(t1) trade, financial flows and foreign investment

Question 1

Define composition of trade

Answer 1

The mix of what goods & services are traded

Question 2

What is the most globalised sector in the world and why?

Answer 2

Finance is the most globalised sector in the world economy because money mores between countries more quickly than goods & services or people

Question 3

Why did international financial flows expand substantially in the 1970s & 1980s?

Answer 3

Financial deregulation:)

Question 4

How has technology played an important role in financial flows?

Answer 4

Technological advancement & global communications networks link financial markets throughout the world

Question 5

The volume of financial flows fluctuates in response to what?

Answer 5

Global conditions

Question 6

List years when sharp falls in financial hows occurred:

Answer 6

2008 (GFC), 2015 (Eurozone crisis) & 2020 (COVID19)

Question 7

What are foreign exchange markets?

Answer 7

Networks of buyers & sellers exchanging one currency for another in order to facilitate flows of finance between countries

Question 8

What is an exchange rate?

Answer 8

The value of a currency expressed in terms of another currency

Question 9

What are the main drivers of global financial how’s

Answer 9

Speculators & currency traders

Question 10

What are speculators?

Answer 10

Investors who buy or sell financial assets with the aim of making profits from short-term price movements. They also create excessive volatility in financial markets.

Question 11

What is the main benefit of greater global financial flows?

Answer 11

Enable countries to obtain funds that are used to finance their domestic investment - helps a country achieve higher levels of investment → economic growth

Question 12

What is foreign direct investment (FDI)?

Answer 12

The movement of funds that are directly invested in economic activity or in the purchase of companies

Question 13

What is foreign direct investment (FDI)?

Answer 13

The movement of funds that are directly invested in economic activity or in the purchase of companies

Question 14

What was the main destination for FDI during the globalisation decades of the 1990s & most of the 2000s?

Answer 14

Economies in Europe, north America & Japan

Question 15

How has the destination of FDI changed since 2020?

Answer 15

The destination of FDI has shifted to developing countries with a majority of FDI inflows going to economies in Asia.

Question 16

What are transnational corporations (TNCs)?

Answer 16

Large companies that operate in multiple countries beyond their original country. They have facilities & assets in several countries, & coordinate across international borders.

Question 17

How much does TNCs account for in global trade?

Answer 17

Roughly 1/2

Question 18

Benefits of TNCs:

Answer 18

More job opportunities, foreign investment, new technologies, skills, & knowledge

Question 19

How much of total investment does FDI account for?

Answer 19

Less than 20%

Question 20

How does technology influence globalisation?

Answer 20

Decreases trade costs, international communication, easy movement of money, greater labour mobility

Question 21

How does technology transport and communication influence globalisation?

Answer 21

Decreases trade costs, international communication, easy movement of money, greater labour mobility