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Economic transition Flashcards

1
Q

What is GDP?

A

the total value of goods and services produced by a country in a year

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2
Q

What is GNI?

A

GDP together with a country’s income received from other countries - profit leakage form countries where TNCs operate

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3
Q

What is GNI per capita?

A

total GNI of a country divided by the total population

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4
Q

What is Purchasing Power Parity?

A
  • the exchange rate needed to buy the same quantity of products in each country
  • they measure the total amount of goods and services that a single unit of a country’s currency can buy in another
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5
Q

what are the top 3 countries by GNI per capita (US$) ?

A
  1. Bermuda - 116,540
  2. Lichtenstein - 116,440
  3. Switzerland - 90,360
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6
Q

Strengths and Weaknesses of economic indicators of development

A

Strengths:
- widely established
- US$ means easy comparison
- PPP -> weighting
- primary measure of development - HICs, MICs, LICs, etc.

Weaknesses:
- inequality not measured - differences in regions and distribution by highest to lowest earners not taken into account
- not a social or political development measure
- skewed by resources, tax havens, gambling revenue, etc.

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7
Q

What is HDI?

A

takes into account life expectancy at birth, expected years of schooling, mean years of schooling and GNI per capita PPP

Annual UN development report containing 191 countries

Groupings: very high/high/medium/low

Comparable between countries and over time

Top 5: Switzerland, Norway, Iceland, Hong Kong, Australia

Bottom 5: Burundi, Central African Republic, Niger, Chad, South Sudan

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8
Q

What is the Physical Quality of Life Index (PQLI)?

A

the measure of quality of life or wellbeing of a country

PQLI takes into account – basic literacy rate, infant mortality rate and life expectancy at age one

Top 5 countries: Netherlands, Denmark, Switzerland, Luxemburg and Finland

Bottom 5 countries: Iran, Sri Lanka, Venezuela, Bangladesh, Nigeria

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9
Q

What is the Happy Planet Index?

A

Happy planet index is a measure of sustainable wellbeing, ranking countries by how efficiently they deliver long, happy lives using our limited environmental resources

Gallup world poll is used to measure wellbeing/happiness using a sample of 1000 people however, the accuracy of this can be put into question

HPI takes into account – wellbeing, life expectancy, inequality of outcome and ecological footprint

Top 5 countries – Costa Rica, Vanuatu, Colombia, Switzerland and Ecuador

Bottom 5 Countries – Zimbabwe, Lesotho, Central African Republic, Mongolia and Qatar

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10
Q

What is the Gini Inequality index (Gini coefficient)

A
  • the most commonly used measure of inequality expressed as a percentage
  • a value of 0 corresponds to the absence of inequality, so that, having adjusted for household size and comparison, all individuals have the same household income
  • a value of 100 corresponds to inequality in its most extreme form, with a single individual having all the income in the economy
  • a Lorenz curve allows the index to be compared spatially and temporally
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11
Q

top and bottom 3 of Gini Inequality index

A

Top:
1. Ukraine
2. Slovenia
3. Iceland

Bottom:
1. South Africa
2. Namibia
3. Botswana

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12
Q

What is Globalisation?

A

The increasing interconnectedness and interdependence of the world economically, culturally, and politically

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13
Q

What is Global Shift?

A

the movement of economic activity, particularly in manufacturing, from HICs to NICs and LICs

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14
Q

What is New International Division of Labour (NIDL)?

A

a change in the geographical pattern of specialisation, with the fragmentation of many production processes across national boundaries – ‘outsourcing’ and ‘offshoring’ signify the importance of this process

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15
Q

What is Globally concentrated production

A
  • all production at a single location
  • products are exported to world markets
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16
Q

What is Host Market Production

A
  • each production unit produces a range of products and serves the national market in which it is located
  • no sales across national boundaries
  • individual plant size limited by the size of the national market
17
Q

What is Product specialisation for global/regional markets?

A
  • each production nit produces only one product for sale throughout a regional market of several countries
  • individual plant size is very large because of scale economies offered by the large regional market
18
Q

What is Transnational vertical integration?

A
  • either each production unit performs a separate part of a production sequence
  • units are linked across national boundaries in a chain like sequence
  • the output of one plant is the input of the next plant
  • or, each unit performs a separate operation in a production process and ships its output to a final assembly plant in another country
19
Q

what type of TNC production unit category does Coca-Cola fit into?

A

Host-market production

20
Q

Revenue - Cost = __________

A

Profit

21
Q

Why do companies want to become a TNC?

A
  • Keeping costs lower through access to cheaper labour
  • exploiting new resource locations which will increase the company’s resource availability
  • avoiding trade barriers - e.g. Nissan factory in Sunderland
  • tapping into more market potential in other world regions which increases revenue
  • avoiding strict domestic environmental regulations
  • maximising exchange-rate advantage
22
Q

What are the 4 categories in the A.T. Kearney index of globalisation?

A
  • political engagement
  • personal contact
  • technological connectivity
  • economic integration
  • top 3 countries are Singapore, Hong Kong and Netherlands
23
Q

what are the social impacts of Apple?

