Economic Globalisation Flashcards
What are SEZs and how do they speed up globalisation?
Usually large areas of land reserved for economic purposes near major transport hubs, especially seaports. The national government exempts businesses within these zones from taxes. Foreign TNCs, are attracted to locate subsidiaries in SEZs, boosting the local economy by employing people and providing them with skills, and making links with local businesses who gain knowledge of technology.
What are government subsidies and how does it accelerate globalisation?
National governments may subsidise the costs of TNCs and local companies so that they will locate in certain places within the country. These can take several forms, like tax incentives/exemptions, no custom duties or tariffs on imports/exports. This can greatly reduce the costs for industries and increase profits.
What is FDI?
When a company/person invests in another business in another country.
What does the KOF index measure?
The rate of globalisation in different countries.
What does the AT Kearney index measure?
Looks at FDI confidence and the economy of cities.
How do TNCs play a role in globalisation?
Production networks - extract raw materials in 1 country, refine them in another and make components in several countries and assemble in another.
New markets - sell finished products to main markets in developed countries and create new markets in emerging economies using global branding and marketing to meet local needs.
Glocalisation - change products to suit local cultures/tastes, perhaps due to religion/regulations. Global brands remain the same but their identity is tailored to suit the local situation.
Liberal policies - use economic liberalisation of countries to locate outsourcing (another company completing some of the work at a lower cost) and offshore operations.
