6.1, 6.2 International Specialisation & Globalisation

Question 1

What two main factors allow a nation to specialise?

Answer 1

• Superior resource availability (quality/quantity)
• Cheaper production methods

Question 2

What are the four main characteristics of globalisation?

Answer 2

• Increasing foreign ownership of companies
• Increasing movement of labour/technology across borders
• Free trade in goods/services
• Easy flows of capital/finance across borders

Question 3

Define a multinational corporation

Answer 3

A firm with production facilities in two or more countries

Question 4

What are the benefits of free trade?

Answer 4

• Greater choice
• Lower prices (competition)
• International cooperation
• Flow of new ideas
• Access to resources
• Increased efficiency (competition)
• Economic growth (exports), economic development

Question 5

List reasons for protectionism

Answer 5

1. Protect infant or sunset industries
2. Protect strategic industries for self-sufficiency (defence, energy)
3. Prevent structural unemployment
4. Correct balance of imports to exports (current account balance)
5. Labour/environmental regulations

Question 6

Describe methods of protectionism

Answer 6

1. Tariffs: tax on imported goods/services
2. Quotas: physical limit on imports (usually below free market level)
3. Subsidies: lowers costs of production for domestic firms
4. Embargoes: ban of trade with another country
5. Administrative barriers (regulations, specifications, labelling)

Question 7

Pros & Cons of National Specialisation

Answer 7

Question 8

Pros & Cons of Multinational Corporations

Answer 8

Question 9

Pros & Cons for a firm being a MNC

Answer 9