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Economics - Unit 3 > Globalisation and interdependence > Flashcards

Globalisation and interdependence Flashcards

1
Q

What is globalisation?

A

The globalisation of the world economy is characterized by a greater degree of interdependence of national economies than that created by the links of international trade

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2
Q

Extend on globalisation?

A

Porter argues that nations need not be well endowed with factors, they can be created through investment for infrastructure and highly specialized training of the workforce
Globalization implies that national economies lose some of their independence

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3
Q

What have channels of globalisation created?

A

Channels of Globalisation have created a GLOBAL VILLAGE with GLOBAL PRODUCTS

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4
Q

Why do larger businesses prefer global markets?

A

Because it allows for them to have a standardized products that is accepted everywhere

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5
Q

Why are some products globally accepted?

A
  • common products associated with common needs of functions, with little differentiation other than price (raw products, industrial products and financial products)
  • the nature of the product
    (strong brand name, converging consumer tastes and consistency of expectations)
  • global rivalary
  • persusaive advertsing
  • infotainment media (cross promotion of all media types promoting a ‘lifestyle’ and a world wide accepted image)
  • franchising system
  • increased mobility of populations
  • diffusion of technology particularly in the relam of communication
  • urbanisation
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6
Q

What are the challenges from global firms?

A
  • backlash from local communities not wanting to be in the global ‘herd’
  • being able to cater for local market preferences and tastes
  • PR image of being monolithic, amoral and manipulative
  • social media and AI
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7
Q

What are factors accelerating globalisation?

A
  • relaxation of government controls and the widespread adoption of free trade
  • improved availability of new technology including the internet
  • the mobility of capital and investment by transitional businesses
  • faster more efficient transport and communications
  • a belief that globalisation will improve our living standards
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8
Q

What is the impact of MNC’s?

A
  • economic power
  • tax incentives
  • imbalance in economic power of nations
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9
Q

How can the level of globalisaiton be mapped?

A
  • trade intensity
  • law of one price
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10
Q

What is transfer?

A

The movement of scientific methods of production or distribution from one enterprise, institution or country to another

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11
Q

What is capital mobility?

A

The ability to move private funds across national boundaries in pursuit of higher returns

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12
Q

What is slowbalisation?

A

Slowbalisation refers to the slowing down of globalisation characterized by a decline in the growth of cross-border trade, investment and economic integration

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13
Q

What is hyperglobalisation?

A

Hyperglobalisation is an intense phase of globalisation marked by rapid expansion in cross-border trade investment, and economic integration, it is often driven by technological advancements and liberalized trade policies, resulting in highly interconnected global markets and economies.

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14
Q

What is nationalistic movement?

A

Nationalistic movement refers to the policies and actions by a country aimed at prioritizing and protecting domestic industries, jobs and resources over global economic integration, often through measures like tariffs, trade restrictions and subsidies to strengthen national economic independence

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15
Q

What do international firms look for?

A
  • low wages
  • low tax
  • ease of capital mobility
  • political stability
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16
Q

What is the law of one price?

A

A measure of economic integration based on the theory that the price of similar products traded in linked markets should converge to one price

17
Q

What is trade intensity?

A

Is the ratio of trade to output. It is the measure of integration of product markets in the world economy.

18
Q

What is the impact of globalisation on Australia’s economy?

A
  • lower consumer prices paid for good and services (+)
  • possibility of reduced national sovereignty (-)
  • deregulation of wages in the labour market with short-term rise in unemployment (-)
  • pressing need for governments to cut tax rates and improve infrastructure (+ -)
  • greater consumer choice and satisfaction of wants (+)
  • faster average rate of economic growth (+)
  • adverse effect on environment due to increased transport and production levels (-)
  • possibility of higher average incomes and material living standards (+)
  • greater need to become more informed and ethical consumers (?)
19
Q

What are the factors driving globalisation? (7)

A
  • market expansion
  • location economies
  • core competencies
  • competitive strategies
  • risk diversification
  • government incentives
  • technology transfer
20
Q

What is market expansion?

A
  • firms exploit economies of scale with access to larger international markets
  • average fixed costs for each unit produced is reduced and the firms competitiveness is improved
21
Q

What is location economies?

A
  • production facilities to foreign sites may keep a firm internationally competitive
  • taking advantage of: cheaper labour
    lower tax rates
    closer supply chains
22
Q

What are core competencies?

A
  • these are unique characteristics that give a firm a competitive advantage
23
Q

What are competitive strategies?

A
  • firms will often follow major customers abroad as means of getting a foothold in foreign market
  • establishing production facilities abroad enables a firm to protect its foreign markets by overcoming import barriers and guaranteeing essential supplies
24
Q

What is risk diversification?

A

Firms with multiple foreign locations can offset risk
- changes in local economic conditions
- changes in employment
- changes in supply chain

25
Q

What are government incentives?

A

Government policies that can act as either a push or pull factors for international business
- tax policy
- environmental controls
- subsidised clean energy policies

26
Q

What is technology transfer?

A
  • technology can be transferred through a number of different channels
  • foreign direct investment
  • skilled workforce
  • government research and development
27
Q

What is the foreign exchange market?

A

A market where international currencies are bought and sold

28
Q

What is the trade weighted index (TWI)?

A

The TWI is a measure of the value of the Australian dollar against a basket of foreign currencies of the country’s major trading partners
These currencies are weighted according to their significance to Australian trade flows

29
Q

What is a fixed exchange rate?

A

The value of a currency that is determined by the government fixing it to the value of another currency at a certain level and guaranteeing to maintain that level

30
Q

What are the channels of globalisation?

A

Globalisation of markets
Globalisation of production
Capital Mobility
Transfers

31
Q

What are the four types of globalisation?

A

Economic
Cultural
Political
Technological

32
Q

What is economic globalisation?

A

Involves the integration of economies worldwide through trade, investment, and capital flows, leading to increased interdependence among nations.

33
Q

What is political globalisation?

A

Involves the development of international organizations, agreements, and policies that facilitate cooperation and governance on global issues.

34
Q

What is cultural globalisation?

A

Refers to the spread of ideas, values, and cultural products across borders, resulting in shared cultural experiences and influences around the world

35
Q

What is technological globalisation?

A

The rapid spread of technology and innovation globally, which enhances communication, connectivity, and access to information across countries

36
Q

What are the risks of supply chain integration?

A

Supply chain integration increases efficiency but also creates risks, such as greater vulnerability to disruptions. When a single part of the supply chain fails—due to natural disasters, geopolitical tensions, or supplier issues—the entire chain can be impacted. This dependence on interconnected parts can lead to delays, increased costs, and reduced flexibility in responding to sudden market changes or crises.

Economics - Unit 3 (6 decks)

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