Chapter 1 Global Interdependence Recap Flashcards
Memorise important info from Chapter 1
Globalisation Def
process by which the world is becoming increasingly interconnected.
What characterises globalisation?
growth in trade
international investment,
rapid movement of information and people around the globe.
4 trends that have affected the relationship between trade and development since the start of the millennium
economic growth of developing countries.
Higher prices for agricultural goods+ natural resources.
growing integration of global production through supply chains.
increasing interdependence of the world economy,
4 factors that drive competitiveness (IMD)
Economic performance
Government efficiency
Business efficiency
Infrastructure
key economic determinants of competitiveness?
Labour productivity (influenced by technology, education, and training).
Relative price levels (domestic inflation vs. trading partners).
Relative wages (domestic wages vs. trading partners).
Exchange rate (affects export/import prices).
How is competitiveness measured?
Real unit labour costs:
Trade-weighted exchange rate (TWI):
What does purchasing power parity (PPP) state?
PPP theory suggests that goods should sell for the same price across countries when prices are converted using the exchange rate. Differences indicate misaligned exchange rates.
What are the main indicators of globalisation?
Trade as % of GDP: Rose from 39% (1990) to 60% (2019).
Tariffs: Dropped from 15% (1990) to 5% (2019).
FDI: Grew from $239 billion (1990) to $1322 billion (2019).
Internet and mobile subscriptions: Significant growth since 2000.
Tourism: International arrivals tripled (1990–2019).
Real unit labour cost def
Reflect wages relative to productivity. Competitiveness rises when productivity increases or wages decrease.
Trade weighted exchange rate
Measures currency value against trading partners, adjusted for inflation rates. Depreciation improves competitiveness, and appreciation reduces it.
