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
What does ASEAN stand for
Association of the south east Asian Nations
When was the ASEAN founded
Eighth of August 1967 in the Bangkok declaration
How many nations are part of ASEAN
10 nations
What are some of the nations are part of the ASEAN
Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. 
What are some weaknesses of the ASEAN trade Block
Four major weaknesses
1. Tendency to prioritise national over regional interests
2. Weak leadership
3. Ineffective bureaucratic structure
4. Purely copying the western approach
What are some strengths of the ASEAN trade bloc
Reduces trade barriers between member states that’s helping improve economic growth in the region
Promoting regional peace and stability of its members
What were the bra– Wars
In 2006 the EU banned imports of Chinese Underwear on the basis that the annual Quotas have been met And they were jeopardising EU clothing companies
What Decisions did the UK government made in the 1980s? (trade)
Remove trade barriers and let some industries collapse – trade Liberalisation
How did the UK government encourage economic growth? (1980’s)
Taxbreaks-trade liberalisation
Privatisation
What decision did China make in 1978
The open door policy allowing investment of FDI from Western TNCs
Why did special economic zones attract European USA market
As they have tax incentives and cheap labour
How has China’s economy changed since the open door policy began? (allowing it to do)
China is now economically developed enough to have TNCs doing major outward FDI
What role does China play with global FDI
China is the biggest sender and receiver of FDI
How did government backing help attract FDI in China
Many Chinese TNCs will do business which is partly backed by the state reducing risk of loss for TNCs
Why did good infrastructure in China attract so much FDI
As there is mega buildings, roads, reliable water and electricity and Migrant employees to come and work(cheap)
All in place and efficient keeping costs low for TNC
Why was political stability important receiving FDI in China
Communist Party has been passed since 1949 stability reduces the risk for TNCs
why are cheap goods an important for China receiving so much FDI
Low price so able to outsource manufacturing to far off places and still make money
Why was cheap skilled labour important for China seen so much FDI since 1978
Labour is cheaper than in the EU And USA reducing cost and maximising profits
Why is China as an emerging market important increase the FDI since 1978
As it is a huge potential market so good to us today is a population of 1.34 billion people which is huge attractive TNCs
What is a special economic zone or SEZ
Geographical region that has economic and other laws that are more free market orientated Than a country’s typical or national laws
What is the most successful SEZ China
Shenzhen has developed from a small village into the city with a population over 10 million won in 20 years
What do SEZ’s do
manufacturing areas were taxes are reduced as an incentive for companies to offshore outsource manufacturing
