A Level Politics

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Globalisation and Economic Policy

In what ways does globalisation affect policy making in the UK ?

Key points 

  • To some extent the inflation rate is not in the control of policy makers – note oil, commodity and food prices.

  • Financial markets are more interlinked than we thought before the credit crunch. Any attempts to regulate financial markets have world-wide effects. Action needs to be global.

  • The emerging economies (China, India, Brazil etc.) are taking increasing shares of world trade and enjoy cheap labour. This presents challenges for policy on industrial restructuring.

  • International capital is more fluid. Policy makers must address the need to attract such capital. It is also a highly competitive market.

  • Free movement of Labour in the EU has had considerable effects on labour markets, wages and employment patterns.

  • As corporations become increasingly global, so does the movement of more ‘senior’ management and skilled labour. This constrains policies on income taxes.

  • Similarly as companies are globally mobile, corporate tax policy is constrained.