4.1 - Globalisation Flashcards
Growth rate
The rate at which a nation’s GDP changes from year to year.
GDP
The total value of goods produced and services provided in a country within a given time period.
Emerging economies
Economies that have increasing growth rates but relatively low income per head.
UK growth
Lower than emerging economies due to growth of the manufacturing sector.
Businesses choose to manufacture in NEE’s due to lower labour costs and access to raw materials.
Globalisation
The economic integration of different countries through increasing freedoms in the cross-boarder movement of people, goods, technology and finance.
Emerging economies
BRICS
MINT (newest)
BRICS
Brazil, Russia, India, China, South Africa.
MINT
Mexico, Indonesia, Nigeria, Turkey
Class of emerging economies
Growing middle class with increasing incomes, so profitable for international firms who sell goods and services in NEE’s.
Impacts of economic growth for businesses in NEE
Increased profit entering a new market.
Reduced costs of production due to low labour costs and cheap raw materials.
Increased trade opportunities as demand increases.
Increased investment, as economy grows business expansion occurs.
Increase FDI as business wants to benefit from growing economy.
FDI (foreign direct investment)
The net transfer of funds to purchase physical capital, e.g. machinery and factories.
Impacts of growing economy for people in NEE
Reduced unemployment.
Increased average incomes, thus increased standards of living.
Access to quality public services as more tax is generated, govt. can invest more.
4 key indicators of growth
GDP (Gross domestic product) rise per capita (person)
Literacy
Health
HDI (Human development index)
Imports
Goods and services brought by people and businesses in one country from another country.
Exports
Goods and services sold by domestic businesses to people or businesses in other countries.
Specialisation
Occurs when a country/business decides to focus on producing a particular good/service.
Specialisation allows for
Lower unit costs due to economies of scale as costs spread over large output.
Low unit costs lead to low prices for customers.
Increased profit margins, if they do not lower selling price.
Gain competitive advantage due to added value.
How do business grow through FDI
As mergers, takeovers, partnerships or joint ventures in order to enter new markets.
Inward FDI
When foreign business invests in the local economy.
Outward FDI
When a domestic business expands its operations to a foreign country.
