3.2.4 Flashcards
What is globalisation?
The worldwide movement toward economic, financial, trade and communications integration.
What is an LEDC?
A less economically developed country that confronts severe structural impediments to sustainable development.
What is a MEDC?
A more economically developed country that has a developed economy and advanced technological infrastructure relative to other less industrialised nations.
What is a multinational corporation?
Where a firm has operations in at least one other country other than its home country.
Why has globalisation happened?
Technology, infrastructure, deregulation and MNCs.
How can globalisation be encouraged?
Open borders, little protectionism and easy planning permission.
What is FDI?
When a company makes an investment in a foreign country.
How can governments get businesses to invest in the country?
Low interest, government grants, relaxing laws, investing in education and lowering taxes.
What is development aid?
Developed countries giving aid to less developed countries.
What are 3 examples of development aid?
Grants, loans and tied aid.
What are 3 advantages to MEDCs of globalisation?
Cheaper labour and expertise overseas, source of raw materials, less conflict.
What are 3 advantages to LEDC’s of globalisation?
FDI, allowing them to expand industry, gives them access to different markets and increase in tax revenue with more employed.
What is overpopulation?
When there are not enough resources to support the population without a decline in living standards.
What is sustainability?
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
What is tax avoidance?
The practice of paying less tax in legal ways.
What is tax evasion?
The practice of paying tax in illegal ways.
What is the IMF?
International monetary fund, acts as help for poorer countries offering expertise, loans and grants.
What is tied aid?
Money given in return for something e.g. USA funding Ukraine but making them buy US equipment.
What is global corporation tax?
It is at least 15%.
What are trading blocs?
A group of countries in the same area that join together and make a ‘free trade area’ free of tariffs, quotas or any regulation.
What is a free trade area?
Where 2 or more countries abolish trade barriers between the countries, maintaining its own tariffs against non member countries however.
What is an economic union?
Where 2 or more countries eliminate all barriers to trade. Common tax system and the same currency.
What is the EU single market?
Refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services.
What is a retaliation?
Actions countries take as a result of another countries actions.
What are advantages of being in a trade bloc?
Cheaper goods from free trade, more FDI, more consumer choice and economies of scale
What are disadvantages of being in a trade bloc?
Less global free trade, financial costs for governments, overreliance of trading within the bloc and monopolising markets as firms can merge.
What are some criticisms of the WTO?
Allowing of exploitation of workers in the developing countries, depleting of resources in LEDCs, developed world pushing down prices in LEDCs and the environment usually suffers.
What is internal trade?
Trade within a country.
What are commodities?
Raw materials.
What is trade liberisation?
Moving towards free trade by removing the barriers.
What are infant industries?
New industries, yet to establish themselves.
What is interdependence?
The reliance of countries on each other resulting from specialisation and free trade.
What is free trade?
International trade left to its natural course without tariffs, quotas, or other restrictions.
What is an embargo?
Orders to stop trading with a other country.
What are trade barriers?
Measures designed to restrict imports.
What are reasons for protectionism?
Protecting jobs, small businesses, the environment, improving the current balance, raising domestic demand.
What are problems with protectionism?
Losing benefits of free trade so consumers pay more for imports, less competition and trade wars.
What are methods of protectionsim?
Tariffs, quotas, subsidies and administrative barriers.
What are tariffs?
Tax on imports so people choose domestic goods.
What are quotas?
Limits on imports to protect domestic supply. They calculate total demand minus what domestic producers can produce and the difference is the quota.
What are artificial barriers?
Non-financial methods used to prevent firms from being able to enter the domestic market.
What is appreciation?
When the value of the currency rises in value to another.
What is depreciation?
When the value of the currency falls to another.
What are exchange rates?
The value of one currency for the purpose of conversion to another.
What is a fixed exchange rate?
When the value of a currency is pegged to another major currency such as the UK dollar.
What is the foreign exchange market?
A market where foreign currencies can be bought and sold, FOREX is the largest private firm that offer this.
What is free floating?
Where the price of a currency is determined by market forces.
What are reserve assets?
They include currency, commodities or other financial capital held by monetary authorities such as central banks to finance trade imbalances.
What are 2 factors that impact exchange rates?
Interest rates, where if they rise investors will put money into banks, so higher rates lead to strengthening of a currency. Political stability where investors like safety so it leads to stronger currencies.
What are the impact of your currency weakening?
Higher prices, oppurtunity to export more and tourism increases.
