Globalisation Flashcards

Question

What are the cons of FDI?

Answer 1

-Possible exploitation -Businesses take profits and pay little tax -Competition with existing buisnesses

Answer 2

A type of FDI where a company will build its own, brand new facilities from the ground up, involves organic growth -competition is difficult to overcome -entry process takes years -new facilities are more efficent -have a greater control of the business

Answer 3

A type of FDI when a company purchases or leases an existing business in the forgein country, involving inorganic growth -reduces start up costs -gain access to an established market -one less competitor to deal with -aquire a companys technology, staff and knowledge

Answer 4

-Exporting = manufacturing products at home to be sold abroad -Franchising = selling a license to use a firms name, products or services in return for an intial payment and royalities -Licensing = one firm producing and marketing another's products in a particular country -Joint venture = 2 companies combining resources to operate in a particular country, shares risks and costs -Merger/takeover = when two seperate entities combine forces to create a new joint organisation -Direct investment = setting up production facilities abroad, costly and risky, lower wage costs, availability of raw materials

Answer 5

Supporting domestic industries against forgein competition by the government using policies such as: quotas, tarffis or barriers that increase the prices of imported goods

Answer 6

-Tariff = a tax placed on an import to increase its price and reduce demand -Quotas = a limit on the quantity of a good imported or exported -Subsidy = money given to local producers to make their goods cheaper on the domestic market

Answer 7

-Protect key strategic industries -Raise money for government -Protect domestic jobs -Reduce the trade defict -Protect new infant industries

Answer 8

-High import prices may not reduce demand -Tariffs can raise consumer prices -Domestic firms may not become more competitive -Quotas require monitoring

Answer 9

A type of intergovernmental agreement to reduce regional trade barriers

Answer 10

-Free trade agreements = elimination or reduction of import tariffs and quotas on trade between member countries -Customs unions = removing trade barriers and establishing a common external tariff on imports and non-member countries -Common markets = remove trade barriers and allow free movement of factors of production e.g labour -Monetary Unions = common currency shared by member countries

Answer 11

-27 member states -Started in 1951 -Combined market of 550 million customers -Free circulation of goods, people and money in the EU -19 memebers make up the eurozone

Answer 12

Canada, Mexico, United States -Free trade zone -Covers environmental and labour issues as well as trade and investment

Answer 13

Association of Southeast Asian Nations -10 member international body -More than 500 million people living in the reigon -Set up in 1967 -Free trade agreement among member states with eased travel in the region

Answer 14

Removal or reduction of restrictions or barriers on the free exchange of goods between nations -aims to make an economy more open to trade and investment

Answer 15

-Higher quality of goods and services -Cheaper goods and services -Promotes co operative relationships between countries -Promotes a higher standard of living -Encourages trade which boosts economic growth -Larger markets

Answer 16

-Politicians use it as negotion power -Large companies have greater power -Complex and expensive -Increased competition inside the bloc -Difficult to expand to areas outside the bloc