Global Markets (Ch 1+2) Flashcards
Why has world trade grown so fast? (4)
[1/2]
- The success of WORLD ORGANISATIONS in promoting the liberalisation of World Trade
- The improvements in TRANSPORT AND TECHNOLOGY, which has lowered the cost of international commerce
- SPECIALISATION and exchange
- Rapid industrialisation of developing countries
Define globalisation
[1/2]
The freer movement of goods, services, investment, ideas and people around the world. It implies the opening up of international borders to the flow of trade and investment.
What are the arguments FOR globalization? (5)
[1/2]
- It provides access to a variety of goods and services.
- It lowers prices
- It provides more and better-paying jobs
- It increases overall living standards
- It increases multiculturalism
What are the arguments AGAINST globalisation? (4)
[1/2]
- It results in higher unemployment among low-skilled workers
- It destroys local cultures
- It is unfair to developing countries
- It increases environmental change
Define international competitiveness
The degree to which a country can produce goods and services which meet the test of international markets, WHILE simultaneously maintaining and expanding real incomes of its people over the long term.
What is a Multinational Corporation (MNC)?
Very large firms with headquarters in one country and subsidiaries in one or more other countries.
EXAMPLES:
General Electric (US)
Royal Dutch/ Shell (Netherlands/UK)
BP (UK)
Define Foreign Direct Investment (FDI)
It occurs when a firm in one economy acquires at least 10% ownership of a foreign firm
What are the assumptions of absolute advantage? (4)
- The world consists of two countries
- Each country produces and consumes two goods
- If trade takes place, there are no transport costs
- Resources are perfectly mobile- resources can be shipped between industries with zero displacement costs
