Definitions- The Global Economy (topic 1) Flashcards
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Globalisation
The process by which people and countries are more closely linked. Organisations start operating on an international scale.
GWP
Gross world Product (GWP) or Global gross domestic product (GDP) - Refers to the sum of total output of goods and services by all economies in the world over a period of time. Nominal world GDP was US$84.84 trillion in 2018.
IMF
(made 1945)International Monetary fund- organisation of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.
Finance
Short term speculative shifts of money as finance vs longer term flows of money to by or establish businesses as investments.
FDI
Foreign Direct investment - 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 per cent or more).
FDI is generally considered to be a long-term investment and the investor normally intends to play a role in the management of the business.
TNCs
Transnational coporation- are global companies that dominate global product and factor markets. TNCs have production facilities in at least two countries and are owned by residents of at least two countries. eg. Apple, Shell, Toyota
International division of labour
How the production of task in the production process are allocated to people in different countries. This is an example of comparative advantage. Can occur when businesses move to find cheap labour or people move to find work.
Offshoring
Companies to shift production between countries to reduce costs. This results in the development of export-oriented economies that can compete on the basis of their abundance of low wage labour.
Brain drain
Those who are attracted to other countries by greater rewards. (Skilled labour)
Creditors
A person or company to whom money is owing. eg. employees owed wages.
Free trade
A situation where governments do not impose artificial barriers to trade e.g. Tariffs or subsidies
WTO
The World Trade Organisation- deals with the global rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
The World Bank
International financial institution that provides loans to countries of the world for capital projects. Comprised of: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).
UN
The United Nations is an international organisation founded in 1945. Currently 193 Member States. The mission and work of the UN are guided by the purposes and principles in its founding Charter.
OECD
The Organisation for Economic Co-operation and Development. Promotes policies that will improve the economic and social well-being of people around the world. They measure productivity, predict future trends, set international standards (eg. agriculture)
G7/8
A group consisting of Canada, France, Germany, Italy, Japan, the UK, and the US.
G20
(20 countries) an international forum for the governments and central bank governors from Argentina, Australia, Canada, China etc.
Trading Blocs
A type of intergovernmental agreement, often part of a regional intergovernmental organisation, where barriers to trade are reduced or eliminated among the participating states.
Can either be Monetary Unions e.g. the EU or a Free Trade Agreement e.g.
Monetary Unions
A currency union (monetary union) involves two or more states sharing the same currency without them necessarily having any further integration
FTA
Free Trade Agreements - are international treaties that reduce barriers to trade and investment
Protection
Any type of government action that has the effect of giving domestic producers an artificial advantage over foreign competitors. (tariffs, import quotas, subsidies)
Infant industry
A new industry, which in its early stages experiences relative difficulty or is incapable in competing with established competitors abroad.
Dumping
The practice of exporting goods to a country at a price lower than their selling price in their country of origin.
Tariffs
Taxes on imported goods imposed for the purpose of protecting domestic industries.
Consumer surplus (calc)
total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) minus the total amount that they actually do pay (i.e. the market price).
Producer surplus
how much of a good the producer is willing to supply minus how much he receives in the trade.
Deadweight loss
A cost to society created by market inefficiency (in allocation of resources).
Subsidies
Cash payments from the gov to businesses to encourage production of a good or service and influence the allocation of resources in an economy. Help them compete with overseas.
Quota
Restrictions on the amounts or values of various kinds of goods that may be imported.
Local content rules
specify that goods must contain a minimum percentage of locally made parts. In return for guaranteeing a certain percentage of a good will be locally made, the imported components may not attract a tariff.
EMDG
Export Market Development Grant- provides direct funding and general assistance to local manufacturers looking to break into international markets. Example of export incentive
GNI
Gross National Income- is the sum of value added by all resident producers in an economy plus receipts of primary income from foreign sources.
PPP
Purchasing power parity- is a theory that states that exchange rates should adjust to equalise the price of identical goods and services in different economies throughout the world.
GDP per capita
The value of all final goods and services produced within a nation in a given year, converted at market exchange rates to current U.S. dollars, divided by the average population for the same year.
GNI per capita (old name GNP)
Gross national income/product- The dollar value of a country’s final income in a year, divided by its population. It reflects the average income of a country’s citizens.
