Political and economic decision-making Flashcards
What is trade?
Good is that is of a specific standard + prompt payment according to the trading agreement
Why do governments regulate cross-border trade
As governments recognise the benefits of increasing trade phase for economic growth employment and taxation revenue
What is a potential disadvantages from cross border change
Domestic companies may become overspecialised
Competition from abroad may lead to collapse of domestic firms
What is a UK example of a company coming over specialised
UK specialisation of financial services – which was hit by the 2008 global crash
What is protectionism?
The name pose taxes and tariffs On imported goods, to protect the trade from competition – this is called protectionism
What did the USA and the UK think was the best way to combat the spread of communism
Accelerate economic development by the establishment of three main IGO’s
What are two main processes that IGO want to promote in terms of helping globalisation
Foreign direct investment
Free trade
What is foreign direct investment
Controlling ownership in a business enterprise in one country by company or organisation in another
investment of money or technology by a company or country
What must governments wishing to receive investment in their economies from abroad do
They must make it legal for foreigners to own and control business/property in the country
What is inorganic FDI
When a foreign form buy as company in another country
What is a UK example of inorganic FDI
The UK received £12 billion of FDI when Kraft foods purchase Cadburys in 2010
What is organic FDI
Where are foreign investment expand the operation of an existing business in a foreign country
What is an example of organic FDI
In 2015 Nissan invested £100 million in its existing car plant in Sunderland to produce the next generation of its “Juke“Car
Why would national government encourage FDI
Bring skills
Economic growth
job creation
productivity
How the uk encourage FDI
Subsidise for research and development
Tax‘ holidays‘ Or other tax concessions
What is privatisation
Transferring ownership of a business, agency, service or property from the public (government – controlled) sector to the private sector
What is liberalisation
Reducing/remove rules restricting economic activity and companies
Why do governments to liberalisation
As they think that rules make businesses inefficient, and reduce motivation and innovation
What is a trade bloc
 A type of intergovernmental agreement, where are used to trade in a world region are Or eliminated in the participating states
What are the aims of trade blocks
Promote free trade between all member nations by removing trade barriers
Try to make trade between member nations as easy as possible
Protect trade in the group by placing trade barriers on trade from outside block

In what ways Do trade blocs help globalisation?
Encourage more trade between member  nations
Often it leads To intratrade block trade deals
How can trade blocks negatively affect globalisation?
They can reduce trade outside the block slowing down global flows and leading poor nations isolated
They can lead To trade wars between trade blocks reducing global flows
What are the advantages of the larger size of the market
Largest population to sell goods to
Higher population = more sales
More sales = more products made
What is comparative advantage
Easier to trade different goods and services due to the restrictions so They can concentrate on making what they are good and trade for things are not good at
