Theme 4.1 - Global Business Flashcards
What does GDP stand for
Gross domestic product
What is GDP
The growth rate of the country which is measured annually
What is an emerging economy
Where there are increasing growth rates but a relatively low capita per head
What’s is Uks growth like
UK often is seen to have lower growth due to manufacturing sector being down in emerging economies as there are
- lower labour costs
- access to raw materials
What is globalisation
The economic integration with different countries
Implications of Economic growth
- Reduced cost of production which lead to easier, quicker and cheaper access to raw materials
What are the four indicators of growth
- GDP
- Health
- Literacy
- HDI
What are imports
Goods/services bought by people and businesses in one country to another
What are exports
Goods sold by domestic businesses to people/businesses in other countries
What is specialisation & 2 advantages
Where a country/business decides to focus on 1 product
+ lower unit costs
+ competitive advantage
What does FDI stand for
Foreign direct investment
What is FDI
Investment into a business in another country to gain a share in ownership
3 Benefits of FDI
- Increased economic growth
- Increased job opportunities
- Access to knowledge and expertise
What are the two types of FDI
Inward and Outward FDI
What is inward FDI
Foreign investment into local economy
What is outward FDI
Expanding operations and investment into a foreign country
What is trade liberation
Removal/reduction of barriers to trade between different countries
Strength & Limitation of trade liberalisation
- Domestic firms may not be able to keep up with international firms
+ Reduced costs, raw materials can be sourced more cheaply
Influences of globalisation
- Political change
- Reduced trade barriers
- Reduced transport and communication costs ( containerism - reduced business costs - economies of scale)
What is Protectionism
Where the government seeks to protect domestic industries from foreign competition
2 Examples of protectionism
- Tariffs
- Import quotas
What is a tariff
Tax place on imported goods
What is an import quota
Government imposed limit on amount of particular product allowed into a country
EV - (strength&weakness) of Tariffs
+ protection of infant industries
- reduced competition
EV - (strength&weakness) of Import quotas
+ to meet extra demand domestic businesses need to hire more workers, decreasing unemployment
- price of product will rise when supply becomes more and more limited
What is a trading bloc
Group of countries forming an agreement to reduce/eliminate protectionist measures between eachother
What are the 3 largest trading blocs
- EU (European Union)
- ASEAN (Association of South East Asian nations)
- USMCA (United States, Mexico and Canada)
What is the EU & Rules
- 28 countries
- Free movement of people and goods (no trade restrictions)
What is the ASEAN & Rules
- 10 countries
- Free movement of goods but not people
What is USMCA and rules
- 3 Countries
- Aim in promotion free trade
- USA relocated manufacturing to Mexico (cheaper labour)
What are 4 benefits of Trading Blocs for businesses
- Wider markets
- external tariff walls
- infrastructure support
- free movement of labour
What are 4 drawbacks of Trading Blocs
- increased competition
- common rules and regulations
- retaliation
- inefficiency
