4.1 Growing Economies

Question 1

Impact of globalisation on countries

Answer 1

Can specialise in what they are naturally good at
Can benefit from Foreign Direct Investment
Domestic industries may be harmed

Question 2

Impact of globalisation on governments

Answer 2

Can collect taxes from the increased growth
Can appear to have higher gdp growth

Question 3

Impact of globalisation on Consumers

Answer 3

Receive more choice and cheaper goods

Question 4

Impact of globalisation on Workers

Answer 4

Low skilled workers get low cost work brought to them

Question 5

Reasons why globalisation is important

Answer 5

An expansion 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
Increased levels of labour migration
Shifts in economic and political strength

Question 6

Factors affecting globalisation: Improved communication

Answer 6

Better communication, development of satellite TV - provide worldwide marketing avenues
BUT not all countries have good communication

Question 7

Factors affecting globalisation: Improved Transport

Answer 7

Development of containers and bulk shipping by air has allowed mass movement of goods
BUT there’s pollution and environmental issues

Question 8

Factors affecting globalisation: Free Trade Agreements

Answer 8

Free trade as a way of increasing the countries wealth and influence
BUT there’s a bias to rich countries

Question 9

Factors affecting globalisation: Global banking

Answer 9

Modern tech allowing vast amounts of capital to flow between countries and instantly
BUT chance of financial crisis and can create too much confidence

Question 10

Factors affecting globalisation: Growth of Multinationals

Answer 10

Rapid growth of multinationals causes globalisation as there’s lots of investment from goods selling around the world
BUT There’s much legislation, taxation and people may choose to buy local instead

Question 11

Factors affecting globalisation: Labour costs and skills

Answer 11

Labour intensive industries such as clothing can take advantage of cheaper labour costs and reduced regulations in lesser economically developed countries
BUT there’s likely to be an increase in the avg wages in those countries due to the economic growth

Question 12

Why do countries want FDI?

Answer 12

New technology
Improved trade and infrastructure
Provides jobs/ better employment rate
Improved skills of workers through training
Taxes increase and gov can use them to help country
Can export more goods to other countries

Question 13

Problems with FDI

Answer 13

Unethical/ unfair practices
Initially very expensive
Lost resources domestically
Time to develop the worker skills
Importing goods/ services/ materials from abroad and so capital leaves the country
Takes away from the domestic sales- possible monopolisation

Question 14

Types of FDI: Greenfield

Answer 14

A company will build its own, brand new facilities from the ground up

Question 15

Analysis of Greenfield FDI

Answer 15

Greater control of the business
New facilities will be more efficient
Entry process may take years
Competition will be difficult to overcome

Question 16

Types of FDI: Brownfield

Answer 16

When a company purchases or leases an existing business

Question 17

Analysis of Brownfield FDI

Answer 17

Instantly acquire companies tech, staff and knowledge
Gain access to an established market
One less competitor to deal with
Start up costs are reduced

Question 18

Ways to enter international markets: Exporting

Answer 18

Selling products in other countries/ markets from domestic production
Low risk to test the market
Allows business to use spare capacity or increase profit margins

Question 19

Ways to enter international markets: Franchising

Answer 19

Selling rights to sell their products in another country under their name with support from the franchise
Reduced costs of expansion
Pay initial set up fee then royalties

Question 20

Ways to enter international markets: Licensing

Answer 20

One firm producing and marketing another’s product in a particular country
Similar to franchising but is also concerned with the production process, rather than retailing

Question 21

Ways to enter international markets: Joint venture

Answer 21

Businesses work together as two separate identities to complete the same objective
Often foreign firm will work with a domestic producer

Question 22

Ways to enter international markets: Merger/ Takeover

Answer 22

Joining another company in another country to sell their products and create a new joint organisation

Question 23

Ways to enter international markets: Direct Investment

Answer 23

Setting up production facilities abroad
Can result in a merger or takeover
Used by multinationals
Can take adv of lower wages, raw materials and lower regulations
BUT higher costs and high risk strategy

Question 24

Globalisation

Answer 24

The process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange

Question 25

Economic Globalisation

Answer 25

Widespread international movement of goods, capital, services, technology and information

Question 26

Social globalisation

Answer 26

Refers to the sharing of ideas and information between and through different countries

Question 27

Political Globalisation

Answer 27

Refers to the amount of political co-operation that exists between different countries

Question 28

Causes of globalisation

Answer 28

Expansion of trade between countries Increase in transfers of financial capital across national boundaries Development of global brands Labour migration Structural change Shift in economic and political strength

Question 29

Cause of Globalisation: Trans-national companies

Answer 29

Multinationals, investment in factories and operations in other countries Creation of jobs and transfer of skills Global brands

Question 30

Protectionism

Answer 30

Involves Supporting domestic industries against foreign competition. Governments use policies such as quotas, tariffs and other barriers that increase prices of imported goods or make it more difficult for foreign companies

Question 31

4 Protectionist Methods

Answer 31

Tariffs Quotas Gov Legislation Domestic Subsidies

Question 32

Tariff

Answer 32

Tax placed on an import to increase its price and decrease its demand Imposed by gov to raise revenue and restrict imports Increase in the final price Consumers SHOULD switch to domestic goods

Question 33

Import Quotas

Answer 33

Physical limit on the quantity of good imported or exported Imposing a limit on the quantity of goods will increase the market share available for the domestic products

Question 34

Subsidies

Answer 34

Subsidy is a way of a government protecting their domestic markets Money is given to local producers to make their goods cheaper on the domestic market Reduces the final price

Question 35

Government Action

Answer 35

Legislation on product quality requirements Preferential state procurement policies- favouring a local/ domestic produces Exchange controls- Limiting the foreign exchange that can move between countries

Question 36

Free Trade

Answer 36

When government put in place policies to allow producers from overseas producers freely selling goods in our country

Question 37

Arguments For Protectionism

Answer 37

Domestic Produced goods do not incur the tariff so are cheaper Better job security Increase tax revenue for gov Protect infant businesses

Question 38

Disadvantages of protectionism

Answer 38

Less choice for consumers Lack of cheaper alternatives Closure of businesses Less competitive globally Can raise tax for gov reduces imports

Question 39

Trading Bloc

Answer 39

Type of intergovernmental agreement to reduce regional trade barriers

Question 40

Trade Liberalisation

Answer 40

Removal or reduction of restrictions of barriers on the free exchange of goods between nations Aim is to incentivise that trade, making the economy more open to trade and investment

Question 41

Arguments against trade blocs

Answer 41

Businesses will face increased competition from other firms inside the bloc Firms will find it difficult to expand in areas outside the bloc Firms may need to act quickly before other firms enter the markets Trade between blocs may reduce as firms just focus on selling goods within countries in their bloc

Question 42

Advantages of Trading Blocs

Answer 42

Encourages trade between member countries. Provides a much larger market to sell goods to and make larger profits. Firms can increase production and reduce costs through economies of scale With free movement of people there is a much larger workforce for industries so people can live and work in different member countries as they choose. More opportunities to sell in growing markets

Question 43

BRIC countries

Answer 43

Russia Brazil India China

Question 44

MINT

Answer 44

Mexico Indonisia Nigeria Turkey