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The Global Economy > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Globalization

A

Globalization is the integration between different countries and economies and the increased impacts of international influences on all aspects of life and economic activity

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2
Q

Trade

A

It is a measure of how goods and services produced in an economy are consumed in other economies around the world

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3
Q

GWP

A

Gross world product

It is the sum of total output of goods and services produced by all economies around the world

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4
Q

Global trade is forecasted to grow by 3% in 2020

A

11

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5
Q

Growth in trade highlights

A
  • the country doesn’t produce all the items they need

- they don’t produce it as sufficiently as other economies can

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6
Q

Trade grows strongly because

A

Technology—reduced the cost of moving goods between countries
Remove barriers and join world organizations to promote trade

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7
Q

Trade in services is the fastest growing category of trade

The direction of trade flow has changed in recent years reflecting the change in importance of economic regions

A

11

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8
Q

International finance has a major impact of linking economies together

A

Money moves quickly

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9
Q

International financial flows expanded substantially due to

A

Financial deregulation

Technological change

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10
Q

Exchange traded derivative

A

Main instrument of financial markets

It’s value is based on the value of other assets
国际汇率

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11
Q

Forex

A

Networks of buyers and sellers exchanging one currency for another in order to facilitate flows of finance between countries

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12
Q

Exchange rate

A

The value of currency is expressed in terms of another currency

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13
Q

Interaction of supply and demand

A

Forex

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14
Q

Two types of financial flow

A

Speculators are investors who buy or sell financial assets with the aim of making short term price movements or to hedge against further movements and minimize risks of loss

Currency traders

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15
Q

Benefit of greater financial flow

A

1) enable country to obtain funds that are used to finance their domestic investment (low savings)

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16
Q

Disadvantages of financial flows

A

1) volatility in forex markets and domestic financial markets. Once the upwards or downwards trend in asset prices is established, it tends to continue
2) currency falls and financial crisis

IMF: establish individual economies experiencing currency crisis or financial turmoil and prevent flow on effects

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17
Q

FDI

A

FDI refers to the movement of funds between economies for the purpose of establishing a new company or buying a substantial proportion of shares in an existing company (10%or more)

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18
Q

Financial flow

FDI

A

Shorter term speculative shifts of mon

Long term to buy/establish business is investment

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19
Q

FDI involves the movements of funds that are directly invested in economic activity or in the purchase of companies

A

11

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20
Q

FDI flows have traditionally favored developed nations but now it is destined for developing and other economies

A

11

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21
Q

Developing countries have increased their share of FDI outflows

A

11

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22
Q

TNC

A

Source inputs from other countries

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23
Q

TNCs play a vital role in global investment flows

A

Dominant global product and factor markets

Have production facilities in at least 2 countries and are owned by residents of at least two countries

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24
Q

TNCs expand or establish production facilities in a country

A

They bring investments, new technologies, skills and knowledge, capitals and employment opportunity

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25
Q

Governments encourage TNC

A

Subsidies and tax concessions

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26
Q

A significant cause of the growth of international investment

A

Increase in international mergers and takeovers

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27
Q

TNCs continue to increase in volume and significance

A

Increase in corss border cartels which reduces competition in economies and disadvantage local consumers

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28
Q

Most investment still come from domestic sources

A

Less than 20%

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29
Q

Development in freight technology such as standardized shipping containers and more efficient logistic systems facilitate greater trade in goods

A

11

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30
Q

Cheaper and more reliable international communication through high speed broadband

A

Allows the provision of commercial services to consumers around the world

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31
Q

Technology moves money around the world

A

11

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32
Q

Technology is a driver of globalization

A

Economies that adopt new technologies tend to be economies that are most closely integrated with other economies in the world

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33
Q

Technology is also a driver in trade and investment

A

For the leading technology innovators and exporters, technology represents a major trade opportunity— they adopt new technologies and they become innovators

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34
Q

Business plays key role in developing new technologies will move directly into overseas markets and sell their products

A

They will bring technological know how into a new market and will invest in the new countries they enter.

