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Economics > 4.1 international economics > Flashcards

4.1 international economics Flashcards

1
Q

what is globalisation?

A

process of deeper economic integration and interdependence between countries

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2
Q

what are characteristics of globalisation?

A

-expansion of global trade
-increasing number of multinational corporations
-development of global brands
-international outsourcing and offshoring of production
-greater labour migration

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3
Q

how does containerisation cause globalisation?

A

lower transport costs, shipping on a larger scale and more efficient, lower costs allow a truly global market, lead to an increase of trade in goods

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4
Q

how does technology and communications cause globalisation?

A

easier, faster and cheaper exchange of knowledge and ideas, leads to an increase of trade in services

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5
Q

how does reduced protectionism cause globalisation?

A

GATT then WTO led the way on more open trade, average tariff levels have fallen massively, steady rise of numbers of countries that are members of the WTO

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6
Q

how does increased international financial flows cause globalisation?

A

e.g china financed part of its fast economic growth through inward flows of international financial capital

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7
Q

how does multinational companies cause globalisation?

A

MNCs have an increasing significance to global trade, responsible for significant amounts of global FDI, offshoring and outsourcing of production adds to economic integration between countries

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8
Q

how does foreign ownership of firms cause globalisation?

A

increasingly common for large firms to buy foreign companies

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9
Q

impact of globalisation on consumers choice?

A

massive increase in the range of goods and services that can be brough

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10
Q

impact of globalisation on consumers choice? evaluation

A

homogenisation of culture means that hotels and food across the globe are becoming more similar

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11
Q

impact of globalisation on consumer prices?

A

fall in prices of many goods and services, particularly where production locations have sifted to regions with lower wage rates, falling shipping costs, offshoring to cheaper production locations, economies of scale. rise in prices of some goods and services, higher global demand puts greater pressure on scarce resources. incomes, generally raised incomes around the world

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12
Q

impact of globalisation on consumer prices? evaluation

A

greater affluence not evenly spread, many incomes in the developed world have been relatively stagnant in recent decades

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13
Q

impact of globalisation on workers employment?

A

transfer of manufacturing has seen job losses, some find work in services and others remain unemployed, manufacturing can be replaced by higher value industry

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14
Q

impact of globalisation on workers employment? evaluation

A

worker may not have the skill for these jobs

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15
Q

impact of globalisation on workers, migration?

A

migrant workers compete in job markets with domestic workers

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16
Q

impact of globalisation on workers, migration? evaluation

A

many migrant workers take jobs that domestic workers are unwilling to take, extra migrants add to the AD of te econom creating additional demand for other goods and services

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17
Q

impact of globalisation on workers wages?

A

low skilled workers are effectively in competition with workers in the rest of the world, higher skilled workers have seen wages rise significantly over time, globalisation has tended to lead to a rise in inequality in developed countries

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18
Q

impact of globalisation on workers wages? evaluation

A

wages of low skilled in developing countries have increased, lowering inequality

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19
Q

impact of globalisation on producers specialisation and economic dependency?

A

firms are increasingly dependent on each other around the world, firms are reliant on uninterrupted supplies from around the world to keep their production going

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20
Q

impact of globalisation on producers specialisation and economic dependency? evaluation

A

globalisation means greater opportunities o find new supplies and new customers

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21
Q

impact of globalisation on producers cost and markets?

A

firms can move production to other parts of the world to reduce costs, globalisation creates more opportunities to create contracts with other companies to complete an element of the business that used to be completed internally

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22
Q

impact of globalisation on producers costs and markets? evaluation

A

increasingly, businesses that produce their goods at home use this as part of their marketing strategy

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23
Q

impact of globalisation on producers, tax avoidance?

A

firms operating in several countries have the possibility of tax avoidance, transfer pricing and setting up offices in low-tax countries

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24
Q

impact of globalisation on producers, tax avoidance? evaluation

A

greater inclination for counties to work together to reduce tax avoidance

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25
Q

impact of globalisation on governments?

A

attempt to adopt policies which capture the benefits and minimise the losses from globalisation

26
Q

impact of globalisation on governments? evaluation

A

governments may be susceptible to bribery from foreign MNCs

27
Q

impact of globalisation on the environment?

A

extra global production has led to extra demand for materials and increased emissions from production, what is best for profits rather than the environment

28
Q

what is trade?

A

exchange of products between countries

29
Q

when does a trade surplus occur?

