Free Trade

Question 1

How do national governments promote FDI?

Answer 1

Become key players when they adopt policies that encourage investment

Question 2

What three policies may a gov choose to adopt when encouraging investment?

Answer 2

• Free market liberalisation (neo-colonialism)
• privatisation
• encouraging business start ups

Question 3

Describe the government under Margaret Thatcher in the 1980s

Answer 3

Trickle down effect from wealthiest members of society as gov intervention in markets impedes economic development
E.g. deregulation of London in 1986 removed lots of ‘red tape’ to become a leading global hub for financial services

Question 4

Until 1980 important (1) such as the (2) companies were owned by the state. Running of these services was (3) and over time the ownership has passed (4) e.g. (5)

Answer 4

1 - assets
2 - railway and energy
3 - expensive
4 - overseas
5 - EDF energy

Question 5

Describe the sovereign wealth fund

Answer 5

Since the global financial crisis, the UK gov has approached the Chinese and Middle Eastern funds to build new infrastructure projects

Question 6

Give two examples of the Chinese sovereign wealth funds in the UK

Answer 6

• £800m investment in Manchester City airport

- Hinckley point C is 40% owned by China

Question 7

Give two ways in which governments can encourage business start ups

Answer 7

• reduce business tax

- law changes to increase profit e.g. Sunday trading became legal in 1994