A

Positive:
- In countries where Apple directly employs people, such as the US and the UK, workers are generally paid and treated well which enables them to enjoy a good standard of living

Negatives:
- 64.2% of the workers at Foxconn are from rural villages which creates greater levels of inequality due to the lack of investment in rural areas
- Accusations of poor working conditions, excessive working hours and forced overtime have been made at Foxconn
- In 2018, the guardian reported that many workers were working 70 hours overtime per month, in breach of Chinese law
- In 2010 and 2011 there were several suicides among Foxconn workers as a result of poor conditions
- 43.4% of workers said that they had experienced or seen an accident at the workplace

24
Q

what are the economic impacts of Apple?

A

Positives:
- FDI in many different countries which also attracts FDI from other TNCs
- Wide range of jobs both directly and indirectly – 22,000 jobs in Europe – 170,000 through its suppliers in Europe – 350,000 at Foxconn – creates a positive multiplier effect
- Wages are above the minimum wage than other parts of China

Negatives:
- Economic leakages occur as profits from overseas operations are sent back to the USA
- Extremely low wages of £2.20 an hour compared to £27 an hour in the USA means that workers can only have a basic existence – survey in 2012 from Fair Labour Association found that 64.3% of the workers felt that their wages were insufficient to cover their basic needs
- People are concerned about job security as if sales fall or if assembly is sub-contracted to a different company or work becomes automated, thousands will be affected
- Many countries are unhappy with the amount of tax that is paid – accused of tax avoidance – in 2016 ordered to pay 13 billion euros back to Ireland – later rejected by an EU court in 2020 – also agreed to pay 10 years of back taxes to France

25
Q

Environmental impacts of Apple

A

Positives:
- A 2017 Greenpeace report on greener electronics graded Apple B and ranked it second out of the 17 world’s leading consumer electronic companies for addressing environmental impacts
- All of Apple’s offices, stores and data are powered by renewable energy sources
- By 2030, all Apple products will be made using 100% renewable energy
- Apple trade-in encourages people to exchange their old devices for credit towards new products
- The use of plastics in packaging has been reduced by 58% in 4 years
- Fibre alternatives made out of mostly recycled materials are being used in some packaging and for shopping bags
- In collaboration with Conservation international, have formed a fund to protect and restore forests, wetlands and grasslands

Negatives:
- Regularly updates and changes the design of their products leads to people wanting to keep up with modern trends and getting rid of devices early, creating electronic waste
- Many products are difficult to repair and upgrade
- In 2017, the guardian reported that they were intentionally designing iPhone so the batteries slowed down with age
- Hazardous chemicals are used in the manufacturing process
- In 2018, the guardian reported that in China, contaminated wastewater from Apple manufacturing plants was being discharged into public drains
- Many elements used in Apple products are mined, such as, Cobalt
- The transport used to distribute Apple products often rely on fossil fuels

26
Q

Factors explaining the Rapid Economic Growth of China in recent decades

A
  • Labour supply
  • wages and unemployment
  • Female participation in the workforce
  • Political system
  • Strong leadership
  • Free-market economics
  • export-led growth
  • SEZs and FDI
  • private enterprise
  • energy supply
  • investment in infrastructure
  • economic diversification
  • education
  • ‘going global’
  • location
  • raw materials
27
Q

Characteristics of LDCs

A
  • 10.5% of worlds population
  • generate only 0.1% of global income
  • In many LDCs, national debt now equals or exceeds GDP
  • they have major economic, institutional and human resource problems
28
Q

Characteristics of NICs

A
  • a good initial level of infrastructure
  • A skilled but relatively low cost workforce
  • cultural traditions that revere education and achievements
  • governments welcoming FDI from TNCs
  • distinct advantages in terms of geographical location
29
Q

what is cumulative causation?

A

the process whereby a significant increase in economic growth can lead to even more growth as more money circulates in the economy

30
Q

what are backwash effects?

A

transmitted to the less developed regions as skilled labour and locally generated capital is attracted away

31
Q

what are spread effects?

A

spatially selective and will only benefit parts of the hinterland (less developed regions) with valuable raw materials or other significant advantages

32
Q

what are the three stages in the cumulative causation theory?

A
  • the pre-industrial stage: when regional differences are minimal
  • a period of rapid economic growth characterised by increasing reginal economic divergence
  • a stage of regional economic convergence when the significant wealth generated in the most affluent regions spreads to other parts of the country
33
Q

what is initial advantage?

A

the critical importance of an early start in economic development

34
Q

Myrdal vs Hirschmann

A
  • instead of heartland Hirschmann used Core
  • instead of hinterland he used periphery
    • the core benefited from ‘virtuous circles’ or upward cycles of development, whereas the periphery was impeded by ‘virtuous circles’ or downward cycles
  • the term trickle-down was used to describe the spread of growth from core to periphery
  • both came to the same conclusions but used different terms
35
Q

what are the characteristics of poverty in Brazil?

A
  • 70% of the total population living in poverty are city dwellers
  • 51% of the poor live in the NE region
  • 70.1% in the N region, 59.7% in the CW and 53.5% in the NE region have housing conditions that are inadequate compared to 26.7% in the SE region

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