4.1.2 International Trade And Business Growth Flashcards
1
Q
What are imports
A
- products bought from overseas
- cause money to flow out of the economy
2
Q
What are exports
A
- products sold to overseas
- result in money flowing into the economy
- businesses use this to expand for an increased market size
3
Q
How specialisation can help a firm trade internationally
A
- trading just one or very few products
+ helps to improve efficiency
+ quality of the product improves
+ EOS can be formed to reduce unit costs which can dramatically increase sales in a price-elastic market
4
Q
disadvantages of specialisation
A
- focus on one product means that a fall in demand can have a large effect
- requires extensive staff training
5
Q
What is FDI
A
- foreign direct investment is when a firm in one country invests in another country
- this could be through offshoring, launching products into a new market or mergers/joint ventures
6
Q
Advantages of FDI for the business
A
- gives firms access to new markets, increasing sales
- reduces costs through cheaper labour or access to cheaper raw materials, increasing profit
- skilled local labour, increases productivity
- can help overcome trade barriers that come with exporting
7
Q
How does FDI impact the economy
A
- in emerging economies FDI can improve economic growth, increasing GDP
8
Q
define specialisation
A
- when a business or country focuses on producing and exporting goods they have a comparative advantage in
WHILST - importing other goods that other countries can produce more effectively
9
Q
why might a business use FDI to grow
A
- gain access to new markets to sell in
- access to better or cheaper resources for production or operations
- to start a joint venture or merger
