2.2 THE GLOBAL ECONOMY Flashcards
globalisation
growing interconnection of world’s economies
interdependence
where actions of one country or large firm will have a direct effect on others
multinational corporations (MNCs)
operate in many different countries
saturated
market in which there is more of a product for sale than people want to buy
offshoring
getting work done in another country in order to save money
FDI
Foreign direct investment (FDI) is any investment that a firm makes into a
foreign country.
reserves
amount of something valuable such as oil gas or metal ore
MNCs
Multinational companies (MNCs) are firms that operate in more than one
country.
tax avoidance
practice of trying to pay less tax in legal ways
repatriation (of profit)
where a multinational returns the profits from an oversees venture to the country where it is based (typically from developing country to developed country)
free trade
situation in which goods coming into or going out of a country are not controlled or taxed
protectionsism
approach by governments to protect domestic producers
trade barriers
measures designed to restrict imports
dumping
where an oversees firm sells large quantities of a product below cost in the domestic market
infant industries
new industries yet to establish themselves
tariffs or customs duties
tax on imports to make them more expensive
embargo
official order to stop trade with another counry
quota
physical limit on quantity of imports allowed into a counrty
bi-lateral trade agreements
trade deal between only two countries
trading blocs
groups of countries situated in same region that join together and enjoy trade free of tariffs, quotas and other forms of trade barrier
trade liberalisation
move towards grater free trade through removal of trade barriers
WTO (world trade organisation)
international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers, It polices free trade agreements, settles trade disputes between governments and organises trade negotiations
commodities
product that can be sold to make a profit, especially one In its basic form before it has been used or changed in an industrial process.
Examples - farm products and metals
exchange rate
price of one currency in terms of another
foreign exchange market
market where foreign currencies can be bought and sold
revalued (of a currency)
when a government fixes a new higher exchange rate
appreciate (currency)
where the value of a currency rises owing to market forces - exchange rate increases as a result
depreciate (of a currency)
where value of a currency falls owing to market forces - exchange rate falls as a result
depreciate (currency)
where the value of a currency falls owing to market forces - exchange rate falls as a result
devalued (currency)
when a government fixes a new lower exchange rate
