4.1 globalisation Flashcards
What does the term growth rate mean?
The rate at which a nations GDP changes from one year to another
How is growth rate measured?
GDP (gross domestic product)
What is GDP
The total value of goods produced and services provided in a country within a given time period
What are emerging economies
Economies that have increasing growth rates but relatively low income per head e.g. BRICS and MINT
What is Globalisation?
The economic integration of different countries through increasing freedoms in the cross-border movement of people, goods/services and technology
What is industrialisation
A rise in manufacturing as a proportion of economic activity
What does the acronym BRICS stand for
Brazil
Russia
India
China
South Africa
What does the acronym MINT stand for?
Mexico
Indonesia
Nigeria
Turkey
What are impacts of economic growth on businesses?
Potential for increased profits as businesses enter new markets
Reduced costs of production due to lower labour costs and cheaper raw materials
Increased trade opportunities
What are impacts of economic growth on individuals
Reduced unemployment as there is higher demand for goods therefore more workers are needed.
Increased average incomes as average incomes are likely to start rising
Access to better quality public services due to more tax revenue being produced
What are the 4 key indicators of growth
Gross domestic product (GDP) per capita
Literacy
Health
Human development index (HDI)
What is GDP per capita?
it is the GDP(output) of a country divided by the number of people in the country.
High GDP is associated with a high standard of living
What does the indicator of growth Health mean
How healthy a countries citizens are
examples of indicators to consider include life expectancy, infant mortality rate and access to healthcare
What does the indicator of growth literacy mean?
The percentage of adults within an economy who can read and write
Literacy rate is often related to the quality of a workforce
What is Human development index (HDI)
A combined measure of three key aspects of development. Life expectancy, education and Gross national income per capita.
What is the scale used for HDI
0-1
1 being the highest
What are the problems with using HDI as a measurement
It doesn’t account for inequalities and there is a lack of reliable data in some countries.
Doesn’t consider personal freedom or gender disparity
What is (GNI) Gross national income
The total amount of income earned by a country’s individual’s and businesses, divided by their population
What are imports?
Goods and services bought by people and businesses in one country from another country.
E.g. buying goods from China
Imports result in money leaving the country
What are exports?
goods and services sold by domestic businesses to people or businesses in other countries
Exports generate extra revenue
What is specialisation
Focusing on one product or a limited scope of products to become more efficient
What are the benefits of specialisation?
Lower unit costs due to economies of scale as costs are spread over a a large output
Lower unit costs = lower prices for consumers = more sales
Can help them gain a competitive advantage
What is foreign direct investment (FDI)
Investment by foreign firms which results in more than 10% ownership of domestic firms
What are joint ventures
A combination of two or more businesses that join together to form a single enterprise with shares risks and rewards
What can FDI lead to
Increased economic growth
Increased job opportunities
Access to knowledge and expertise
When does inward FDI occur?
When a foreign business invests in the local economy
e.g. in 2017,Kenya opened the Kenya Standard Gauge Railway Line built by Chinese investors
When does outward FDI occur?
When a domestic business expands its operations to a foreign country
e.g. Dyson has moved its manufacturing from the UK to Malaysia, China and the Philippines
What is trade liberalisation
The removal or reduction of barriers to trade between different countries
Benefits of trade liberalisation
Increased international trade = increase in market size = increased output = countries can benefit from economies of scale
Freer trade helps businesses to reduce costs as imported raw materials can be sourced cheaply
Drawbacks of trade liberalisation
Small firms may not be able to compete against international firms
Some industries may be subject to dumping as business abroad may sell excess products at unfairly low prices
What is meant by a business dumping
A business selling their products abroad in export markets at significantly low prices
What is meant by infant industries
An industry in the early stages of development in the economy
What are potential reasons for an increase in globalisation
reduced trade barriers
political change
migration
reduced transport and communication costs
How does political change affect globalisation?
Changes in the government can influence a country’s attitude to trade
How does reduced cost of transport and communication affect globalisation
Make it easier and more cost effective for buyers and sellers to connect with one another
Economies of scale due to innovation in containerisation has reduced costs
what is protectionism
When a government seeks to protect domestic industries from foreign competition
What is a tariff
A tax placed on imported goods from other countries
what are the benefits of tariffs
-They protect infant industries so they can become more competitive globally in the future
- increase in tax rev
-reduces dumping by foreign businesses
What are the disadvantages of tariffs
-Increases the cost of imported raw materials
-Reduces competition
-reduces consumer choice
What is the point of a tariff?
A tariff increases the prices of imported goods which shifts demand for the product/service from a foreign business to a domestic business
