4.1 international economics Flashcards
(4 cards)
4.1.1 globalisation
define globalisation/ 2 definitions (integration/connectedness)
what are the 5 factors that have contributed to globalisation,explain how each one has contributed to globalisation
-globalisation can be defined as the growing interdependence of countries and the rapid rate of change it brings about.
-globalisation can also be defined as the increasing integration of the world’s local,regional and national economies into a single international market
-improvements in transport infrastructure and operation - has made transport of goods quicker, more reliable and cheaper. allowing production to be seperated all over the world
-improvements in IT and communication- allows companies to operate across the globe
-trade liberalisation- this has helped reduce protectionism, and has made trading cheaper and more feasible.
-international financial markets - have enabled the ability to raise money and move money around globally, essential for international trade
-TNC’s- have led to globalisation by acting in their own benefit (increase profits), to do this they will want to increase reveneue (open shops abroad) and decrease costs (operate production in lower wage economies). They have the power to lobby governemnts.
4.1.1 Impacts of globalisation
what are 2 benefits of gobalisation to consumers
what is 1 disadvanatge of globalisation to consumers
Benefits to consumers:
-consumers have greater choice since there is a wider range of goods available
-globalisation leads to lower prices as firms take advantage of comparative advantage and produce in countries with lower costs, like lower labour costs
Disadvantages to consumers:
-in some cases it is leading to a rise in prices, this is because as incomes increase in some of these areas, there is a rising demand for g/s leading to demand pull inflation
4.1.7 Balance of payments
what is the balance of payments
what is the current account
what is the capital account
what is the financial account
-the balance of payments refers to the balance sheet of transactions made by a country as they send and receive money, shows all flows into and out of the country.
current acount:
- the current account refers to the trade is goods and services, it is split into 4 components, trade in goods, trade in services and primary and secondary incomes.
capital account:
-mainly records the transfers of immigrants and emigrants taking money abroad or bringing into the UK, or government transfers like debt forgiveness to developing countries
financial account:
-the financial account is pslit into 3 parts, FDI, portfolio investments, and other investments. FDI is the flow of money to purchase part of a foreign firm (10% of more than ordinary shares, e.g.g BT buying 15% of a brazilian telecommunications firm). portfolio investments refer to purchasing less than 10% of a foreign firm.
