4.1.1 globalisation Flashcards
definition of globalisation
the deepening of relationships between countries, reflected in an increasing level of cross-border trade and investment and migration
causes of globalisation
trade liberisation
trading blocs
growth of MNCs
technological advances
greater mobility of labour and capital
advantages of globalisation
lower prices
large economies of scale
free movement of labour and capital
greater employment
benefits of trade
disadvantages of globalisation
growing inequality
higher structural unemployment
environmental costs
trade imbalances
definition of absolute advantage
when a country can produce a product using fewer factors of production than another nation
definition of comparative advantage
a country should specialise in the goods and services it can produce at the lowest opportunity cost, and then trade with another country
definition of specialisation
when a worker, firm or country produces a narrow range of goods and services
advantages of specialisation
larger range of goods and services
greater output
better quality
reduces the problem of scarcity
benefits of trade
disadvantages of specialisation
finite resources
over-reliance and interdependence
changing tastes/fashion
de-industrialisation
definition of terms of trade
indicates the quantity of exports that must be sold to purchase a given level of imports
terms of trade formula
ToT = (weighted average of export prices x weighted average of import prices) x 100
factors influencing terms of trade
change in demand/supply of exports/imports (short-run)
inflation/exchange rates (short-run)
incomes (long-run)
productivity (long-run)
technology (long-run)
