what is gross domestic product
total value of goods produced and services provided in a country within a given period of time
UK growth tends to be lower than emerging economies
- growth of the manufacturing sector
- businesses choose to manufacture in emerging economies due to lower labour costs and access to raw materials
what is globalisation
economic integration of different countries through increasing freedoms in the cross-border movement of people, goods, technology & finance
Emerging economic powers of countries within Asia, Africa and other parts of the world include
BRICS: Brazil, Russia, India, China and South Africa
MINT: Mexico, Indonesia, Nigeria and Turkey
the implications of economic growth
Impacts on Businesses
- Reduced costs as firms benefit from lower labour costs and cheaper raw materials
- Increased trade opportunities as demand for goods and services increases
the implications of economic growth
Impacts on Individuals
- Reduced unemployment as there is more demand, which requires more labour to increase output
- Increased average incomes as individuals due to employment, which increases the standard of living
- Access to quality public services as tax revenue is generated. The government improves public services
There are four key indicators used to assess the economic growth of emerging economies
- literacy
- health
- GDP per capita
- Human Development index - HDI
What is GDP per capita
is calculated by taking the total output (GDP) of a country and dividing it by the number of people in that country
what is protectionism
any method that restricts free trade
tariff definition
A tax is placed on an import to increase its price and decrease demand. This shifts demand from foreign firms to domestic ones
quota definition
physical limit on the quantity of a good imported or exported. so domestic firms face less competition
The benefits of tariffs include
- protect infant industries so they can become more competitive globally
- increase in government tax revenue
- domestic goods will be cheaper
- ensures better job security
The disadvantages of tariffs include
- high import prices won’t put people off
- reduces consumer choice
- Tariffs may increase prices for consumers
The benefits of import quotas include
- meet extra demand, domestic businesses may hire more workers which reduces unemployment
- Countries can change import quota as market conditions change
- their exporters can still sell their goods at a higher price in domestic markets (but a limited amount)
The disadvantages of import quotas include
- Quotas limit the supply of a product so the price of the product rises
- reduces the level of competition
what is a subsidy and how odes it act as a trade barrier
is an amount of money given by the government to protect particular industries. they lower prices making the price more competitive
Benefits of subsidies
lead to a lower price, making domestic firms more competitive
Legislation as a trade barrier
impose laws to restrict imports to protect customers and firms. they may need to meets strict regulations in order to be allowed into countries
Positives and negatives of legislation as a trade barrier
+ domestic firms grow - due to limited competition
- lead to retaliation from other countries
what is a Trading bloc?
a group of countries that has signed an agreement to reduce/eliminate tariffs, quotas and other protectionist measures within themselves.
Different types of trading blocs
- Preferential trade arrangements (PTA)
- Free trade areas (FTA)
- Customs unions (CU)
- Common markets
- Economic unions
Benefits of trade blocs
- Foreign Direct Investment
- Economies of Scale
- access wider markers
- infrastructure support
- free movement of labour
- Greater trade: protectionist measures are reduced, which stimulates greater demand
drawbacks of trade blocs
- increased competition
- retaliation from countries outside the trade bloc
impacts of businesses
outside the trading bloc
firms will face higher costs form the protecitons measures
