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Business Flash Cards > 4.1 Growing Economies > Flashcards

4.1 Growing Economies Flashcards

1
Q

Definition of Globalisation

A

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

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2
Q

Definition of Economic Globalisation

A

The widespread international movement of goods, capital, services, technology and information

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3
Q

Definition of Political globalisation

A

The development and growing influence of international organisations means governmental action takes place at an international level

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4
Q

Definition of Cultural globalisation

A

Refers to the transmissions of ideas, meanings and values around the world in such a way to extend and intensify social relations

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5
Q

Reasons for globalisation

A

An espansion of trade in goods and services between countries
An increase in transfers of financial capital across national boundaries
Development of global brands
Shifts in production and consumption
Increase levels of labour migration
Shifts in economic and political strength

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6
Q

What does BRIC stand for

A

Brazil
Russia
India
China
emerging economies that have significantly grown in power

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7
Q

What does MINT stand for

A

Mexico
Indonesia
Nigeria
Turkey
Next most powerful emerging economies in the world

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8
Q

Definition of Emerging/Developing Markets

A

A country with some characteristics of a developed market but does not satisfy standards to be termed a developed market

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9
Q

Definition of Developed Countries

A

A high income country which is more economically developed with a high quality of life and more advances technological infrastructure

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10
Q

Key characteristics of a emerging market

A

lower than average per capita income
sudden economic growth
high volatility from factors such as natural disasters, external price shocks and political instability
changes in exchange rates
The potential for growth but need the investment

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11
Q

Implications of economic growth for individuals and businesses

A

trade opportunities
employment patterns
health
literacy rates
gross domestic product
human development indedx

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12
Q

Definition of Competitive Advantage

A

A party provides better value than its competitors

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13
Q

Definition of Comparative Advantage

A

Country produces a good or service for lower opportunity cost than other countries

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14
Q

Definition of Specialisation

A

focusing on one task or product to increase the speed and skill with which the job can be done and so improve efficiency

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15
Q

Definition of Imports

A

buying products from a foreign country

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16
Q

Definition of Exports

A

sellings products to a foreign country

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17
Q

Pros and cons of exporting+

A

pros:
more sales as more customers can be targeted worldwide
increased profits
take advantage of economies of scale
Cons:
exchange rate fluctuations
At risk of changes in demand from abroad that may affect your sales and leave too much stock

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18
Q

Pros and cons of importing

A

pros:
reduced manufacturing costs
can get resources and prodcuts that you wouldn’t have normally
higher quality products available
cons:
exchange rates fluctuations
aren’t contributing to their economy

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19
Q

Pros and cons of specialisation

A

Pros:
increased productivity and output
economies of scale
comparative advantage
gdp growth
boost economic growth
cons:
over reliance on one industry
competition may enter the market
disecnomies of scale could set in

20
Q

Definition of Foreign Direct Investment (FDI)

A

investing by setting up operations or buying assets in a business in another country

21
Q

Definition of Horizontal FDI

A

a business takes over/set up a business that is doing the same thing in another country

22
Q

Definition of Vertical FDI

A

a firm acquires a complementary business in another country

23
Q

Definition of Greenfield FDI

A

Build a completely new factory or business

24
Q

Definition of Brownfield FDI

A

Buy an existing business and grow it

25
Q

Definition of Host country

A

a country that will receive the foreign direct invetment from foreign investors

26
Q

Pros and cons of FDI to host country

A

pros:
brings high paying, new jobs
brings new technology and creates new markets
increases exports
cons:
exploitation
may affect the exchange rate
political instability makes it risky

27
Q

What can globalisation lead to

A

people have more choice about where they live and work
high level of interdependency between countries
capital and goods flow more easily

28
Q

Factors that contribute to globalisation

A

Reduction of trade barriers
political change
reduced transport costs
increased significance of global companies
increased investment flows
migrations
growth of the global labour force
structural change

29
Q

Definition of Protectionism

A

is an approach used by governments to protect domestic producers

30
Q

Reasons governments use protectionism

A

protect jobs
protect infant industries
prevent dumping
raise revenue
prevent the entry of harmful goods
improve the balance of payments

31
Q

What some barriers to trade

A

taxes/tariffs
import quotas
subsidies
product quality requirements
subsidies/tax breaks
trade marks, IP and copyright protection

32
Q

Definition of Tariffs

A

a tax placed on an import to increase its price and decrease its demand

33
Q

Why do we have Tariffs

A

Raise tax revenue
Environmental reasons
Protectionism

to protect fledgling domestic industries
protect aging and inefficient domestic industries
foreign producers who face the tariffs cut production due to reduced demand
reduction in production can mean los of jobs

34
Q

Pros and cons of protectionism

A

pros:
forcing fairer competition
starting point of international negotiations and agreements
source of government revenue
encouraging domestic production growth
cons:
trigger retalisation from partner countries
consumers bear higher prices
raises deadweight loss

35
Q

Pros and cons of tariffs

A

Pros:
Domestic produced goods do not incur the tariff and so are likely to be cheaper
Tariff protection allows domestic businesses to sell more because they gain a price advantage compared to imports
Domestic producers gain price advantage
It can ensure better job security
It can protect new infant businesses from being swamped by international competition from MNCs
It can aid economic growth by improving the GDP
It can raise important tax revenue for government which can be spent possibly on infrastructure
It reduces imports so improves balance of trade
Cons:
High import price won’t put many firms off.
Tariffs may just increase prices for consumers
Restricts the volume of trade.
Other countries may impose their tariffs in response to this on their imports.

36
Q

Definition of Import Quotas

A

A physical limit on the quantity of a good imported or exported

37
Q

Why are import quotas used

A

Allows country to be sure on the amount of the good imported from the foreign country
Imposed to protect jobs of domestic producers
Imposed as a bargaining chip to be used in negotiations on trade
Protect strategic industries

38
Q

Pros and cons of import quotas

A

Pros:
Boosts local investment
Protects domestic business
Creates more job opportunities
Boost revenue
More effective at restricting trade tan tariffs
Do not depend on the elasticity of demand or changes in exchange rates
Cons:
Protect infant businesses
Trading partners could do the same
Complex for the country using them
Difficult to measure
Government does not get revenue
Domestic consumers bear higher prices
May be beneficial for some importers but not for others

39
Q

Definition of Subsidies

A

Money is given to local producers to make their goods cheaper on the domestic market

40
Q

Types of trading blocs

A

Preferential trading area
Free trade area
Customs union
Common and single markets
Economic and monetary integration

41
Q

What is Preferential trading areas (PTAs)

A

Allows certain products to receive reduced tariffs and can lead to a free trade area being developed

42
Q

What is Free trade areas (FTAs)

A

The removal of all barriers allowing individual member states to negotiate separately with non members

43
Q

What is customs unions

A

Same as FTA but have a common set of barriers against non member states

44
Q

What is common and single markets

A

Same as custom unions but allows for the free movement of goods, labour and capital
Tariffs are generally removed and non tariff barriers are eliminated

45
Q

What is economic/monetary unions

A

Both customs union and common market but a common currency is used

46
Q

Pros and cons being in a trading bloc

A

Pros:
Freedom to trade
Enlarged market
Protection from international competition outside of the bloc
Freedom of movement of people
Cons:
Inefficiency is protected
Retaliation
Protectionism
Damages small businesses

Business Flash Cards (19 decks)

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