Theme 4 Flashcards
Indictators of economic growth
Gross domestic product per capita
Finding and evaluating data on GDP
Literacy
Health - inc. life expectancy, pollution exposure and access to clean water
Human development Index
Countries associated with the acronyms BRICS and MINT
BRICS - Brazil, Russia, India, China and South Africa
MINT - Mexico, Indonesia, Nigeria and turkey
Purchasing power parity
A measure of real growth that sides the price or purchasing a standardised basket of goods and services in order to compare prices across economics
Comparative advantage
The theory that a country should specialise in products and services that it can produce more efficiently that other countries
Competitive advantage
The idea that a business should specialise in any area (products, services, management, research etc) where it can perform better than its competitors
Foreign direct investment
Investing by setting up operations or buying assets in businesses in another country
Horizontal FDI and Vertical FDI
Horizontal refers to producing the same products or services as done at home
Vertical FDI is where one firm is seeking to acquire materials or support for its own products or services.
Different forms of FDI
Joint venture
Strategic alliances
Buying through cross-boarder mergers and acquisitions is the main way of that businesses undertake FDI
Factors contributing to inc globalisation
Reduction of international trade barriers / trade liberalisation
Political change
Reduction cost of transport and communication
Increased significance of global companies - MNCs
Increased investment flows
Migration
Growth of global labour force
Structural change
Globalisation
The growing integration of the worlds economies
Types of protectionism
Tariffs
Import quotas
Subsidies
Problems w trade barriers
A country may retaliate when barriers are imposed. - start trade war
Tariffs might also be ineffective if demand for imports is inelastic
Administrative barriers
Rules and regulations (such as trading standards and strict specifications) that make it difficult for importers to penetrate an overseas market
Common market
A market where foods, labour, and capita can move freely across the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least reduced
Customs union
A union where member states remove all trade barriers between themselves and members adopt a common set of barriers against non-members.
Economic and monetary union
An economic union that uses common currency
Single market
A market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country
Trading bloc
A group of countries that has signed a regional trade agreement or reduce or eliminate tariffs, quotas and other protectionist barriers between themselves
Impacts for businesses of trading blocs - benefits
volume of trade increases within the region, producers being able to benefit from economics of scale
Trade increases, result in greater competition and thereby more efficiency in the market
Resources may be easier to source and labour easier to recruit, while production and transport costs may continue to fall
Impacts on business of trading blocs - drawbacks
Overall may harm trade because countries outside the region may be better placed to specialise or develop a competitive advantage in the product and yet they are closed out of the market
Inefficient producers may be protected from competition, thereby diverting trade away from more efficient producers and potentially harming consumers
Push factors that prompt trade
Saturated markets - most of its customers who would buy a product already have it, limited remaining sales
Competition - May drive down prices due to lowered costs, declining demand, due to change of tastes
Pull factors that prompt trade
Economies of scale - lower cost per unit
Risk spreading - expanding into other countries and markets, firm may be able to limit the various risks that it faces, over dependance may leave a market vulnerable in the short term, long term a region characterised by a rapid aging population may not be a viable place for a business that sells mainly to under 30s
Off-shoring
Shifting jobs to other countries
Outsourcing
Shifting jobs to other organisations
