4.3 Globalisation

Question 1

What is globalisation ?

Answer 1

The increasing economic integration of national economies into the global economy

Question 2

What are the causes of globalisation ?

Answer 2

Reduction in trade barriers 
Growth of trading blocs
Reduction in costs of comms
Fall in cost of transport 
Reduction in restrictions on the movement of international finance allows FDI to move freely between economies 
Containerisation 
Growth of multinational corporations(MNC’s) 
Liberalisation of domestic markets

Question 3

What is a trade barrier ?

Answer 3

Government policies such as tariffs and quotas that reduce the flow of exports and/or imports

Question 4

What is Foreign direct investment

Answer 4

FDI is investment undertaken in one country by companies based in other countries

Question 5

What is a MNC?

Answer 5

Companies whose production activities are carried out in more than one country

Question 6

How is international competitiveness determined ?

Answer 6

By price and non-price factors. Greater competition drives firms to become more statically efficient, which depresses unit costs of production, enabling them to pass these savings on to the consumer in the form of lower prices. May also push firms who make supernormal profits to invest in innovation and quality of their products and production, becoming more dynamically efficient and non-price competitive