Globalisation Flashcards
Globalisation
Trade in goods and services
Why is globalisation good
Job opportunities
Raise output
Raise productivity
Raise wages
Higher standard of living
Terms of trade
How many exports we have to sell to pay for our imports- ratio between exports and imports
Terms of trade formula
Index of export prices/index of import prices all x 100
Factors influencing terms of trade
Exchange rate
Inflation
Productivity
Elastic or inelastic goods
Trading blocks
Created to encourage trading between countries/members within the Bloc
Customs unions
A type of bloc with a free trade area and an external tariff
Economic union
An agreement between countries to allow goods/services/money and workers to move freely over borders
Free trade area
Grouping of countries with trade barriers abolished for members
Common market
Free trade area with relatively free movement of capital and services
Negatives of trading blocs
Interdependence on economic performance in other countries in trading bloc. Countries often only in one meaning they can’t enter others.
Increased tariffs, loss of independence
Benefits of trading bloc
Increased customers
Economies of scale
Investment from others in bloc
Legislation
Protectionism
Protecting your domestic markets from foreign goods and services
Tariff
Tax imposed by a government on imports
Quotas
Limit on quantity of exports
