Unit 2.4 Foreign Direct Investment & Globalisation

Question 1

What does FDI stand for?

Answer 1

Foreign Direct Investment

Question 2

Where does FDI usually come from?

Answer 2

Multinational Companies (MNC’s)

Question 3

What does Multinational mean?

Answer 3

Operating in several Countries

Question 4

Give and example of a MNC

Answer 4

Nike, Apple, Tata

Question 5

What is a PLC?

Answer 5

Public Limited company. This mean sit is owned by people who have bought share sin the company.

Question 6

Name two resources that attracted FDI in Angola.

Answer 6

Diamonds and Oil.

Question 7

What would make a company more likely to invest in a developing country?

Answer 7

If it is politically stable.

Question 8

Name 4 ways governments can attract foreign investment.

Answer 8

Low tax rates or tax holidays
Few laws to protect the environment.
Relaxed labour laws and absence of trade unions.
Free trade zones with no tariffs to reduce import costs.

Question 9

List 3 Advantages of MNC Investment.

Answer 9

1. High employment for local people
2. Skills learnt
3. Exports of goods will earn money to pay for imports
4. People have money to spend and stimulate the economy.
5. Bigger choice of goods to buy.
6. Taxes are raised for the government.
7. The government have more money to spend on infrastructure.

Question 10

List 3 Disadvantages of MNC investment.

Answer 10

1. Industry is usually capital intensive.
2. Many skilled workers are brought in from overseas.
3. Profits go out of the country.
4. Wages are very low for a long time.
5. Goods are too expensive for local people.
6. Low taxes.
7. Corrupt governments will not use the revenue to reduce poverty.

Question 11

What is meant by the multiplier effect?

Answer 11

An investment that leads to further spending and income.

Question 12

Why do Free Trade Zones (FTZ’s) attract MNC’s?

Answer 12

There are no tariffs to pay on imports

Question 13

What is meant by an Export Orientated Strategy?

Answer 13

Production for the purpose of selling goods abroad.

Question 14

What is a Special Economic Zone?

Answer 14

A zone where all the infrastructure is provided such as roads, energy, water etc (in an area where these are otherwise poor).

Question 15

Define the word ‘Hub”

Answer 15

The centre of activity

Question 16

What does the word strategic mean?

Answer 16

An essential part of a plan to achieve a long term aim.

Question 17

What is meant by the term ‘high-tech’?

Answer 17

Advanced Technology especially electronics.

Question 18

What is meant by the term ‘bottom line’?

Answer 18

It is used to refer to a company’s profits as these are shown on the ‘bottom line’ of the accounts sheet.

Question 19

How does being environmentally responsible effect a company’s bottom line?

Answer 19

Pollution prevention measures etc cost money and therefore would reduce a company’s profits. They are not popular!

Question 20

Name 2 ways in which MNC’s can be bad for the environment

Answer 20

1. Natural environment; polluting rivers etc

2. Social environment e.g building factories on farm land

Question 21

Name 3 ways in which working conditions may be poor in a factory run my an MNC (often called sweatshops)

Answer 21

1. Long working hours
2. No breaks
3. No personal protective equipment (PPE)
4. Low wages
5. Lots of work is temporary - no job security.

Question 22

Define the word ‘Lobby”

Answer 22

Trying to influence those making decisions

Question 23

Define the word “Ethical”

Answer 23

Relating to good and right principals

Question 24

List some ways that companies may make efforts to be more sustainable.

Answer 24

1. Using bamboo instead of plastic packing
2. Sending employees to work on conservation projects.
3. Tree Planting
4. Recycling of cars at the end of their life.
5. Working to eliminate hazardous chemicals from manufacturing process.

Question 25

To help achieve MDG 8 consumers should try and buy from companies who are trying to….

Answer 25

1. Reduce their use of non-renewable raw materials e.g water.
2. Reduce waste.
3. Reduce the use of harmful chemicals.
4. Employ local people on decent wages.
5. Protect the natural environment.

Question 26

How might the internet be used to pressurise non-ethically minded companies?

Answer 26

Using twitter etc to shame companies. Bad publicity will put pressure on them to change their ways.

Question 27

What does the word ‘corporate’ mean?

Answer 27

Relating to a large business.

Question 28

Define the term ‘Globalisation’

Answer 28

International influence on the development of the business and trade links worldwide with the aid of telecommunications.

Question 29

What is meant by the term ‘outsourcing’?

Answer 29

Transferring part of the work of a company to another organisation somewhere.

Question 30

What does the word ‘remotely’ mean?

Answer 30

far away but accessed immediately via telecommunications.

Question 31

Name two advantages of a UK company outsourcing IT services to both India and Brazil.

Answer 31

1. The company can offer a 24 hour service to cutomers (different time zones)
2. Work on a computer programme can continue non-stop.

Question 32

Name 2 major transport improvements that have made transporting of goods easier.

Answer 32

1. Containerisation.

2. Electronic tracking and billing (barcodes).

Question 33

What does the term logistics mean?

Answer 33

It is used to describe how the movement of goods is managed from its point of origin until it reaches the consumer.