theme 4 pros/cons/factors/definitions Flashcards
Factors of globalisation
- Improved transport infrastructure (containerisation)
- improvements in communication and technology
- trade liberalisation
- international financial markets
- TNCs operating globally
Impact of globalisation
- trade creation
- higher tax revenue
- increase consumer surplus
Limitation of comparative advantage
- assumes no transport cost
- assumes no EOS and costs are constant
- assumes goods are all homogenous
- assumes FOP are perfectly mobile
- depends on countries TOT if trade takes place
pros of specialisation and trade
- increase world output and efficiency
- greater choice
- greater competition
- allows EOS from greater output
cons of specialisation and trade
- over dependent in imports and exports
- structural unemployment (job loss)
- loss of sovereignty in trade bloc
factors of pattern of trade
- comparative advantage
- emerging economies
- trading bloc
- exchange rates
(k) terms of trade
Amount of exports needed to be sold to buy imports
Types of trading blocs
PTA
FTA
Customs unions
common market
monetary unions
advantage of trading blocs
- trade creation
- larger market
- protects economies from cheaper imports
- increase choice
- increase jobs
cons of trading blocs
- trade diversion
- fall in competition
- retaliation
Reasons for restriction in free trade
- protects infant industries
- job protection
- protection from import dumping
- protection from unfair competition
- improves TOT
Types of restrictions on free trade
Tariffs
Quotas
Subsidies
embargoes
import licensing
Policies to improve current account deficit
- SSP
- Expenditure switching
- Expenditure reduction
factors of exchange rates
- speculation
- current account
- ## FDI
Measures of international competitiveness
- relative unit labour cost
- relative export prices
Causes of wealth and income inequality
- wages
- welfare payments and taxes
- unemployment
What does human development index measure?
- life expectancy at birth
- mean years of schooling
- expected years of schooling
- GNI per capita
What theories highlight the cons of primary product dependency
- dutch disease
- prebisch singers hypothesis
Define national debt
Total % of GDP that is borrowed, increases due to interest rates
roles of central banks
- controls monetary policies
- bankers to government
- bank to other banks
- regulate financial systems
Types of government expenditure
Current spending
(spending on public sector)
Capital spending (spending on infrastructure)
Transfer spending (direct payments to households via benefits)
Two types of tax systems
regressive - lower tax rate as you earn more income
progressive - higher tax rate as you earn more income
