Globalisation Flashcards
Topics 66-70
Define economic growth.
Economic growth is the increase in a country’s productive capacity, and is measured in gross domestic product (GDP).
What are some opportunities of emerging markets?
1= Growing number of middle-class consumers.
2= Source of high skilled, but low cost labour.
3= Great potential for joint ventures and aquisitions.
What are some risks of emerging markets?
1= Political instability
2= Cultural differences
3= Corruption
4= Low cost labour sometimes uncompetitive
What are the main indicators of economic growth?
1= GDP per capita
2= Purchasing Power Parity
3= Literacy rate
4= Human Development Index
What does the Gross Domestic Product (GDP) per capita show?
GDP per capita shows the amount of goods and services produced in a year divided by the total population.
What does the Purchasing Power Parity (PPP) show?
The PPP (Purchasing Power Parity) shows the power of one currency compared to another, by comparing the prices of a standardised basket of goods.
What does the literacy rate show?
The literacy rate shows what proportion of the population can effectively read and write.
What does the Human Development Index (HDI) show?
Human Development Index (HDI) combines life expectancy, education (mean years of schooling) and income (GNI per capita).
What are exports?
Exports are goods and services that a firm produces in its home market, but sells to a foreign market.
What are imports?
Imports are goods and services that are brought into one country from another.
What is trade liberisation?
Trade liberisation is the process of reducing barriers to trade within countries.
What are ‘invisible’ exports and what are some examples?
Invisible exports are intangible goods, such as finance, tourism, education or entertainment.
What is a comparative advantage in the context of international trade.
This is where each country will produce things which it is comparably good at producing.
Define FDI.
Foreign direct investment (FDI) is investing by setting up operations or buying assets in businesses in another country.
FDI can be horizontal or vertical. Horizontal is producing the _____ products or services which are done at _____. Vertical is where a firm is trying to acquire _________ or ________ for its ____ products or services.
same
home
materials
support
own
What are some benefits of FDI to the host country.
1= New high paying jobs
2= New technologies & markets
3= Increases exports
Define globalisation.
Globalisation is the growing integration of the world’s economies.
What are some key factors contributing to globalisation?
1= Reduction of trade barriers
2= Political change
3= Reduced transport cost
4= Increase investment flows
5= Migration
6= Technological advancement
What are some benefits of globalisation?
1= Economies of scale
2= Incentivise innovation
3= Higher incomes & reduces poverty
4= Shared ideas / technologies
What are some drawbacks of globalisation?
1= Can raise inequalities in wealth
2= Strong demand leads to inflation
3= Vunurability to external shocks
4= Damage to global commons
5= Loss of cultural diversity
Define protectionism.
Protectionism is an approach used by governments in order to protect domestic producers.
How can tarriffs be used as a protectionism strategy?
This approach aims to make imports more expensive. This will reduce demand for imports and increase demand for goods produced in the home country.
How can import quotas be used as a protectionism strategy?
It places a physical limit on the amount of imports allowed into the country.
How can government legislation be used as a protectionism strategy?
Some countries decide not to use tariffs or quotas, and instead use government legislation, ensuring that imported goods meet strict regulations and specifications.
How can subsidies be used as a protectionism strategy?
Giving subsidies to domestic producers gives them an incentive to compete against imported products.
What is a trading bloc?
A group of countries which have an agreement to reduce / eliminate trade barriers.
What is a preferential trading area (PTA)?
Preferential trading areas (PTAs) allow certain types of products from participating countries to receive reduced tariffs.
What is a free trade area (FTA)?
Free trade areas exist where member states remove all trade barriers such as tariffs and import quotas.
What is a custom union?
Custom unions are where members adopt a common set of barriers against non-members.
What is a common market?
Common markets are more integrated than free trade agreements, as labor goods and capital can move through the member states.
What is a single market?
A single market is where almost all trade barriers between members have been removed and common laws or policies work to make movement of goods and services as easy as possible.
What is a economic union?
Economic unions are a type of trade bloc involving both common unions and common markets. Its aim is to improve economic, political and cultural ties between member states.