In this way technology drives foreign investments

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35
Q

Improvements in technology

A
  • reduces cost in business that have been a barrier

- greater communication between and within economies

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36
Q

Internet usage users

A
  • integrates nature of global economy

- rapid spread of technologies

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37
Q

Migration is the movement of people between different countries on a long term basis

A

Less internationalised
For the search of better work opportunities

Economic and political motivations
Political unrest or conflict

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38
Q

International division of labor

A

It is how the task in the production process are allocated to people in different countries around the world

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39
Q

Highly skilled labor

A

Greater awards

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40
Q

Low skilled labor

A

Demanded by advanced economies where not enough people born locally to do certain types of work

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41
Q

Barriers for immigration

A

Language
Immigration restrictions
Cultural factors
Incompatible education and professional qualifications

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42
Q

Corporations shift production is between economies in search for the most efficient and cost affective labor

A

Global supply chain with production facilities in several countries which results in the Development of export orientated economies that can compete on the basis of the abundance of low-wage labors

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43
Q

Comparative advantage

A

Developing countries have a large population of workers with only Basic labor skills and education levels giving them a comparative advantage in labor intensive manufacturing

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44
Q

Business cycle

A

Business cycle refers to the fluctuations in the level of economic activities due to either domestic or international influences

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45
Q

Gross domestic product

A

Gross domestic product is the total market value of all final goods and services produced in economy in a given period of time

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46
Q

International business cycle

A

International business cycle refers to the fluctuations in the level of economic activity in the global economy overtime

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47
Q

For most countries economic growth is stronger when the rest of the world is growing strongly and wake her when the rest of the world is growing weaker

A

Downturn in the US in 2008 spread to other advanced industrialized economies a result in the biggest global recession since 1930s and it results in a large fall in world trade and this highlights the close relationships between trade and economic growth

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48
Q

Increase integration of economy during globalization

A

If there is a boom or recess in one country this will affect its demand for goods and services from other countries

forecasted global economic growth have been scaled down since the Trump administration Escalated trade tensions with China by making tariff increases because of this concern about the effect of the global economy

Economic conditions in one country will affect whether business in that country will invest in new operations in other countries. For example Brazil has a negative outflow of US 13 billion in 2018

Transnational corporations are increasingly important means by which global upturns and downturns are spread throughout the global economy for example German bank announced 180,000 job losses across its offices

Financial flows: Short-term financial flaws play in important role in transmitting the international business cycle. countries with strong financial integration will experience an increase in financial floss between themselves especially in response to imminent external shocks

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49
Q

Financial market and confidence and its influence on international business cycle

A

Consumer confidence and investors are constantly influenced by conditions in other countries this is highlighted by the strong correlation between movements in share prices of the worlds major stock exchanges

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50
Q

Global interest rate levels

A

Monetary policy conditions in individual economies are strongly influenced by interest rate if higher economic growth makes it necessary for the central bank in the US to increase interest rate displaces pressure all central banks and other economies to follow suit

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51
Q

Commodity prices

A

Global prices of key commodities such as energy minerals play in important role eat influencing inflation investment employment growth and other feature of the international business cycle

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52
Q

International organizations

A

G20 or G7 Camplay important role in influencing global economic activity

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53
Q

Development in freight technology such as standardized shipping containers and more efficient logistic systems facilitate greater trade in goods

A

11

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54
Q

Cheaper and more reliable international communication through high speed broadband

A

Allows the provision of commercial services to consumers around the world

55
Q

Technology moves money around the world

A

11

56
Q

Technology is a driver of globalization

A

Economies that adopt new technologies tend to be economies that are most closely integrated with other economies in the world

57
Q

Technology is also a driver in trade and investment

A

For the leading technology innovators and exporters, technology represents a major trade opportunity— they adopt new technologies and they become innovators

58
Q

Business plays key role in developing new technologies will move directly into overseas markets and sell their products

A

They will bring technological know how into a new market and will invest in the new countries they enter.

