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business studies > 4.1 - globalisation > Flashcards

4.1 - globalisation Flashcards

1
Q

GDP

A
  • gross domestic product
  • total amount of goods and services produced by all businesses in an economy in a year
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2
Q

economy

A

state of a region or country in terms of production and consumption of goods and services and the supply of money

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3
Q

BRIC economies

A

brazil
russia
india
china
south africa

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4
Q

importance of BRIC economies

A
  • global influence and power
  • growing economic influence
  • china is the biggest economy
  • cultural influence
  • geopolitical influence
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5
Q

MINT economies

A

mexico
indonesia
nigeria
turkey

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6
Q

importance of MINT economies

A
  • rapid economic growth attracts investors
  • incomes increasing
  • middle classes expanding
  • increasing consumer spending on domestic goods and imports
  • risky markets in terms of political stability
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7
Q

implications of economic growth for individuals

A
  • rising incomes
  • rising consumption and standard of living
  • greater choice of products and services
  • greater employment opportunities
  • improvements in health and education long term ( due to paying more tax )
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8
Q

implications of economic growth for businesses

A
  • rising demand/consumption = higher revenue and profit for domestic producers
  • competition increases and overseas investors attracted
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9
Q

indicators of growth

A
  • GDP
  • literacy
  • health
  • human development index (HDI)
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10
Q

imports

A

bringing in goods from other countries

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11
Q

benefits of imports

A
  • wider range of goods
  • increases competition = drives down prices
  • necessities such as energy and food
  • components in production for UK businesses
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12
Q

risks of imports

A
  • illegal goods
  • competition for domestic businesses
  • pollution
  • tariffs
  • transport
  • over-reliance
  • money flowing out of country
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13
Q

exports

A

countries trading with eachother

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14
Q

benefits of exports

A
  • increases sales revenue for uk businesses
  • increases employment for uk businesses
  • increases gdp and incomes
  • improves business competitiveness
  • potential for economies of scale
  • diversification of consumer markets
  • enhanced innovation and acquisition of new skills
  • boosting the business profile and brand
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15
Q

risks of exports

A
  • taxes and tariffs
  • impacts of exchange rates
  • packaging and transport
  • copyright
  • payment methods
  • legislation compliance
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16
Q

specialisation

A

when a business concentrates on a product or task and in many cases means producing only a small number of products

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17
Q

competitive advantage

A

a sustainable advantage over the competitors in the long term, gained by offering consumers greater value

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18
Q

benefits of specialisation

A
  • increased productivity and output
  • increased economies of scale
  • improved competitive advantage
  • increased sales and exports
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19
Q

disadvantages of specialisation

A
  • lack of diversification
  • does not spread risk
  • competition from lower cost countries
  • diseconomies of scale
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20
Q

foreign direct investment (FDI)

A

investing by setting up operations or buying assets in businesses in another country

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21
Q

globalisation

A

the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange

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22
Q

advantages of globalisation

A
  • access to new markets
  • spread of knowledge and technology
  • promotes economic growth
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23
Q

disadvantages of globalisation

A
  • increased competition
  • exploitation of labour and resources
  • imbalanced trade
  • domestic job loss
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24
Q

trade liberalisation

A

the process by which international trade is made easier through the relaxation of tariffs and barriers

25
Q

tariffs

A

taxes charged on the import of goods from foreign countries

26
Q

trade barriers

A

something that slows down or stops a business from exporting to an overseas market

27
Q

GATT

A
  • 1947
  • general agreement on tariffs and trade
  • raised living standards = allowed developing countries to export goods to more indutrialised ones
28
Q

WTO

A
  • world trade organisation
  • replaced GATT in 1994
  • reduces barriers to trade and to ensure countries keep to agreements they’ve made
29
Q

why might tariffs be imposed?

A
  • governments want to protect domestic businesses
  • stop imports that compete with state monopolies
30
Q

advantages of trade liberalisation

A
  • bigger markets
  • increased competition
  • wider range and better quality goods and services
  • more employment
  • higher incomes
31
Q

disadvantages of trade liberalisation

A
  • small firms suffer
  • employment may be temporary
  • environmental issues
32
Q

G7

A
  • seven major advanced economies
    canada, france, germany, italy, japan, uk and usa
  • make global decisions on trade
  • discuss global issues such as climate change, health issues and trade
33
Q

how has changing communication caused an increase in globalisation

A
  • access to markets and suppliers is easier and quicker
  • communication and trade via the internet
34
Q

how does FDi contribute to increased globalisation?

