4.1.4

Government Policy & Globalisation

Test yourself

Government Policy and Globalisation

National Governments can adopt policies such as free-market liberalisation, privatisation and encouraging business start-ups which accelerate globalisation.

Illustrative background for Free-market liberalisationIllustrative background for Free-market liberalisation ?? "content

Free-market liberalisation

  • Free-market liberalisation is also known as neoliberalism. It is where you remove the influence of the state in the economy and allow the markets to act more freely.
  • By doing this, it is hoped that markets will be efficient and the benefits of economic growth will trickle down to the poorest in society. This does not always work as intended.
Illustrative background for PrivatisationIllustrative background for Privatisation ?? "content

Privatisation

  • Privatisation is where state-owned businesses or infrastructure is sold to private TNCs. It allows foreign investors to gain a share and so can represent a form of FDI.
  • It was the policy of the UK government in the 1980s under Margaret Thatcher's Conservative government. Companies like BT and British Airways (now called IAG) were privatised.
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Privatisation cont.

  • The policy is based on the view that businesses are run more efficiently in the private sector because of the incentive to make profit.
  • It reduces government spending and gives a one-off payment to the government for selling shares. Royal Mail was privatised by the UK government in 2013.
Illustrative background for Subsidies to TNCsIllustrative background for Subsidies to TNCs ?? "content

Subsidies to TNCs

  • National Governments can offer subsidies, perhaps to TNCs, to set up in a particular area and thus encourage FDI into a region or a country.
  • The Irish government was punished by the EU for having a favourable tax relationship with Apple and other tech companies. Apple paid a tax rate of 0.005% in Ireland.
Illustrative background for Encouraging business start-ups Illustrative background for Encouraging business start-ups  ?? "content

Encouraging business start-ups

  • Encouraging business start-ups is another government policy that can accelerate globalisation. If you adopt methods to encourage businesses to start up in an area then you can encourage TNCs to increase FDI in your country.
  • Methods to encourage business start-ups include: offering lower tax rates to these companies, installing high-quality infrastructure in an area (e.g. high-speed broadband) and allowing them to make more profit (e.g. by relaxing Sunday trading laws). Subsidies could also be used.

Jump to other topics

1Tectonic Processes & Hazards

2Option 2A: Glaciated Landscapes & Change

3Option 2B: Coastal Landscapes & Change

4Globalisation

5Option 4A: Regenerating Places

6Option 4B: Diverse Places

7The Water Cycle & Water Insecurity (A2 only)

8The Carbon Cycle & Energy Security (A2 only)

9Superpowers (A2 only)

10Option 8A: Health & Human Rights (A2 only)

11Option 8B: Migration & Identity (A2 only)

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