In this way technology drives foreign investments

59
Q

Improvements in technology

A
  • reduces cost in business that have been a barrier

- greater communication between and within economies

60
Q

Internet usage users

A
  • integrates nature of global economy

- rapid spread of technologies

61
Q

Migration is the movement of people between different countries on a long term basis

A

Less internationalised
For the search of better work opportunities

Economic and political motivations
Political unrest or conflict

62
Q

International division of labor

A

It is how the task in the production process are allocated to people in different countries around the world

63
Q

Highly skilled labor

A

Greater awards

64
Q

factors that weaken international business cycle

A

Interest rate: high, strengthen ea
Low, dampen ea

Government economic policy decisions

Fiscal policies: if the government in one country raises tax while the other cut its taxes, economic growth is likely to move in opposite directions

Exchange rates: differ between countries and impact on the level of investment, trade, competitiveness and confidence within economies

Structural factors: countries have different levels of resilience in their financial system, different levels of innovation and take up of new technology

Regional factors: some economies are closely integrated within their neighbors and are therefore very influenced by the level of economic activities of their trading partners

65
Q

Regional business cycles

A

Fluctuations in the level of economic activity in a geographical region of the global economy over time

Regional cycles are a result of cross border integration

66
Q

East Asia region

A

China and Japan both experience a slowdown in recent years and the region contribute to experience stable growth due to upswing elsewhere in the region

67
Q

Sub Saharan Africa

A

Dependent on high income economies for 80% of their exports and is influenced by the performance of other countries

68
Q

The growth of world trade is an important indicator of the extent of globalization

A

11

69
Q

The process of globalization has occurred in areas with few barriers and is driven by

A

Speculative activity

70
Q

TNCs

A

Transfer of technological know how and FDIs

71
Q

Economic Integration

A

Economic integration refers to the liberalization of trade between two or more countries or many countries within a region or between regions stop this liberalization of trade may lead to the formation of a free trade area custom union common union or a monetary union

72
Q

Integration induces

A

Increased trade and investment flows and writing standards of living

73
Q

Greater international economic integration has also be accompanied by increasing proportion of world trade carried out by multinational corporations

A

11

74
Q

GDP is measured in real purchasing power

A

11

75
Q

Economic integration occurs when

A

Trade barriers are reduced or removed between countries to facilitate the growth in free international trade and flows of economic investment stop this cat occur through the signing of regional free trade agreements between member countries stop economic integration can also be promoted through the standardization of customization of products and services which are marketed and distributed on a global basis.

76
Q

Characteristics of the globalization process

A

Integration of national financial system has created a powerful world financial system.Financial deregulation has led to the integration of capital markets and greater mobility of capital flows globally.This induces floors of foreign direct import follow investments and foreign exchange between different countries and regions

77
Q

Disadvantages of globalization

A

Increase economic integrations between countries and regions has also increase the risk of financial contagion from one country or region to others

Widening the gap in the distribution of income and wealth within and between advanced countries and emerging and developing countries

78
Q

Four major factors underpinning the process of globalization

A

The increase of customization of products and services has led to the development of a network of production and distribution facility around the world by TNCs

Rapid liberalization a financial environment is marked by the signing of trade agreements

Improve levels of technology communications transport and information technology has reduce the cost in conducting global business

The financial and Trade linkages between countries have been strengthened by globalization

79
Q

Globalization has lead to higher growth in world output, trade and foreign investment

A

Major global merchandise exports are food agricultural materials fuse and metals

Major service experts in the global economy include commercial, transport, travel, insurance and financial services

80
Q

World trade in services has grown with the rise incomes and demand for specialized services as well as lower cost for global technology transport and communications

A

11

81
Q

The growth in service exports from emerging and developing countries is mainly due to the increase

A

Use of Outsourcing and offshoring

82
Q

Globalization and foreign investment companies establish or buy a controlling interest in the foreign subsidiary

A

11

83
Q

Foreign direct investment

A

Foreign direct investment is where companies establish or buy a controlling interest in a foreign subsidiary

84
Q

Foreign portfolio investment

A

Foreign portfolio investment is where equity and debt securities are acquired

85
Q

The general growth in foreign direct and Portfolio investment has mainly be due to

A

The eating of capital controllers between countries as the process of financial deregulation has spread widely.

Countries have floated the exchange rates

Central banks has removed landing controls allow you a greater access for individuals.
They have also increase the turnover by providing greater access for individuals, companies and governments to raise funds and companies to engage in merger activity

86
Q

There is a decline in FDI inflows in periods of economic recession because of the uncertainty created by the trade tensions between the USA and China

A

11

87
Q

Multinational transnational corporations

A

Multinational transnational corporations are enterprises to manage production or deliver services in more than one country.

