globalisation revision Flashcards
reasons for economic growth in emerging countries
- FDI
- a more stable government
- better infrastructure and accessibility
indicators of growth
- GDP
- Literacy
- HDI
what is HDI
combines economic progress with the health and education of a country
India’s weaknesses
- poor infrastructure
- narrow education system
- the balance of payments deficit (more imports than exports)
opportunities in Africa?
- tremendous wealth in the top few %
- resources that attract businesses to relocate
`problems doing business in Africa?
- corruption - businesses that value CSR may not find it appropriate to locate here
- poor infrastructure
- investor concern about instability
specialisation
choosing to produce one product only or produce for one market only - e.g. Porters focused low-cost strategy
how does specialisation increase efficiency?
- fewer machines
- economies of scale
- Taylor ‘practice makes perfect’ - quality
benefits of foreign direct investment
- avoiding transport costs
- avoiding trade tariffs
- closer proximity to resources
- lower operating costs
trade liberalisation
removing trade barriers such as
- tariffs - import taxes
- quotas - quantity limit on imports
- regulations - weaker legislation
factors influencing globalisation
- trade liberalisation
- reduced transport costs and communication
- increased migration
- economies of scale
protectionism
- the purpose is to increase a nation’s prosperity by increasing exports and decreasing imports.
- trade barriers are imposed to protect domestic markets
what are domestic subsidies?
government providing capital for domestic firms to promote growth within its own market
- boosting profit margins allows firms to maintain their competitiveness
what is a trading bloc?
- a group of countries that agree to trade freely with each other - protected by tariffs for those not involved
The EU and the single market
- over 445 million consumers
- relatively affluent
ASEAN
- Asian dominated markets that work alongside the biggest countries such as China and Japan
pros and cons of trading blocs
+ free movement of goods
+ greater interdependence
- competition increases
- legislation may differ or have to be changed
push factors (leaving a market)
- saturated markets
- fierce competition
- extending product life cycle
pull factors (attract firms into foreign markets)
- economies of scale
- offshoring and outsourcing
- risk-spreading
what makes a country attractive as a market? (selling products to consumers here)
- growth and disposable income
- ease of doing business
- the quality of infrastructure
- exchange rates
what makes a country attractive as a location to produce goods?
- costs
- skills and availability of the workforce
- infrastructure
- natural resource availability
- government incentives
what is a joint venture
agreement between two separate businesses to work together for a fixed amount of time
reasons for a joint venture or global merger
- risk - spreading
- entering new markets
- strengthening of the brand
- increasing global competitiveness
ways of achieving cost competitiveness
- increasing productivity
- outsourcing and offshoring
