Theme 4 Slattery Flashcards
What is globalisation
Interdependence of world economies for trade and this includes people, products and ideas
Drawbacks for globalisation
-increase in the concept of robots so less work
-pollution
-inflation
Benefits of globalisation
-China benefitted through taking jobs in the USA
-spread health improvement
-more choice for children
Terms of trade
How many exports we have to sell our imports
Terms of trade equation
Index of export prices
——————————- X 100
Index of import prices
Factors influencing costs of imports and exports
-exchange rate
-inflation
-productivity
-the added value
-whether goods are elastic or inelastic
Trading bloc
These are created to encourage trading partners to buy and sell goods amongst its members. More favourable trading conditions offered to members and there is often less favourable trading conditions offered outside the bloc
Benefits of the EU
-enables goods, services, money and people to move freely throughout most of the continent. Currently been 70 years of peace showing that it does work.
Problems of the EU
-takes away firms incentive to invest in technology
-not all members have equal economies
-brain drain
Advantages of trading blocs
-firms compete each other
-economies of scale
-increased foreign investment
Disadvantages of trading blocs
-competition for weaker countries
-interdependence
-trade diversion
protectionism
protecting domestic market from foreign goods and services
6 ways to use protectionism
-quality of standards (making them high)
-admin and red tape (make it difficult)
-subsidies (to domestic firms)
-embargos (a ban)
-tariffs (tax)
-quotas (limited amount)
evaluation of tariffs
-retaliation
-trade war
-damage specific industries
what is a quota
allowing in a specific agreed quantity of imported goods into your country
what do quotas do
-ensure that parliament truly reflect the population it represents
-help regulate the volume of trade between them and other countries
-they safe guard local jobs and industries
-they can benefit local industries
absolute poverty
living less than $2 a day
relative poverty
households receive 50% less than average household incomes
causes of poverty
-poor education in the area
-lack of employment in the area
-lack of infrastructure
impacts of poverty
-higher crime rates
-high unemployment
-investments within the economy are reduced
Case study for poverty
South Sudan.
Population of South Sudan
10.75 million
GDP per capita of South Sudan
1,070 USD
What is significant about South Sudan
They are a landlocked country. They import most items meaning the inflationary prices of imports are pushed onto the consumers.
what is the lorenz curve
it is a graphical representation of income/wealth distribution and it shows that not everyone earns the same % of income in comparison to % of population
gini coefficient
section A / section A + B
harod - domar model
–> increased savings –> increased investment –> higher capital stock –> higher economic growth –>
what is international aid
any form of needed assistance by one country to another
how does aid relate to the harod domar model
aid becomes the savings which then becomes the investment for the country to rebuild
criticisms of aid
-creates a dependency culture
-corruption
-creates a pity culture rather than a planning culture
debt relief
cancelling the debt of developing countries
criticisms of debt relief
-undemocratic
-no legal obligation on private creditors to cancel debt
-6 year program is too long
the lewis model
moving surplus unproductive labour from rural areas into the cities:
-building economy based on productive manufacturing which eventually moves to services related economy
the lewis model picture
advantages of the lewis model
-economic growth stimulated
-reduces unemployment
-increases efficiency
disadvantages of the lewis model
-higher inequality gap
-geographical immobility
-decreased living standards
(Industrialisation in South Korea) population of South Korea
51.74 million
key exports of South Korea
electrical machinery, cars
gdp per capita in South Korea
$34,997.78 USD
positives about South Korea industrialisation
-education
-lots of jobs
-subsidies
-productivity
negatives about South Korea industrialisation
-no entrepreneurship
-export driven economy
-diseconomies of scale
why might South Korea’s method of industrialisation not work for all countries
For example, central african republic don’t have the same amount of population.
Primary product dependency
when a country over depends on the production and export of a primary sector product (oil, metal, sugars, gold etc)
disadvantages of primary product dependency
-limited resources
-prices often volatile due to economic demand
benefits of an oil based economy such as Angola
-oil can provide extensive revenue still which could be used back as investment
-oil is extremely inelastic
problems with oil based economy such as Angola
-very few jobs created
-low investment in other industries
-oil is non renewable
advantages of primary product dependency
-attracts fdi
-source of economic growth
who type of consumer does tourism aim for
high income consumers
How much total GDP in 2019 did Kenyan travel and tourism industry represent
8% of total GDP was represented by Kenyan travel and tourism industry represent
negative economic impacts
-infrastructure cost
-seasonal character of jobs
what is Microfinance
allows people to take on reasonable small business loans safely. This promotes enterprise
who does Microfinance target
women, low income and those living in rural economies
(microfinance) population of Bangladesh
170 million
(microfinance) GDP per capita
$2,457.92 USD
(microfinance) mean age in Bangladesh
27.1 years old
microfinance in Bangladesh evidence
Bank has helped 7,000 micro lenders with 25 million clients lending money to new entrepreneurs that previously had limited finance. chance for new economic growth
positives of microfinance in Bangladesh
UK and US welcomes micro-lending institutions for their own impoverished populations
negatives of microfinance in Bangladesh
entrepreneurs can’t make the most out of the loan as they lack basic business skills