Transnational corporations are responsible for much of the worlds foreign direct investment things they set up subsidiary other countries to gain access to the global market

They also play a major role in world trade investment and have influenced the pace and spread of globalization of economic activities

88
Q

Foreign direct investment involves the acquisition of 10% or more of the voting power of shareholders of an enterprise in another countries this can be done by the following methods

A

By incorporating a wholly owned subsidiary or company

By acquiring shares and associated enterprise

Through a merger or acquisition of unrelated enterprise

By participating equity joint ventures with other investors

89
Q

Disadvantages of transnational corporations

A

Transnational corporations can assert undue market power over labor and environmental legislations.

They can also remit profits and dividends to their parent companies which causes that outflow of funds in the host country’s balance of payments

90
Q

The benefits of transnational corporations

A

Include a transfer of technological know-how, the creation of export and employment opportunities and the generation of additional tax revenue for the government.

91
Q

One of the key features in the globalization process

A

Is the emergence of global value added supplies has established and managed by transnational corporations in special economic zones

92
Q

The major factor driving the global and regional value add a change is the minimization of cost to achieve economies of scale

A

11

93
Q

Manufacturing plants are allocated in countries with the labor cost and favorable government policies like tax concessions, cheap power and export incentives

A

11

94
Q

Manufactured and assembly, these components and final products are distributed by transnational corporations to major high income markets

A

High technology products Are customize and modified to made the preferences and needs of consumers in various markets throughout the world

95
Q

Transnational corporations utilize global and regional supply chain

A

So they can source the cheapest inputs of raw materials, labor and capitals for their operations

96
Q

Technology innovation

A

Has led to the global market in information communications. Technology good such a smart phones, resulting in structural changes to the production and distribution of goods and services to consumers

97
Q

Major means of conducting domestic and global businesses

A

Electronic commerce and social media marketing

98
Q

Business can access and use information throughout the Internet more efficiently to

A

Increase the output, reduce cost and expand production

99
Q

Examples of technological innovation

A

The ordering of stocks and inputs can be done instantaneously

Firms can use information technology systems to maintain the accounts

New products and services can be customized

100
Q

The growth of Internet usage

A

Has led to the development of electronic-commerce what is driven by the broadband Internet technology

101
Q

Innovative technologies in the countries are exported to the rest of the world and the rate or extent at which they are adopted is known as technology diffusion

A

👌🏻

102
Q

These technologies have become essential tools for economic development helping to contribute to the global integration of countries

A

11

103
Q

A division of labor

A

The division of labor is closely linked to the operations of transnational corporations in establishing Subsidiaries in foreign countries and minimize costs andIncrease profits by selling products to the large global market

104
Q

Division of labor can increase output per person as people become proficient through constant repetition of work

A

At international market for special list labor skills has emerged and the increased mobility of many skilled and professional people leads them to work in foreign countries to earn a higher income

105
Q

Examples of international division of labor

A

The establishment of manufacturing plants by transnational corporations in special economic zones to utilize the abundant supply of low-paid labors

The outsourcing of telecommunications, computing, accounting and insurance to offshore locations where there is a abundant supply of cheap skilled labor

The migration of unskilled labor from emerging and developing economies to work in primary, manufacturing and service industries in advanced economies

106
Q

Disadvantages of migration

A

Workers from developing countries are exploited by their employers in foreign countries because they are not protected by minimum standards for working conditions

black market for immigrant workers

Growing need for advanced countries to increase their labor supply because of population aging

Illegal refugees

107
Q

Globalization has lead to higher growth in world output, trade and foreign investment

A

Major global merchandise exports are food agricultural materials fuse and metals

Major service experts in the global economy include commercial, transport, travel, insurance and financial services

108
Q

World trade in services has grown with the rise incomes and demand for specialized services as well as lower cost for global technology transport and communications

A

11

109
Q

The growth in service exports from emerging and developing countries is mainly due to the increase

A

Use of Outsourcing and offshoring

110
Q

Globalization and foreign investment companies establish or buy a controlling interest in the foreign subsidiary

A

11

111
Q

Foreign direct investment

A

Foreign direct investment is where companies establish or buy a controlling interest in a foreign subsidiary

112
Q

Foreign portfolio investment

A

Foreign portfolio investment is where equity and debt securities are acquired

113
Q

The general growth in foreign direct and Portfolio investment has mainly be due to

A

The eating of capital controllers between countries as the process of financial deregulation has spread widely.

