Key Terms

Question 1

Capital flows

Answer 1

The movement of money for the purpose of investment, trade, or to produce goods / services.
Usually regarded as investment into a production operation.

Question 2

Define globalisation.

Answer 2

A process by which national economies societies and cultures have become increasingly integrated through the global network of trade, communication, transportation and immigration.

Question 3

Define international trade

Answer 3

The exchange of capital, goods and services across international borders.

As imports (inbound trade) or exports (outbound trade).

Question 4

Define labour.

Answer 4

Factor of production defined as the aggregate of all human physical and mental effort used to create goods or provide services.

Question 5

Define BRIC

Answer 5

Acronym for four countries - Brazil, Russia, India, China.

Who’s economies have advanced rapidly since the ’90s.

Question 6

Define diaspora.

Answer 6

A large group of people with a similar heritage or homeland who have moved and settled in places al over the world.

Question 7

Define leakages.

Answer 7

A loss of income from an economic system.

Most usually refers to the profits sent back to their base country by TNCs (aka profit repatriation).

Question 8

Define containerisation.

Answer 8

A system of standardised transport that uses large standard size steel containers to transport goods.

Can be transferred between ships, trains and lorries - enabling cheaper, more efficient transport.

Question 9

Define protectionism.

Answer 9

A deliberate policy by government to impose restrictions on trade in goods and services with other countries - usually done with the intention of protecting home based industries from foreign competition.

Question 10

Define conglomerates.

Answer 10

A collection of different companies / organisations which may be involved in different business activities but all report to one parent company.

Eg HSBC in banking an financial services.

Question 11

Define economies of scale.

Answer 11

The cost advantages that result from the larger size, output of scale of an operate as savings are made by spreading the costs or by rationalising the operations.

Question 12

Define maquiladora.

Answer 12

A manufacturing operation (plant) located in free trade zones in Mexico.

They import materials for assembly, then export the final product without trade barriers.

Question 13

Define bottom up.

Answer 13

When local people are consulted and supported in making decisions to undertake projects / developments that meet their specific needs.

Question 14

Define top down.

Answer 14

When the decision to undertake projects / development is made by a central authors eg government with little to no consultation with local people whom it will affect.

Question 15

Define bilateral agreement.

Answer 15

An agreement on trade (or aid) that is negotiated between two groups of countries.

Question 16

Define common markets.

Answer 16

A group formed by countries in geographical proximity in which trade barriers for goods and services are eliminated.

(This may eventually apply to removing any labour market restrictions, as in the EU).

Question 17

Define customs unions.

Answer 17

A trade bloc which allows free trade with no barriers between its member states but imposes a common external tariff to trading countries outside the bloc. (Eg the EU).

Question 18

Define tariffs.

Answer 18

A tax placed on imported goods with the intention of making them more expensive to consumers so that they do not sell them at a lower price than home based goods. (A strategy of protectionism).

Question 19

Define multilateral agreement.

Answer 19

An agreement negotiated between more than two countries at the same time.

Question 20

Define outsourcing.

Answer 20

A cost saving strategy used by companies who arrange for goods or services to be produced or provided by other companies, usually at a location where costs are lower.