4.1 Globalisation: Glossary Flashcards
Economic growth
An increase in a country’s productive capacity
Emerging economies
The economies of developing countries where there is rapid growth, but also significant risk
GDP
The value of all the finished goods and services produced within a country’s borders in a specific time period.
Human Development Index (HDI)
A measure of economic development which is comprised of three equally weighted index numbers, including health, education and GDP per capita (adjusted for exchange rate differences and inflation).
Comparative advantage
The theory that a country should specialise in products and services that it can produce more efficiently than other countries
Competitive advantage
The idea that a business should specialise in any area (products, services, management, research etc.) where it can perform better than its competitors
Division of labour
Different workers specialising in different productive activities
Exports
Goods or services that a firm produces in its home market, but sells in a foreign market
Foreign direct investment
Investing by setting up operations or buying assets in businesses in another country
Imports
Goods and services that are bought into one country from another
International trade
Exporting and importing
Specialisation
A production strategy where a business focuses on a limited scope of products or services. This results in greater efficiency, allowing for goods and services to be produced at a lower cost per unit
Tariffs
Taxes that are imposed on imports
Foreign Direct Investment (FDI)
Business investment undertaken by a firm in another country e.g. building a factory
Globalisation
The growing integration of the world’s economies
Transnational companies / multinational companies
Companies that own or control production or service facilities outside the country in which they are based
World Trade Organisation (WTO)
An international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers. It polices free trade agreements, settles trade disputes between governments and organises trade negotiations
Administrative barriers
Rules and regulations (such as trading standards and strict specifications) that make it difficult for importers to penetrate an overseas market
Embargo
A complete ban on international trade - usually for political reasons
Import quota
A physical limit on the quantity of imports allowed into a country
Infant industries
New industries that have yet to establish themselves
Protectionism
An approach used by government to protect domestic producers
Subsidy
Financial support given to a domestic producer to help compete with overseas firms
Tariffs / custom duties
A tax on imports to make them more expensive
Trade barriers
Measures designed to restrict trade
Common market
A market where goods, labour and capital can move freely across the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least reduced
Customs union
A union where member states remove all trade barriers between themselves and members adopt a common set of barriers against non-members
Economic union
A type of trade bloc involving both a customs union and a common market
Free Trade Area (FTA)
A region where member states remove all trade barriers between themselves, but each member state nevertheless keeps different barriers against non-member states
Preferential Trade Area (PTA)
A type of trading bloc where certain types of products from participating countries receive a reduced tariff rate
Regional Trade Agreement (RTA)
Agreement made between two or more countries within a geographical region, which is designed to facilitate trade by bringing down barriers
Rules of origin
A system of allocating certificates whereby a defined amount of a product or service must be certified as being created within that region
Single market
A market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country
Trading bloc
A group of countries that has signed a regional trade agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves
