Factors Contributing To Increased Globalisation

Question 1

What is trade liberalisation?

Answer 1

Trade is liberalised when governments decide to remove international trade barriers such as tariffs, quotas and regulations that are designed to keep imports out of a country

Question 2

What are tariffs?

Answer 2

Taxes imposed on imports only

Question 3

What is the purpose of tariffs?

Answer 3

The imports become more expensive so the higher the price the lowest the domestic demand for imports therefore higher demand for domestically produced substitutes

Question 4

What is a quota?

Answer 4

An annual restriction on the amount of a particular good that can be imported

Question 5

What are some opportunities created by trade liberalisation?

Answer 5

· Price of imports will fall - helps manufacturers who buy raw materials abroad, if variable costs fall the manufacturer could lower their retail prices therefore selling more of their product
· Creates increased market access to businesses who are willing to sell abroad

Question 6

What are some threats created by trade liberalisation?

Answer 6

· Opens domestic markets to foreign competition, consumers benefit from the extra competition because firms will offer the best products possible at the lowest price as possible

Question 7

How has the reduced cost of transport and communication contributed to globalisation?

Answer 7

· Transport costs were very expensive and therefore discouraged international trade because they damaged the exporters profit margin
· However, transport costs have decreased which has contributed to the growth in world trade

Question 8

Why have transport costs fallen?

Answer 8

• Technological advances

- The introduction of larger trucks, boats and aircrafts

Question 9

What is a transnational corporation?

Answer 9

A business that owns factories, shops or offices in more than one country

Question 10

How have increased investment flows contributed to an increase in globalisation?

Answer 10

Globalised financial markets allow investors to move their money more easily around the globe to wherever returns are highest

Question 11

How has the growth of the global labour force contributed to an increase in globalisation?

Answer 11

· Globalisation has helped firms reduce their operating costs as they move their production abroad where labour is cheaper, this offshoring leads to an increase in international trade