4.1 - globalisation

Question 1

importance of economic growth

Answer 1

• when growing - increase in demand - increase in output, which is beneficial for the economy.
• greater output = more jobs = more people out of poverty.

-ppl start earning money = positive income elasticity will increase.
-increase sales
-foreign business may start operating parts of their businesses in growing economies- reduces cost + cheaper labour.
ex) apple services in india.

Question 2

MINT countries

Answer 2

Mexico, Indonesia, Nigeria, Turkey

Question 3

specialisation help international trade

Answer 3

-competitive advantage.
-competitive market.
-specialising in something.
ex) Norway wit fish oil.
P: increase efficiency cuz workers are skilled.
N: losing profit if the product has a decrease in sales + cost money to have specialized workers.

Question 4

Foreign Direct Investment (FDI)

Answer 4

Investment made by a foreign company in the economy of another country.
ex)apple producing their phones in china.

• there is horizontal + vertical FDI
  horizontal
  -when a firm invest in a business that is at the same stage of production process as the business in their own country.
  ex)toyota build a car production plant in the UK.

vertical
-when a business invests in a business that is at a different place in the supply chain.

Question 5

Causes of globalisation

Answer 5

• more people able to work
  -more people more likely to migrate
  -investing more in foreign countries
  -increase in global companies
  -transport and communication is cheaper.

Question 6

protection to boost globalisation

Answer 6

-tariffs - tax to paid when importing products.
-Quotas - restrictions for the volume of import.
-government legislation - bans = trade more difficult and can restrict a countries development.
-domestic subsidies - sum of money given by the government to domestic firms in certain industries.

Question 7

trading bloc

Answer 7

a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations = trade liberation.

Ex) EU union.

Question 8

trading bloc P+N

Answer 8

P:
-removes trade barriers = surge in demand
-skilled workers = efficiency + quality
-expanding markets = larger market - increased sale volume for lower cost cuz scales of economies.
-greater competition = competitive prices.

N:
-expensive to import = cost increase
-small firms may be forced out cuz of competition.

Question 9

Globalization

Answer 9

the process by which businesses or other organizations develop international influence or start operating on an international scale.

-allows them to make strategic decisions about where to get raw materials from.

Question 10

GDP

Answer 10

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Question 11

Indicators of economic growth

Answer 11

-literacy rate,health,the human development index.

-means that the population are healthy and are educated, allowing them to be able to work.

HDI- measures how developed the humans of a country are, based on life expectancy,average number of year of schooling and average income.

Question 12

BRICS countries

Answer 12

Brazil, Russia, India, China, South Africa

Question 13

imports

Answer 13

• products bought from overseas.
  -can be cheaper than domestically produced ones.
  -increase in the variety of goods/services
  -causes money to flow out of an economy.

Question 14

Exports

Answer 14

-products and Services sold to other countries
-causes money to flow into an economy.
-way of expanding = increase market size.

Question 15

FDI positives and negatives

Answer 15

P:
- allows business to grow and increase sales.
-access to new markets, reduces cost in a foreign country.
-knowledge about the national legal system.

Question 16

Trade Liberalization

Answer 16

the process of reducing barriers to trade, which are things that make trade more expensive . the process of removing is called liberalisation.

P: cheaper cost of raw materials, exporting goods is easier, increased competition = products will be cheaper.

N:reduces the cost of import= domestic businesses can be forced out if they are not competitive enough = increased unemployment.

Question 17

Causes of globalisation : political change

Answer 17

• restrictions to international trade put in place by one government might be removed if the political system changes.

Question 18

Causes of globalisation : structural change in economy

Answer 18

the structure of economy depends on the diff industries it contains:

primary : obtaining raw materials, agriculture and mining.
secondary : industries that manufacture raw materials.
Tertiary: industries that are services, healthcare, finance
Quaternary : industries with knowledge based services, IT + research.

• specialised workers - skilled staff
  -trade internationally obtain market share - maximising market share.