Globalisation (CH 13)

Question 1

How does globalisation rise from?

Answer 1

Grows from growing markets and increasing international trade. It increases interdependence as individual firms make profit in foreign markets and look abroad for finance for investment

Question 2

What does globalisation spread lead to?

Answer 2

Increased trade between nations and more transfer of capital (FDI)

Question 3

Define Open economies

Answer 3

Export a relatively high proportion of total production and import a relatively high proportion of G / S they use

Question 4

Define Outsourcing

Answer 4

Shifting production process to other firms in order to reduce input costs

Question 5

Factors influencing contribution of globalisation

Answer 5

• Trade in goods
• Trade in services
• Trade liberalisation
• Multinational corporations (MNC’s)
• International capital flows
• IT + Lower transport costs
• Impact of emerging economies

Question 6

Discuss trade in goods

Answer 6

Developing nations now have capital + knowledge to produce goods. Efficient transport reduces costs + simplifies international trade

• Cheaper labour in developing nations attract MNC’s to move production abroad, leading to trade between developed + developing nations for manufacturing

Question 7

Discuss trade in services

Answer 7

Tourism, call centres and software production (India) are increasingly traded from developing to developed nations

Question 8

Discuss Trade Liberalisation

Answer 8

Organisations like (WTO) promoted free trade, reducing trade barriers and encouraging global trade

Question 9

Discuss MNC’s

Answer 9

• Own/ Control production of G/S in multiple nations
• Use marketing to become global and grow, to take advantage of EOS
• Spread of technological knowledge + EOS resulted in lower costs of production

Question 10

Discuss International Capital Flows

Answer 10

• Large sums of money that are moved from one economy to another
• Includes FDI’s and activities of wealthy individuals and firms that move back deposits around / buy shares in foreign firms to get higher interest rates / dividends

Question 11

Discuss IT and Lower Transport Costs

Answer 11

• IT resulted in it becoming cheaper + easier to communicate leading to world becoming more interconnected
• Cheaper shipping across world, causing prices too fall helping the market becoming more competitive

Question 12

Discuss Impact Of Emerging Economies

Answer 12

-Communism collapse means more developed nations are participating in world trade

• More crucial for them than developed ones

Question 13

What is Foreign direct investment (FDI)?

Answer 13

• When firms set up production / distribution facilities in other nations
• FDI flows into developing nations as firms seek locations with lower wage rates

Question 14

Discuss impact of weak pound value on FDI’s

Answer 14

Makes UK assets and firms cheaper for foreign investors; encouraging FDI

Question 15

Discuss impact of strong pound value on FDI’s

Answer 15

• Increases cost of investing in UK assets, reducing FDI
• Foreign investors might see lower returns when recovering profits

Question 16

Factors influencing FDI in UK

Answer 16

• Political and economical instability
• Skilled workforce
• Access to markets
• Regulation and Taxation
• Infrastructure
• Sector specific opportunities ( Fintech, healthcare, renewable energy)