4.1 Globalisation

Question 1

What is an emerging economy?

Answer 1

An economy that has increasing growth rates but low income per capita

Question 2

What is globalisation?

Answer 2

The economic integration of different countries

Question 3

What are some implications of economic growth for businesses?

Answer 3

• Increased profits
• Customers likely to have income elastic demand
• Reduces costs of production
• Increased trade opportunities
• Increased investment
• Increased FDI

Question 4

What are some implications of economic growth for individuals?

Answer 4

• Reduced unemployment
• Increased incomes
• Access to quality public services

Question 5

What are the indicators of economic growth?

Answer 5

• GDP per capita
• Health
• Literacy
• HDI

Question 6

What are imports?

Answer 6

Imports are goods/services bought by people and businesses in one country from another

Question 7

What are exports?

Answer 7

Exports are goods/services sold by domestic firms to people or a business in another country

Question 8

What is specialisation?

Answer 8

Specialisation is when a business or country chooses to focus on producing a particular good

Question 9

What are the benefits of specialisation?

Answer 9

• Increased quantity and quality
• Lower unit costs due to economies of scale
• Allows for business to lower prices
• Increased profit margins if prices aren’t lowered
• Excess output can be sold abroad as exports for revenue

Question 10

What is FDI?

Answer 10

Foreign direct investment is investment by foreign firms into a different country

Question 11

What are the benefits of FDI for a country?

Answer 11

• Increased economic growth
• Increased job opportunities
• Access to knowledge and expertise

Question 12

What is trade liberalisation?

Answer 12

Trade liberalisation is the removal of Barrie’s to trade between countries

Question 13

What are the benefits of trade liberalisation?

Answer 13

• Increased international trade
  - Increases output
  - Economies of scale
• Free trade allows businesses to reduce costs of importing raw materials

Question 14

What are the drawbacks of trade liberalisation?

Answer 14

• Domestic firms in infant industries wont be able to compete with big MNC’s
• Dumping from firms may occur

Question 15

What is an infant industry?

Answer 15

An infant industry is an industry that is in the early stages of development

Question 16

What is dumping?

Answer 16

Dumping is when a business sells their products abroad at very low prices to get rid of stock (usually if the product is no longer wanted in another country)

Question 17

What factors increase globalisation?

Answer 17

• Reduced trade barriers/trade liberalisation
• Political change
• Low transport/communication costs
• Increased importance of MNC’s
• Increased FDI
• Migration ( within and between countries)
• Growth of global labour force

Question 18

What is offshoring?

Answer 18

Offshoring is when a company takes part of its production process and relocates it to a lower cost country

Question 19

What is protectionism?

Answer 19

Protectionism is when a government seeks to protect domestic industries from foreign competition

Question 20

What is a tariff?

Answer 20

A tariff is a tax placed on imported goods from other countries

Question 21

What are import quotas?

Answer 21

An import quota is a government imposed limit on the amount of a particular product allowed into the country

Question 22

What are some other trade barriers?

Answer 22

• legislation
• Subsidies

Question 23

What is a trading bloc?

Answer 23

A trading bloc is a group of countries that form an agreement to reduce or eliminate protectionist measures between each other

Question 24

What are the benefits of trading blocs for members inside the bloc?

Answer 24

• wider markets
• external tariff walls
• Infrastructure support
• free movement of labour

Question 25

What are the drawbacks for businesses inside the trading bloc?

Answer 25

• Increased competition
• Common rules and regulations
• Retaliation
• Inefficiency