3.2b) What are the attitudes and actions of national governments?

Question 1

1) How are national governments key players in globalisation?

Answer 1

1) They adopt policies that allow TNC’s to grow in size and influence.

Question 2

1) What is Free-market liberalisation?
2) In practice, what policies are implemented?
3) Give an example of a place where deregulation has occurred:

Answer 2

1) This is the belief that government intervention impedes economic development, and that as wealth increases, trickle down will occur.
2) Restrictions being lifted on the way companies and banks operate.
3) In 1986, the City of London removed large amounts of ‘red tape’, allowing London to become a global financial hub.

Question 3

1) What is Privatisation?
2) Why were state-owned assets sold to private investors?
3) Give examples of assets that have been passed oversees:
4) Since 2008, where has the UK been getting sovereign wealth funds?

Answer 3

1) Allowing foreign investors to gain a stake in privatised national services and infrastructure.
2) To reduce government spending and raise money.
3) The French company Keolis owns stakes in southern England’s railway network, and EDF is owned by Electricite de France.
4) China and the Middle East.

Question 4

1) How can governments encourage business start-ups?
2) Impact of Sunday trading being introduced in 1994:
3) What has been the impact of eased restrictions on Chinese textiles investors, in Italy.

Answer 4

1) Through low business taxes, and changes in the law allowing both local and foreign businesses to make more profit.
2) UK became more attractive for foreign investors, varying from Burger King to the Disney Store.
3) Prato has the largest Chinese population in Europe.

Question 5

1) How is free trade encouraged within a trade bloc?

Answer 5

1) Internal tariffs are removed.

Question 6

1) Give an example of how markets for firms grow:

Answer 6

1) In 2004 when 10 new nations joined the EU, Tesco gained access to 75 million new customers.

Question 7

1) What comparative edge allows French wine-makers to prosper?

Answer 7

1) Their climate and soil, helps to produce a superior product.

Question 8

1) How does an enlarged market reduce manufacturing costs per unit?

Answer 8

1) There will be a bigger demand for a product, therefore reducing production costs, meaning that items will be even cheaper, leading to even more products being sold.

Question 9

1) What can smaller national firms within a trade block, do to make their operations more cost effective?

Answer 9

1) They can merge to form TNC’s.

Question 10

1) Give an example of how trade blocs can agree on external tariffs for foreign imports:

Answer 10

1) In 2006, the EU blocked imports of underwear from China, on the basis that the annual quota that been exceeded.

Question 11

1) Why does NAFTA suit the Americans?

Answer 11

1) American TNC’s can cheaply manufacture goods in Mexico, whilst the designing and marketing is done in the USA.