Globalisation Flashcards
Which of the following is an example of financial capital?
money used for investment
What is one of the main ways that financial capital moves across countries?
Financial capital can move between countries through Foreign Direct Investment.
FDI
FDI is an investment made by a firm in one country into a firm in another country, to gain control over the foreign firm.
Ellen is a British worker who is writing contracts for a German transnational corporation. Ellen’s work is an example of:
C An export of a service, because Ellen is selling to a foreign firm.
Ellen is providing a service rather than a good as the firm is not buying a tangible product. It is exported because Ellen is selling her services to a foreign firm and so money is flowing into the economy.
Which of the following would cause an increase in the trade-to-GDP ratio?
GDP is on the bottom of the trade-to-GDP formula. If GDP decreases, you would be dividing by a smaller number, which would give a larger answer. So, a decrease in GDP will actually increase the trade-to-GDP ratio. If trade stays the same and GDP increases then trade is taking up a smaller percentage of GDP.
Globalisation
Increased integration of different economies around the world.
Foreign Direct Investment
An investment made by a firm in one country into a firm in another country, to gain control over the foreign firm.
Transnational Corporation
A transnational corporation is a company that operates in two or more countries.
Characteristics of Globalisation
- An increase in international movement of labour
- An increase in international movement of financial capital
- An increase in specialisation
- An increase in international trade
- An increase in trade-to-GDP ratios.
Which of the following is one reason to explain why increased specialisation is a characteristic of globalisation?
The Theory of Comparative Advantage says that global output will increase if countries produce according to their comparative advantage.
Containerisation
An efficient and relatively low cost system of transport that uses a common size of steel container to transport goods.
Trade Liberalisation
The reduction and removal of trade barriers.
Tariff
A tax on imported goods
Causes of Globalisation
Improvements in transport
Improvements in IT
Containerisation
Trade liberalisation
Tariff
A tax on imported goods
trade-to-GDP ratio
the sum of exports and imports divided by the gross domestic product.
What is the impact of purchasing economies of scale on long run average costs?
The purchasing economies of scale will reduce long run average costs as output increases.
Which of the following explains what is meant by transfer pricing?
Transfer pricing is a method whereby TNCs reduce the amount of corporation tax that they pay by shifting their profits into countries with low tax rates.
Transfer pricing
A method of pricing goods and services transferred within TNCs in order to reduce the amount of corporation tax paid.
Impact of Globalisation on Individual Countries
Globalisation has led to an increase in living standards but also an increase in overdependence.
Impact of Globalisation on Governments
Globalisation has led to an increase in tax revenue but also an increase in transfer pricing.
Impact of Globalisation on Producers
Globalisation has reduced costs through relocation but it has also increased barriers to entry.
What is a remittance?
A remittance is a transfer of money by a foreign worker to an individual in their home country.
What is structural unemployment?
Structural unemployment occurs when the structure of the economy changes. People working in one sector may lose their jobs while another sector expands.
Impact of Globalisation on Consumers
Globalisation has led to an increase consumer choice and lower prices but it has arguably reduced happiness.
Impact of Globalisation on Workers
Globalisation has led to an increase in international job opportunities but increased structural unemployment.
Impact of Globalisation on the Environment
Globalisation has increased international cooperation to fight climate change but it has increased global warming.
four main causes of globalisation
- Improvements in transport .
- Improvements in IT or information technology .
- Improvements in shipping such as containerisation .
- Trade liberalisation .
Which of the following shows an impact of globalisation on workers?
A An increase in structural unemployment
Whats happened to transfer payments under globalisation
Globalisation has led to an increase in transfer payments where TNCs attempt to reduce the amount of corporation tax that they have to pay on their profits. Trade liberalisation (the reduction in trade barriers) has made transfer payments slightly easier but it hasn’t had a huge impact on this.
