4.1 globalisation

Question 1

HDI

Answer 1

human development index - is an attempt to provide a single measure of economic developments encompassing income, education and health.
shows the well rounded picture of a countries economic developments and a good tool for businesses to use for assessing a country

Question 2

indicators of growth

Answer 2

GDP per capita
Literacy
Health
HDI

Question 3

GDP per capita

Answer 3

is a measure of the total output of a countries economy.

Question 4

implications of economic growth for businesses

Answer 4

new export opportunities
offshoring production
increased domestic competition

Question 5

Why is trade necessary?

Answer 5

as countries trade in products they specialise in, and trade for products that those countries do not produce domestically. The global economy is more productive as a whole.

Question 6

Imports definition (advantages)

Answer 6

are products/services produced abroad and consumed domestically
reduced costs and offering more choice to consumers

Question 7

Exports

Answer 7

Are products and services that are produced domestically and consumed overseas
offers businesses the chance to increase sales, to achieve major growth enabling them to enjoy economies of scale. It also can spread risk

Question 8

Foreign direct investment

Answer 8

FDI - Occurs when a business purchases non-current assets in another country. FDI can flow inward and outward

Question 9

Outward FDI benefits

Answer 9

Avoiding problems involved in exporting
Avoiding transport costs
Avoiding trade barriers
Access to natural resources
Lower operating costs

Question 10

comparative advantage

Answer 10

countries that specialise in producing products that they are good at and gain advantages and investments for it - UK wool

Question 11

business specialisation

Answer 11

choosing to produce only one product or in only one market - links with porters differentiation or cost leadership strategies

Question 12

how can business specialisation boost efficiency and competitive advantages?

Answer 12

For a business choosing to produce one product, fewer machines will be needed. Costs with training and funding multiple machines will be lower. This means that unit costs are also lower and you can gain advantages with competitive pricing.

Question 13

Globalisation

Answer 13

Is the trend towards closer ties between economic and businesses within the global economy.

Question 14

what is trade liberalisation?

Answer 14

Involves the removal of trade barriers between agreement of two countries

Question 15

what are trade barriers

Answer 15

Tariffs - tax imposed on imports
Quotas - businesses limit on the quantity they are allowed to sell in foreign countries
Regulations - rules can be used to make it harder for imports to enter a country.

Question 16

FACTORS CONTRIBUTING TO INCREASED GLOBALISATION

Answer 16

political change - new leaders = new laws
Reduced cost of transport/communication - encouraging more imports
Increased significance of transnational corporations - businesses starting up in other economies
Increased investment - banks
Migration - seeking new jobs
Growth of the global labour force - businesses using offshore production
Structure change - exports boosting host countries economies (china)

Question 17

Opportunities of trade liberalisation

Answer 17

lower costs, allowing them to reduce prices and compete with cheaper import rival.
Can lead to increased export opportunities with removal of barriers.

Question 18

Threats of trade liberalisation

Answer 18

allowing imports into domestic markets increases competition.

Question 19

Trading blocs definition

Answer 19

is a group of countries that sign up to free trade between them, protected by a tariff wall against imports from outside.

Question 20

Attraction of trading blocs

Answer 20

• harmonisation of laws allows one product to be made that meets legal requirements of all countries in bloc.
• Countries working together in a bloc have more power over non member countries than they would if they were single.

Question 21

BRICS

Answer 21

brazil / russia / india / china / south africa

Question 22

MINT

Answer 22

Mexico / Indonesia / Nigeria / Turkey

Question 23

NAFTA

Answer 23

USA/Canada/Mexico - Mexico has the ability to attract companies with its low cost manufacturing base which they can import freely to the world’s largest domestic market - USA.

Question 24

positives and negative of trading blocs

Answer 24

It can be either beneficial or not depending on the business

Question 25

Positive

Answer 25

Free movement of goods between members

As trade grows between neighbours, it becomes necessary for governments to provide infrastructure support

Question 26

Negatives

Answer 26

Competition increases due to freer trade

To create a single market, new rules may be agreed, including minimum wage rates