globalisation revision

Question 1

reasons for economic growth in emerging countries

Answer 1

• FDI
• a more stable government
• better infrastructure and accessibility

Question 2

indicators of growth

Answer 2

• GDP
• Literacy
• HDI

Question 3

what is HDI

Answer 3

combines economic progress with the health and education of a country

Question 4

India’s weaknesses

Answer 4

• poor infrastructure
• narrow education system
• the balance of payments deficit (more imports than exports)

Question 5

opportunities in Africa?

Answer 5

• tremendous wealth in the top few %

- resources that attract businesses to relocate

Question 6

`problems doing business in Africa?

Answer 6

• corruption - businesses that value CSR may not find it appropriate to locate here
• poor infrastructure
• investor concern about instability

Question 7

specialisation

Answer 7

choosing to produce one product only or produce for one market only - e.g. Porters focused low-cost strategy

Question 8

how does specialisation increase efficiency?

Answer 8

• fewer machines
• economies of scale
• Taylor ‘practice makes perfect’ - quality

Question 9

benefits of foreign direct investment

Answer 9

• avoiding transport costs
• avoiding trade tariffs
• closer proximity to resources
• lower operating costs

Question 10

trade liberalisation

Answer 10

removing trade barriers such as

• tariffs - import taxes
• quotas - quantity limit on imports
• regulations - weaker legislation

Question 11

factors influencing globalisation

Answer 11

• trade liberalisation
• reduced transport costs and communication
• increased migration
• economies of scale

Question 12

protectionism

Answer 12

• the purpose is to increase a nation’s prosperity by increasing exports and decreasing imports.
• trade barriers are imposed to protect domestic markets

Question 13

what are domestic subsidies?

Answer 13

government providing capital for domestic firms to promote growth within its own market
- boosting profit margins allows firms to maintain their competitiveness

Question 14

what is a trading bloc?

Answer 14

• a group of countries that agree to trade freely with each other - protected by tariffs for those not involved

Question 15

The EU and the single market

Answer 15

• over 445 million consumers

- relatively affluent

Question 16

ASEAN

Answer 16

• Asian dominated markets that work alongside the biggest countries such as China and Japan

Question 17

pros and cons of trading blocs

Answer 17

+ free movement of goods
+ greater interdependence
- competition increases
- legislation may differ or have to be changed

Question 18

push factors (leaving a market)

Answer 18

• saturated markets
• fierce competition
• extending product life cycle

Question 19

pull factors (attract firms into foreign markets)

Answer 19

• economies of scale
• offshoring and outsourcing
• risk-spreading

Question 20

what makes a country attractive as a market? (selling products to consumers here)

Answer 20

• growth and disposable income
• ease of doing business
• the quality of infrastructure
• exchange rates

Question 21

what makes a country attractive as a location to produce goods?

Answer 21

• costs
• skills and availability of the workforce
• infrastructure
• natural resource availability
• government incentives

Question 22

what is a joint venture

Answer 22

agreement between two separate businesses to work together for a fixed amount of time

Question 23

reasons for a joint venture or global merger

Answer 23

• risk - spreading
• entering new markets
• strengthening of the brand
• increasing global competitiveness

Question 24

ways of achieving cost competitiveness

Answer 24

• increasing productivity

- outsourcing and offshoring