Globalisation and FDI Flashcards
Define ‘globalisation’.
The growing interdependence of the world’s economies
Define ‘interdependence’.
Where the actions of one country or larger firm will have a direct effect on others
Define ‘multinational company’.
A firm that operates in many different countries
Define ‘developed country’.
A country with a relatively high level of economic growth and security
Define ‘developing country’.
A poor agricultural country that is seeking to become more advanced economically and socially
What are the 4 reasons for globalisation?
Reduced cost of transport
Reduced cost of communication
Fewer tariffs and quotas
Increased significance of multi-nationals
What are the 2 impacts of globalisation on developed countries that are bases for MNCs?
Increased wealth
Other types of jobs being created at a faster rate
What are the 2 impacts of globalisation on developing countries that provide sites for MNCs?
Increased economic growth - output generated recorded as country’s output
New technology/working practices introduced
What is the one negative impact of globalisation on individual countries?
Economic events in one country can impact other countries: capital flows so easily that banks can buy bad debt of others in other countries
What are the 2 impacts of globalisation on governments?
Increased tax revenue - MNCs’ profits taxed, can be spent to lower taxes or improve services
More businesses being set up - provides encouragement and skills for locals
What are the 4 benefits of globalisation for producers?
Access to huge markets - provides opportunities to increase sales
Lower costs - economies of scale
Access to labour - overseas workers boost labour supply
Reduced taxation - head office can be located in a low business tax country
What are the 3 benefits of globalisation for consumers?
Cheaper goods
Wider range of goods and services - especially in developed countries
Improved living standards
What are the 3 benefits and 1 disadvantage of globalisation for workers?
Benefits:
Creates new jobs
Workers from less developed countries can look for jobs in developed ones
Reduces labour shortages
Disadvantages:
Some workers lose out - MNCs offshore for cheaper labour/land costs, original factory workers made redundant
What are the 2 impacts of globalisation on the environment?
Environmental damage - increased greenhouse gases
Usage of non-renewable resources
Define ‘foreign direct investment’.
When a company makes an investment in a foreign country
