4.1 - Globalisation Flashcards
What are emerging economies?
Nations experiencing rapid industrialisation and economic growth. E.g. India has rapidly growing GDP, a large spending middle class, increasing FDI and a booming technology and manufacturing sector.
How does the UK’s economic growth rate compare to emerging economies?
- Generally slower than that of emerging economies like China and India
- Uk typically experiences around 1-3% GDP growth annually
What is the impact of growing economic power in Asia, Africa and other regions?
- These regions see increased influence in global trade, investment and production with countries like China and India becoming major economic players.
- China = 5 - 7% GDP growth annually
- India = 6 - 8% GDP growth annually
How does economic growth create trade opportunities for businesses?
more disposable income in emerging economies increased demand for consumer goods, luxury products and services, creating opportunities for exporters
Why are countries in Asia, Africa and Latin America gaining economic power?
Due to industrialisation, foreign direct investment, improved infrastructure and growing middle classes that increase consumer demand.
How does economic growth affect employment patterns?
- It shifts employment from agriculture to industry and services
- increases urbanisation
- creates higher paying jobs
- however, automation and global competition can also lead to job displacement
What are some indicators of growth?
- Gross Domestic Product (GDP) per capita
- literacy
- health
- Human Development Index (HDI)
What is GDP?
The total monetary value of all goods and services produced within a country over a specific period.
What does GDP per capita measure?
- The average income per person in a country, indicating economic prosperity.
- GDP per capita gives a clearer picture of individual wealth and living standards
- A higher GDP per capita suggests greater income levels, better access to goods/ services, improved healthcare and higher living standards
Why is literacy an important economic indicator
Higher literacy rates lead to a more skilled workforce, boosting productivity and economic growth.
How does health impact economic growth?
A healthier workforce is more productive, reducing absenteeism and healthcare costs.
What is Human Development Index (HDI)?
A measure of a country’s overall development, incorporating GDP per capita, literacy rates and life expectancy.
What are imports and exports?
- exports - goods and services sold abroad
- imports - goods and services that are bought from other countries
How does specialisation improve business performance?
It allows firms to focus on their strengths, increasing efficiency, reducing costs and enhancing product quality.
What is competitive advantage?
When a country or business can produce a good or served at a lower opportunist cost than competitors, making trade more efficient.
What is Foreign Direct Investment (FDI)?
When a business invest in operation or assets in another country (e.g. building factories, acquiring companies)
How does FDI contribute to business growth?
- It provides businesses with access to new markets, resources and lower production costs hole boosting economic development in the host country.
- e.g. Apple building manufacturing plant in India, investing infrastructure, technology and local jobs rather than jus trading goods or services
What is trade liberalisation?
The removal or reduction of trade barriers (tariffs, quotas, regulations) to encourage international trade.
What is the role of the World Trade Organisation (WTO)?
The WTO promotes free trade by enforcing trade agreements and revolving disputes between countries.
How do political changes affect globalisation?
- Pro- business policies, stability and trade agreements encourage global trade, while political instability and protectionism can restrict it.
- e.g. Brexit led to significant changes in trade relationships and economic partnerships between the UK and EU member states.
How has reduced transport cost contributed to globalisation?
- Cheaper air and sea freight make it easier to trade internationally, reducing the costs of importing and exporting goods.
How has communication technology driven globalisation?
- The internet, mobile technology and digital platforms allow businesses to operate and collaborate across boarders easily.
- e.g. ‘Zoom’ for video conferencing or ‘Slack’ which allows teams to share messages, files and conduct video calls in real time.
What are transnational cooperations (TNCs)?
Large multinational companies (e.g. Amazon, Apple) that operate in multiple countries, influencing economies and supply chains.
How does the increase in significance of TNCs contribute to increased globalisation?
- TNCs expand their operations across multiple countries which drives international trade, investment and technology transfer
- drives local economies and employment while also influencing global trade patterns and investment decisions
Why is FDI important for globalisation?
It allows businesses to expand internationally, access new markets and invest in infrastructure and job creation abroad.
How does migration contribute to globalisation?
- The movement of skilled and unskilled workers across boarders fills labour shortages, transfers knowledge and increased economic interdependence.
- movement of skilled professionals from countries like India and China to the US
What is structural change in an economy?
A shift in economic focus from primary industries
(Agriculture) to secondary (manufacturing) and tertiary (services), leading to industrialisation ad increased trade.
How does structural change lead to globalisation?
- moving from primary sectors to secondary an tertiary increases enhances productivity and efficiency.
- this shift encourages countries to engage in international trade, attract FDI and adopt technological advancements
- often involve the development of better infrastructure and communication systems.
What are tariffs?
Taxes on imported goods to protect domestic industries by making foreign products more expensive.
How do tariffs affect businesses?
They benefit domestic producers but can lead to higher consumer prices and potential trade wars.
What are the benefits of tariffs?
- Protection of domestic industries - protect local businesses from foreign competition allowing them to grow and maintain jobs.
- Revenue generation - tariffs provide governments with revenue, which can be used for public services and infrastructure development.
- Trade balance improvement - by making imports more expensive, tariffs can help reduce trade deficits by encouraging consumers to buy domestically produced goods.
What are the drawbacks of tariffs?
- higher prices for consumers - tariffs can lead to increased prices for imported goods, which may reduce consumer purchasing power and choice.
- retaliation from other countries - imposing tariffs can lead to trade wards, where affected countries retaliate with their own tariffs, harming international trade relations
- inefficiency and misallocation of resources - protecting inefficient domestic industries may led to misallocation of resources, stifling innovation and competitiveness in the long run.
What are import quotas?
Limits on the amount of of a product that can be imported, protecting domestic producers from foreign competition.
What are the advantage of import quotas?
- protection of domestic industries - import quotas limit the quantity of foreign goods entering a market, helping local businesses compete and maintain market share.
- job preservation - quotas can help preserve jobs in affected sectors
- stability in local markets - quotas can help stabilise prices in domestic markets by controlling the supply of imported goods, reducing volatility.
What are the disadvantages of import quotas?
- higher prices for consumers - quotas can lead to higher prices for imported goods , as limited supply may increase demand for more expensive domestic alternatives.
- limited consumer choice - may reduce the variety of goods available to consumers, limiting their options.
- inefficiency and reduced competitiveness - may encourage inefficiency and complacency, leading to a lack of innovation and lower overall competitiveness in the global market.
How does government legislation act as a trade barrier?
Regulations (e.g. safety standards, environmental laws) can make it harder for foreign businesses to enter a market
What are domestic subsidies?
Financial support given to domestic businesses to make them more competitive against foreign companies.
What are trading blocs?
Groups of countries that agree to trade freely with each other while imposing tariffs on non-members.
What is the EU’s Single Market?
- A trading bloc that allows free movement of goods, services, capital and labour across member states
- EU countries include: France, Germany, Spain
What is ASEAN?
The Association of Southeast Asian Nations, promoting economic cooperation and trade among 10 Southeast Asian countries.
What is NAFTA? What replaced it?
- North American Free Trade Agreement was a deal between the US, Canada and Mexico
- it was replaced by the USMCA in 2020.
What are the benefits of trading blocs for businesses?
- provide access to larger markets
- reduce trade costs
- encourage competition and investment
What are the drawbacks of trading blocs for businesses?
- may create barriers for non- member countries
- increase competition
- lead to trade disputes
