4.1 Globalisation

?
Why is exporting helpful for economic growth?
Additional revenue; Foreign Direct Investment (FDI) creates jobs and education; Wider markets to sell to; Allows countries to specialise; Best use of scarce resources; Higher output leads to economic growth.
1 of 33
How exporting can hinder economic growth?
Primary product dependency; Increased competition for domestic companies; Increased competition reduces price level, causing GDP to fall.
2 of 33
Types of Foreign Direct Investment
Setting up direct operations; Joint ventures; Acquisitions.
3 of 33
Benefits of FDI to the company
Access to relatively untapped market; Increased revenue streams; Lower cost labour; Possible government incentives to attract FDI; Close to raw materials; Avoid import tariffs
4 of 33
Benefits to the country who receives FDI
Technological and Skills spill-over; Jobs; Training/education; Higher incomes; Higher Government revenues.
5 of 33
Disadvantages of FDI to the company
Legal barriers; Cultural barriers; Language barriers; Transportation costs; Quality of products.
6 of 33
Disadvantages of FDI to the country
Local businesses may lose employees; Culture loss; May exploit workers.
7 of 33
Inward FDI
A foreign firm invests in the UK.
8 of 33
Outward FDI
A UK based business completes a takeover of a business abroad.
9 of 33
Free Trade
An economic policy of not discriminating against imports and exports to other countries.
10 of 33
Protectionism
Involves any attempt by a country to impose restrictions on trade in goods and services.
11 of 33
Key Benefits of Free Trade
Countries can benefit from comparative advantage; Economies of scale; Encourages competition and economic efficiency; Enables businesses to grow.
12 of 33
The World Trade Organisation (WTO)
An organisation that deals with the world's trade. Its main function is to ensure that trade flows smoothly.
13 of 33
Tariffs
A tax or duty that raises the price of imported products.
14 of 33
Import Quotas
Volume limits on the level of imports allowed or a limit to the value of imports at any given time period.
15 of 33
Subsidies
A payment to encourage domestic production by lowering their costs.
16 of 33
Import Licensing
Governments grant importers licenses to import goods- these can be restricted.
17 of 33
Exchange controls
This involves limiting currencies that can move between countries.
18 of 33
Intellectual Property Laws
Patents and copyright protection protecting domestic ideas and products.
19 of 33
Technical barriers to trade
Including labelling rules and stringent sanitary standards, technical barriers to trade increase product compliance costs.
20 of 33
Key arguments in favour of protectionism
Infant industry protection; Protection of strategic industries (e.g. with lots of jobs and skills); Protection against Import Dumping (a form of predatory pricing); Improve balance of payments; Raise tax revenue; Prevent entry of bad goods.
21 of 33
Key arguments against protectionism
Higher prices for consumers; Retaliation from other countries; Extra costs for exporters.
22 of 33
Globalisation
When economies become integrated through the global network of trade, communication, immigration and transportation.
23 of 33
Characteristics of Globalisation
Greater trade; An increase in FDI; Development of global brands; Greater use of outsourcing and offshoring; High levels of labour migration; Higher growth for developing economies.
24 of 33
Factors Contributing to Globalisation
Containerisation (Ocean bulk shipping); Technological Change; Economies of Scale; Difference in Tax Systems; Less Protectionism; Growth of MNCs and TNCs.
25 of 33
Trade Liberalisation
The removal or reduction of restrictions on the free exchange of goods between nations.
26 of 33
Economic Union
The same as a common market, except it also has a shared currency as well.
27 of 33
Free Trade Area (FTAs)
When two or more countries in a region agree to reduce trade barriers.
28 of 33
Customs Union
The removal of tariffs between members and agreeing a external tariff against non-members.
29 of 33
Common Market
Occurs when all member countries trade freely in all economic resources (including labour).
30 of 33
Advantages of Trade Blocs
Markets should get bigger; Allows members to specialise; Producers able to benefit from economies of scale.
31 of 33
Disadvantages of Trade Blocs
Inefficient producers may be protected from competition; Locally benefits may be distributed unequally; May harm world trade; More competition; Loss of skilled workers from non-member countries.
32 of 33
Impact of Globalisation
Increased trade; Greater competition; Economies of scale; Increased capital and labour mobility. However...Monopoly power of MNCs; Structural unemployment; Tax avoidance made easier.
33 of 33

Other cards in this set

Card 2

Front

Primary product dependency; Increased competition for domestic companies; Increased competition reduces price level, causing GDP to fall.

Back

How exporting can hinder economic growth?

Card 3

Front

Setting up direct operations; Joint ventures; Acquisitions.

Back

Preview of the back of card 3

Card 4

Front

Access to relatively untapped market; Increased revenue streams; Lower cost labour; Possible government incentives to attract FDI; Close to raw materials; Avoid import tariffs

Back

Preview of the back of card 4

Card 5

Front

Technological and Skills spill-over; Jobs; Training/education; Higher incomes; Higher Government revenues.

Back

Preview of the back of card 5
View more cards

Comments

No comments have yet been made

Similar Business resources:

See all Business resources »See all Globalisation resources »