A

when the value of exports exceeds the value of imports

30
Q

when does a trade deficit occur?

A

when the value of imports exceeds the value of exports

31
Q

what is absolute advantage?

A

country has absolute advantage in the production of a good when it can be produced more cheaply than another country

32
Q

what is comparative advantage?

A

country has comparative advantage when it can produce a good at a lower opportunity cost compared to another country

33
Q

specialisation and comparative advantage?

A

comparative advantage justifies the principle of each country specialising in producing goods in which they hold a comparative advantage

34
Q

assumptions of the theory of comparative advantage?

A

-no transport costs
-constant costs- no economies of scale
-two economies are producing two goods
-goods are homogenous
-factors of production are perfectly mobile

35
Q

what are the benefits of trade?

A

-comparative advantage
-economies of scale
-increased competition
-choice

36
Q

how is comparative advantage a benefit of trade?

A

allows the benefits of specialisation, should lead to greater total global production

37
Q

how is economies of scale a benefit of trade?

A

opening up trade increases the size of markets that firms compete in, allows them to expand production compared to if they only produced domestically, allows firms to reduce costs and pass on lower prices to consumers

38
Q

how is increased competition a benefit of trade?

A

exposure to more competition means firm have greater incentives to cut costs and become more efficient, particularly beneficial if an industry would otherwise be a domestic monopoly, promotes greater innovation as firms strive to produce more appealing products

39
Q

how is choice a benefit of trade?

A

consumers can choose from a wider range of goods and services

40
Q

what are the costs of trade?

A

-overdependence
-structural unemployment
-environmental impact
-cultural impact
-inequality

41
Q

how is overdependence a cost of trade?

A

problem if a country becomes too reliant on one product, sudden difficulties in the supply of the product or drop in demand for the product are problems

42
Q

how is structural unemployment a cost of trade?

A

as the pattern of trade changes, existing domestic industries may go into decline, regional unemployment may result

43
Q

how is environmental impact a cost of trade?

A

theory of comparative advantage assumes no transport costs and no environmental impact, real world environmental impact of extra transport required to ship product between countries

44
Q

how is cultural impact a cost of trade?

A

cultural homogenisation- loss of indigenous indentity

45
Q

how is inequality a cost of trade?

A

trade could exacerbate inequalities if low skilled workers lose jobs

46
Q

what factors affect the global pattern of trade?

A

comparative advantage
emerging economies
trade blocs
trade agreements
exchange rates

47
Q

how does comparative advantage affect global pattern of trade?

A

as countries develop and new comparative advantages are established, the pattern of countries’ trade with each other may trade

48
Q

how does emerging economies affect the global pattern of trade?

A

industrialisation of emerging economies means that they are more able to produce higher value goods compared to the low value commodities they had typically exported previously, rapid growth is adding extra consumers to global demand

49
Q

how does trade blocs affect the global pattern of trade?

A

trade blocs tend to increase trade levels within the bloc, may reduce trade levels with countries outside the bloc, leads to increase in trade (trade creation), shift trade from a country outside bloc to one inside

50
Q

how does trade agreements affect the global pattern of trade?

A

many countries make bilateral trade agreements with other countries, likely to encourage greater levels of trade between them

51
Q

what is the terms of trade?

A

ratio between average export prices and average import prices, tells the value of exports that need to be sold to purchase a given level of imports

52
Q

what short run factors influence the terms of trade?

A

demand and supply of exports and imports, inflation, exchange rate

53
Q

how does demand and supply of export and imports influence terms of trade?

A

rise in demand for goods or services from a particular country is likely to increase the price of these items, more significant the product to the country the more significant to terms of trade changes in demand and supply will be

54
Q

how does inflation influence terms of trade?

A

rise in domestic inflation relative to trading partners inflation will improve a country’s terms of trade, price of exported goods is rising compared to the price of imported goods, index of terms of trade will increase

55
Q

how does exchange rate influence terms of trade?

A

strengthening of domestic currency will improve the terms of trade

56
Q

what factors influence terms of trade in the long run?

A

incomes
productivity
technology

57
Q

how does incomes influence the terms of trade?

A

sustained rises in global incomes leads to increasing demand for many goods

58
Q

how does productivity influence the terms of trade?

A

improvement in domestic productivity should lower costs and therefore the prices of exports

59
Q

how does technology influence the terms of trade?

A

improvements to technology should lower costs of production

60
Q
A

Economics (20 decks)

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