4.1 international economics Flashcards
antonym of of globalisation
protectionism
globalisation definition
greater integration & interconnectedness between countries
tech factor of increased globalisation
drop in transport costs, death of distance
MNCs
has business operations in two or more countries. These companies are often managed from and have a central office headquartered in their home country
opportunities MNCs provide for the community
infrastructure (transport as well as training workers)
diversification of industries
negative of MNCs
impact on small firms
environmental impact
exploitation
taxation
free trade definition
no restrictions on the flow of goods and services between countries
absolute advantage
when country a can produce a good or service using fewer resources than that of another country
comparative advantage
an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners
SPICED
strong pound imports cheaper exports dearer
factors that influence patterns of trade CETE
comparative advantage
emerging economies
trading blocs
exchange rates
factors that influence patterns of trade: comparative advantage
cheap production/lower inflation pressure/general unemployment
factors that influence patterns of trade: emerging economies
integration in competitive markets & increased wealth for citizens
creation of jobs & reduction of poverty
factors that influence patterns of trade: growth in trading blocs
removes barriers to trade
factors that influence patterns of trade: exchange rates
appreciation in the exchange rate will lead to a fall in exports as the price as the price of UK goods and services abroad will go up
dependant on the elasticity of the product
formula for terms of trade
index of export prices / index of import prices
e/i
free trade areas
where members either reduce or elimate trade barriers. trade liberalisation
customs unions
members agree to remove trade barriers amongst themselves & agree on a common approach to trade barriers where other countries are involved. they act as a homogenous group