2.a Access To Markets Flashcards
What is a supply chain?
The flow of materials,information and finance in a network of customers, suppliers , manufacturers and distributor.
what are logistics?
A broad set of activities dedicates to the transformations and distribution of goods from raw materials to finished market distributions
How has transport technology increase global trade? - Containerisation
- Increased the volume of merchandise as more is able to be transported
- Increased volume of exports as is cheaper to ship
How has transport technology increase global trade? - planes
- increased the trade of services ( tourism)
- more people able to access services as is cheaper
- Interconnectivity of places so people are able to explore more
How has communication technology improved global trade?
- increased interconnectivity
- facilitated the movements of goos and services internationally
- increased speed of transactions
- broadened the global supply chain
- increased capital (e.g online banking)
How does automation increase trade?
- increases efficiency and speed
- cost is much cheaper
- allows for greater volume of exports
- greater volume of transactions are accessible
What is a transnational corporation?
Very large companies that have at least one branch / production overseas.
What are the 6 key features of a TNC?
- well known brand
- generates large profits
- large employers
- HQs in Advanced countries
- Research in Acs
- Manufacturing in EDCs / LIDCs
What is the primary sector?
Uses natural resources and raw material extraction.
What is the secondary sector?
Manufacturing goods made from the raw materials into useable product
What is the tertiary sector?
service sector/selling of manufactured goods ( schools, healthcare,tourism)
what is the quaternary sector?
Industry based on human knowledge / providing information services –> technology/research
what is global expansion?
Major product with world wide markets
What is take over?
take ver of a foreign competitor firms to grow business and reduce competition.
What is merger?
Joining with foreign firms into one large international company
what is horizontal integration?
acquiring companies that make similar components that along with yours make the final product. E.G parts to make a phone
What is vertical integration ?
acquiring the companies that sell YOU the materials and components.
What is diversification?
purchasing companies that deal with different products in order to spread risks from loss of sales or financial fluctuations.
What is risk dispersal?
Distributing operations across a range of countries in case of issues such as government instability.
Why do TNCs set up in foreign countries?
profit maximisation
- lower tax
- avoid tarrifs
- wages are lower
- low regulation/laws
What is a trade bloc?
A group of countries that agree to reduce trade barriers between them
purpose of trade blocs
- encouragement of intra regional trade - by rmoving tarrifs
- protection of manufacturing and service industries from foreign competition
- entering inter regional trade - with other trade blocs
Free trade area
Tarrifs and quotas are reduced on certain goods going in or out of an area ( 2+ countries) e.g NAFTA
Custom unions
The removal of tarrifs and barriers between members together with acceptance of common external tarrifs among non members
Single market
As custom uions but with freer movement of labour and capital
Economic Union
All the above but members are also required to adopt **common policies **in areas such as agriculture
- members are free to persue independent macro-economic policies
E.g EU
Benefits of Trade blocs
- Fascilitates trade - makes it easier
- promotes inter regional trade - gives member states accesss to wider market
- Promotes intra regional trade
- Protectionism - barriers against competition
- Political cooperation - work together on common aims
Problems with trade blocs
- Trade distortion - no longer making goods where cheaper non -member sites now in member states
- Short term unemployment - specialisation shifts to industries with comparative advantage
- Cultural erosion - cheap products across bloc replace local more expensive variants
- Sovereignty loss - nation gives up determination of some areas of economic policy
NAFTA example of trade bloc
North america free trade agreement
1. aim to remove tarrifs by 2010
2. remove barriers to agriculture manufacturing and services
3. Aims to improve economic competition betweeen members and increase opportunities
Negatives of NAFTA
- 1.5 million mexican farming jobs lost
- Economies of mexico usa and canada are more dependent on eachother
- TNC products in Mexico are exporte back to USA
NAFTA positives
- 1 million new jobs created in canada
- 12.8 billion dollar increase in agricultural trade between US and mexico
- Sales in consumer products increased
What is labour mobility?
the natural tendency of people to move for employment
Where are the main flows of people?
from South asia, Africa and latin america TO North America and Europe
How is economic migration linked to trade?
- higher skilled workers move to places with labour shortages
- lower skilled move for more job opportunities
- Growth of service industry linked to travel and tourism –> in hotels
- Transport development
what is the new economic division of labour?
to the gloval reorganisation of production ( due to de industrialisation) in ACs and the spread of MNCs
This lead to higher paying jobs in ACs and lower paid ( manufacturing ) in LIDCs
Qatar
- work exploitation is high in world cup buildings
- 600 men 2 kitchens
- 15 people to one room
- many going months without being paid
- Workers unable to leave without emoloyers permiddion ( trapped ) in cycle
what is south-south trade ?
trade among developing countries
How much was s-s trade worth in 2013 ?
4.7 trillion dollars
What was the growth of south - south trade driven by?
The brics
Reasons for growth of south south trade?
- risisng demand in china and india for fuel and energy to fuel development
- vast potential market in Asia and Latin America
- increasing demand from middle class in china, india , Brazil
- growth in FDI in hina and india
- MNCs aiming to reduce costs of labir
- intra regional trade –> trade blocs and emerging countries
What are the barriers for the least developed countries excluded from s-s trade?
- low productivity capacity
- limited economic diversification / limited infrastructure
- poor govanance
- land locked
- exploitative trade agreements with china
why are countries in sub saharan africa lagging behind?
their trade is mostly reliant on primary products —> limited access to technology **so contribute less to supply chains **
