4.1 Flashcards
define globalization
the process of deeper economic integration between countries and regions of the world
state 5 causes of globalisation
deregulation of markets
political changes
removal of trade barriers
lower transport costs
improved communication
disadvantages of globalisation
unskilled workers in developed countries jobs relocated
domestic businesses have increased competition
increased transport contributes to global warming
what impact does a reduction in GDP have on a business
increase in imported goods if country cannot keep up with demand
increased prices leads to inflation
what are the BRIC MINT countries
Brazil
Russia
India
China
Mexico
Indonesia
Nigeria
Turkey
developed economies
mature economies with a relatively high standard of living with generous welfare provision
developing countries
still have a large primary sector, incomes are low and work force is labor intensive
emerging economies
fast growing economy with rapidly rising standards of living & growth in secondary and tertiary sector
migration to urban areas
what is GDP per capita
measures the total output of a country divided by the population, indicated average incomes, doesn’t consider inequality
state the 4 factors used in measuring growth
GDP per capita
literacy rates
health
HDI
what does HDI take into account
gross national income
life expectancy
average years of education
what is FDI
foreign direct investment
investment in a foreign country by a business to obtain control of another business
advantages of FDI
develops the country
builds relationships with businesses and countries
improves infrastructure & technology
increased employment and improves skills
disadvantages of FDI
exploitation of resources
unethical practices
expensive & takes a long time
may take advantage of land
takes away from domestic sales
what is greenfield FDI
a company will build on its own with brand new facilities from the ground up
what is brownfield FDI
when a company purchases or leases an existing business
what is exporting
selling goods/services to other countries
domestic products sold abroad
what is franchising
selling a lisence to use the firms name/product/service in return for initial payment & royalties control over market
cost of expansions goods
what is licensing
one firm producing and marketing another businesses products
joint venture
two or more businesses combined resources to operate in a particular country
risk and cost shared
conflict over control
what is a merger
when a business joins with another business to create a new organization
what is a takeover
when one business buys the entirety of another
what is direct investment
investment in a foreign country by a business to obtain control of another business
economic globalization
refers to the movement of goods, capital, services, technology and information
social globalization
refers to the sharing ideas and information
political globalization
the amount of political co-operation that exists between different countries
what is trade liberalization
countries around the world have signed trade agreements that reduce tariffs, quotas and restrictions on free trade
what factors have increased globalisation
trade liberalization
political change
cost of transport and communication
transnational companies
FDI
migration
structural change
what are transnational companies
one of the main drivers of globalization, investment in factories & operation in other countries
what is protectionism
involves supporting domestic industries against foreign competition
governments use policies such as quotas & tariffs and other barriers that increase prices of imported goods or make it more difficult for foreign companies
what are tariffs
tax placed on an import to increase its price and decrease its demand, they are imposed by governments to raise revenue and to restrict imports however it raises financial price to consumers
what are quotas
a physical limit on the quantity of a good imported or exported imposing a limit on the quantity of goods that are imported which will increase the share of the market available
what are subsidies
a way of the government protecting domestic markets
money is given to local producers to make their goods cheaper in the domestic market
what is legislation
product quality requirements to restrict certain products that don’t meet standards
what is free trade
when government put in place policies that allow producers from overseas nations to freely sell their goods in a country
what are the reasons for protectionism
doesn’t apply to domestic goods so they are likely to be cheaper and ensure better job security for employees in the domestic market
raises import tax for governments
favours domestic businesses over MNCs
improves balance of trade
what are the reasons against protectionism
lack of cheaper alternatives
expensive to consumers
less competitive globally
less choice for consumers
what is a trading bloc
a type of intergovernmental agreement to reduce regional trade barriers, depending on how closely the members integrate their economies they may form different trading blocks
how many members are there in the EU
27
what is the consumer base of the EU
550million customers
who are the members of NAFTA
canada, mexico, united states
what is the consumer base of NAFTA
450million customers
what is the consumer base of ASEAN
500million customers
what are the reasons for trading blocs
encourages trade between countries
provides access to larger markets
free movement of people which increases employment
higher opportunity for growth
more negotiating power
what are the reasons against trading blocs
increased competition
may be difficult to expand outside of the trading blocs
embargos stop you from trading with countries outside of the blocs
