a real force pushing the same trade threshold back the other way.
- It evaluates the strength and durability of the transport/communication-cost cause itself: rising shipping uncertainty pushes the same trade threshold back up, showing the cause named above isn't a permanent, one-way driver
Correct. This is exactly the trade-threshold mechanism running in reverse — the same logic that explains why falling T caused globalisation also explains why rising T (from shipping delays and uncertainty) can partially reverse it, which is precisely why it earns evaluation marks on a causes question rather than being off-topic.
- CIt's credited because reshoring is itself one of the five named causes of globalisation on the spec
Reshoring doesn't appear anywhere on the spec's own five-factor causes list (4.3.1.2a: trade liberalisation, trading blocs, political change, transport/communication costs, TNC significance) — it's evaluation content precisely because it questions how far a real spec-named cause actually goes, not a sixth cause to memorise.
- DIt's credited only because it mentions TNCs, and TNC significance is one of the five named causes
Naming TNCs alone doesn't earn the mark — the credited point specifically evaluates the transport/communication-cost mechanism's own limits, using TNCs' reshoring decisions as evidence for that limit, not TNC significance repeated a second time as a standalone cause.
Traps tested: Reshoring mistaken for restating effects · Invents a sixth cause · Surface keyword match
Practice this for real
This site teaches the mechanism; the exam is sat on Pearson's own real questions. Go find and attempt these yourself — nothing here substitutes for actually sitting a timed paper.
- Mark scheme
- June 2025 · Q7(b) — cited directly in this lesson
Select International Advanced Level → Economics → any series, then look for WEC14.
Up next
Trade Theory and Comparative Advantage
A country that produces every good more efficiently than its neighbour can still gain from trading with it — the decision to specialise never runs on absolute advantage, it runs on comparative advantage, and this lesson derives the difference from first principles rather than defining the two terms side by side.
40 min