Countries have floated the exchange rates

Central banks has removed landing controls allow you a greater access for individuals.
They have also increase the turnover by providing greater access for individuals, companies and governments to raise funds and companies to engage in merger activity

114
Q

There is a decline in FDI inflows in periods of economic recession because of the uncertainty created by the trade tensions between the USA and China

A

11

115
Q

Multinational transnational corporations

A

Multinational transnational corporations are enterprises to manage production or deliver services in more than one country.

Transnational corporations are responsible for much of the worlds foreign direct investment things they set up subsidiary other countries to gain access to the global market

They also play a major role in world trade investment and have influenced the pace and spread of globalization of economic activities

116
Q

Foreign direct investment involves the acquisition of 10% or more of the voting power of shareholders of an enterprise in another countries this can be done by the following methods

A

By incorporating a wholly owned subsidiary or company

By acquiring shares and associated enterprise

Through a merger or acquisition of unrelated enterprise

By participating equity joint ventures with other investors

117
Q

Disadvantages of transnational corporations

A

Transnational corporations can assert undue market power over labor and environmental legislations.

They can also remit profits and dividends to their parent companies which causes that outflow of funds in the host country’s balance of payments

118
Q

The benefits of transnational corporations

A

Include a transfer of technological know-how, the creation of export and employment opportunities and the generation of additional tax revenue for the government.

119
Q

One of the key features in the globalization process

A

Is the emergence of global value added supplies has established and managed by transnational corporations in special economic zones

120
Q

The major factor driving the global and regional value add a change is the minimization of cost to achieve economies of scale

A

11

121
Q

Manufacturing plants are allocated in countries with the labor cost and favorable government policies like tax concessions, cheap power and export incentives

A

11

122
Q

Manufactured and assembly, these components and final products are distributed by transnational corporations to major high income markets

A

High technology products Are customize and modified to made the preferences and needs of consumers in various markets throughout the world

123
Q

Transnational corporations utilize global and regional supply chain

A

So they can source the cheapest inputs of raw materials, labor and capitals for their operations

124
Q

Technology innovation

A

Has led to the global market in information communications. Technology good such a smart phones, resulting in structural changes to the production and distribution of goods and services to consumers

125
Q

Major means of conducting domestic and global businesses

A

Electronic commerce and social media marketing

126
Q

Business can access and use information throughout the Internet more efficiently to

A

Increase the output, reduce cost and expand production

127
Q

Examples of technological innovation

A

The ordering of stocks and inputs can be done instantaneously

Firms can use information technology systems to maintain the accounts

New products and services can be customized

128
Q

The growth of Internet usage

A

Has led to the development of electronic-commerce what is driven by the broadband Internet technology

129
Q

Innovative technologies in the countries are exported to the rest of the world and the rate or extent at which they are adopted is known as technology diffusion

A

👌🏻

130
Q

These technologies have become essential tools for economic development helping to contribute to the global integration of countries

A

11

131
Q

A division of labor

A

The division of labor is closely linked to the operations of transnational corporations in establishing Subsidiaries in foreign countries and minimize costs andIncrease profits by selling products to the large global market

132
Q

Division of labor can increase output per person as people become proficient through constant repetition of work

A

At international market for special list labor skills has emerged and the increased mobility of many skilled and professional people leads them to work in foreign countries to earn a higher income

133
Q

Examples of international division of labor

A

The establishment of manufacturing plants by transnational corporations in special economic zones to utilize the abundant supply of low-paid labors

The outsourcing of telecommunications, computing, accounting and insurance to offshore locations where there is a abundant supply of cheap skilled labor

The migration of unskilled labor from emerging and developing economies to work in primary, manufacturing and service industries in advanced economies

134
Q

Disadvantages of migration

A

Workers from developing countries are exploited by their employers in foreign countries because they are not protected by minimum standards for working conditions

black market for immigrant workers

Growing need for advanced countries to increase their labor supply because of population aging

Illegal refugees

The Global Economy (1 decks)

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