A

businesses outside of important market trading blocs will invest in a business or set up production in the trading bloc to get around tariffs

35
Q

advantages of tariffs

A
  • produce revenue on goods brought into the country
  • opening point for negotiations between countries
  • support a nation’s political goals
36
Q

disadvantages of tariffs

A
  • antagonizes existing issues between governments
  • triggers escalating trade conflicts
  • can lead to shortages by discouraging a country from exporting
37
Q

import quota

A

time-bound restrictions governments impose on trade

38
Q

why are quotas imposed?

A
  • designed to keep prices from getting too high or too low
  • limit production of goods
39
Q

advantages of quotas

A
  • encourages new businesses to start up in the industry
  • easy to change
  • reduces unemployment levels
40
Q

disadvantages of quotas

A
  • limits the supply of products
  • generates tension between trading partners
  • domestic firms can become more inefficient
41
Q

government legislation

A

set of rules and regulations imposed by the government that a business has to follow

42
Q

advantages of government legislation

A
  • able to keep employees safe within the workplace
  • keeps employees paid a fair wage for their jobs
  • means employees can be correctly trained
43
Q

disadvantages of government legislation

A
  • extra costs for the business (minimum wage)
  • health and safety training is an extra cost
  • prosecution if laws are not followed
44
Q

domestic subsidies

A

payments to encourage domestic production by lowering their production costs and improve competitiveness

45
Q

advantages of domestic subsidies

A
  • promotes growth
  • creates and sustains growth
  • provides essential services and goods
  • address market failures
46
Q

disadvantages of domestic subsidies

A
  • can strain government budgets
  • industries can become reliant on government subsidies
47
Q

methods of protectionism

A
  • import licensing = governments grant importers the license to import goods
  • exchange controls = limiting currencies that can move between countries
  • intellectual property laws = protecting domestic products and ideas
  • technical barriers to trade = increase compliance costs and impose monitoring costs on export agencies
48
Q

trade bloc

A

group of nations that have reached a set of special agreements regarding their economic relationships with each other

49
Q

free trade area (FTA)

A

no tariffs or quotas on trade in goods between member countries but each country can set its own tariffs or quotas on goods from non-members

50
Q

customs union (CU)

A

no tariffs on goods between members but there is a common external tariff which means that all members impose the same level of tariffs on non-member countries

51
Q

common (or single) market

A
  • involves a custom union and free trade in services
  • a common set of regulations and standards
  • free movement of labor and capital amongst member countries
52
Q

monetary (or currency) union

A
  • two or more countries share the same currency
53
Q

ASEAN (association of southeast asian nation)

A
  • started in 1967 by thailand, malaysia and singapore
  • expanded several times
  • negotiated a free trade agreement among member states
  • customs union = common external tariff
  • working towards a common market
  • 600 million people in the joint marketplace
54
Q

countries in ASEAN

A

thailand, phillipennes, myanmar, vietnam, indonesia, malaysia, laos, cambodia, brunei, singapore

55
Q

regional comprehensive economic partnership

A
  • made up of 10 southeast asian countries and australia, new zealand, china, japan and south korea
  • largest trading block
  • account for 29% of global gross domestic product
  • india was initially part of it but has since pulled out
  • one of the first multiliteral trade agreements signed by china
56
Q

USMC (previously NAFTA) trading bloc

A
  • united states, mexico, canada agreement
  • founded in 1992
  • new agreement 1st of july 2020
  • no import tariffs = less expensive products
  • some external tariffs set which are common
57
Q

expansion of trading blocs

A

the process of more countries joining an existing trading bloc

58
Q

benefits to businesses of expanding trading blocs

A
  • freedom to trade
  • enlarged market
  • protectionism from international competition outside of the bloc
  • freedom of movement of people and capital-
59
Q

drawbacks to businesses of expanding trading blocs

A
  • increase in competition
  • dominance of developed countries in global trading
  • can kill off smaller domestic businesses in developing nations
  • reduced national soveirgnity

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