4.1 Globalisation

Question 1

How is Economics Growth Defined?

Answer 1

An increase in a country’s productive capacity.

Question 2

How is Emerging Economics Defined?

Answer 2

The economies of developing countries where there is rapid growth, but also significant risk.

Question 3

How is Human Development index (HDI) defined?

Answer 3

A collection of statistics that measures each country’s social and economic development

Question 4

How is Literacy rate defined?

Answer 4

The Percentage of adults (over 15) that can read and write

Question 5

Why do Investors like Emerging Markets?

Answer 5

• they are likely to grow more quickly than more mature markets.
  -Therefore a business should be able to increase profits and dividends.

Question 6

What Does the Initialism BRICS stand for?

Answer 6

-Brazil
-Russia
-India
-China
- South Africa

Question 7

What does the Initialism MINT stand for?

Answer 7

• Mexico
• Indonesia
• Nigeria
• Turkey

Question 8

How is GDP defined?

Answer 8

A common measure of national income, output or employment.

Question 9

How does Economic growth create trade opportunities and what is the implications for both individuals and businesses?

Answer 9

• growing economy = growing consumption
• disposable income rises therefore increase in demand for goods and services.
• These goods/ services can be produced domestically or imported from abroad, creating many opportunities for trade.

Question 10

What are some indicators of growth?

Answer 10

-GDP per Capita
-Data from a countries GDP
- literacy
- Health
-Human Development Index

Question 11

l

Answer 11

l

Question 12

How is literacy used as an indicator of a countries growth?

Answer 12

• the quality of employees. both as workers and potential consumers
• a company looking to invest wants the most productive employees they can find at the lowest costs.
  -a company exporting to a country will want to consider the consumers they want to sell to, understanding their potential consumers they will know how to market its goods and services to them
• this can be found out by the literacy rate provided by the UN which is the percentage of adults that can read and write.

Question 13

How is Health an indicator of a countries growth?

Answer 13

• An assessment of the health of a population may include –> life expectancy at birth, infant and maternal mortality, pollution exposure and access to clean water.
• The World Health Organisation collects and evaluates statistics relating to a broad range of indicators that can be used to assess population health

Question 14

How is HDI an useful to a business?

Answer 14

-A business may want to use the HDI to investigate a potential market or location for investment.

Question 15

How is Comparative advantage defined?

Answer 15

The theory that a country should specialise in products and services that it can produce more efficiently than other countries.

Question 16

How is competitive advantage defined?

Answer 16

The idea that a business should specialise in any area (products, services, management, research, etc) where it can perform better than its competitors.

Question 17

How is Division of Labour defined?

Answer 17

Different workers specialising in different productive activities

Question 18

How is Exports defined?

Answer 18

Goods or services that a firm produces in the homer market, but sells in a foreign market.

Question 19

How is Foreign Direct Investment defined?

Answer 19

Investing by setting up operations or buying assets in businesses in another country.

Question 20

How is Imports defined?

Answer 20

Goods and services that are bought into one country from another.

Question 21

How is Specialisation defined?

Answer 21

A production strategy where a business focuses on a limited scope of products or services. This results in greater efficiency, allowing for goods and services to be produced at a lower cost per unit.

Question 22

How are Tariffs defined?

Answer 22

Taxes that are imposed on imports.

Question 23

What is the link between business specialisation and division of labour?

Answer 23

• Specialisation increases the speed and skill at which a task can be done thereby improving efficiency.

Question 24

What is Competitive Advantages?????

Answer 24

• Michael Porter extended the comparative advantage theory that businesses can gain a competitive advantage in international trade just like countries do
• the idea that a business should specialise in any area (products, services, management, research, etc) where it can perform better than its competitors.
• specialisation in production on a limited scope of products could lead to a lower cost per unit thus can reduce prices or increase profit margins.

Question 25

Why might a business invest directly in other countries?

Answer 25

- to seek out new growth they expand into new markets. - a firm may decide to do this because the business: - has a high potential for making a profit - control over its subsidiaries - direct knowledge of the local market - to avoid barriers to the market

Question 26

What is Horizontal FDI?

Answer 26

- are those in the same industry, such as the Spanish bank Sabadell takeover of British bank TSB

Question 27

What is Vertical FDI?

Answer 27

-when seeking to acquire materials or support for its own products or services, put another way the firm is moving into another part of the value chain, such as when a firm is moving into another such as when a firm opens a call centre in another country to deliver customer or staffing support - this should help lower its costs, allowing growth in revenue or profit

Question 28

How is Globalisation defined?

Answer 28

The growing integration of the world’s economies.

Question 29

How is Transnational or multinational companies defined?

Answer 29

Companies that own or control production or service facilities outside the country in which they are based.

Question 30

How is the World Trade Organisation (WTO) defined?

Answer 30

An international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers. It polices free trade agreements, settles trade disputes between governments and organises trade negotiations.

Question 31

What are some key features of Globalisation?????

Answer 31

- Goods and services are traded throughout the world. - Many people are able to live and work abroad, leading to multicultural societies. - There is a high level of interdependence between countries. This means that events in one economy are likely to affect other economies e.g. the Financial Crisis of 2008 - Capital flows freely between countries. - There is an interchange of technology and intellectual property across borders, increasingly patents granted in the US are recognised in other countries. - Globalisation is not complete, some countries have strict immigration rules, e.g. US and Australia, and some high trade barriers including tariffs and quotas.

Question 32

What are some Factors contributing to Globalisation?

Answer 32

- Reduction of international trade barriers/trade liberalisation - Political change - Reduced cost of transport and communication - Increased significance of global (transnational) companies - Increased investment flows - Migration - Growth of the global labour force - Structural change

Question 33

How is Dumping defined?

Answer 33

Where an overseas firm sells large quantities of a product below cost in the domestic market.

Question 34

How is Embargo defined?

Answer 34

A complete ban on international trade – usually for political reasons.

Question 35

How is Import Quota defined?

Answer 35

A physical limit on the quantity of imports allowed into a country.

Question 36

How is Protectionism defined?

Answer 36

An approach of shielding a country's domestic industries from foreign competition by taxing imports.used by a government to protect domestic producers.

Question 37

How is Subsidy defined?

Answer 37

Financial support given to a domestic producer to help compete with overseas firms.

Question 38

How is Tariffs or custom duties defined?

Answer 38

A tax on imports to make them more expensive.

Question 39

How is Trade barriers defined?

Answer 39

Measures designed to restrict trade - can cause retaliation

Question 40

How is a Free Trade Area (FTA) defined?

Answer 40

A region where member states remove all trade barriers between themselves, but each member state nevertheless keeps different barriers against non-member states.

Question 41

How is Preferential Trading Area (PTA) defined?

Answer 41

A type of trading bloc where certain types of products from participating countries receive a reduced tariff rate.

Question 42

How is Trading Bloc defined?

Answer 42

A group of countries that has signed a regional trade agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves.

Question 43

What is NAFTA?

Answer 43

- North America Free Trade Agreement (US, Canada and Mexico)

Question 44

What are the Factors to consider in Trading Blocs?

Answer 44

1 - Where to Produce --> A company may be able to locate in a neighbouring country where the costs of land, labour or capital are most favourable to it, and then ship goods and services to other members. 2- Where to Sell --> Companies may view trading bloc as one big market for their goods and services. This can present opportunities, but also threats. e.g. NAFTA drove many Mexico retailers out of buisnesses 3 - How to enter Market --> The market entry strategy may be adapted according to the opportunities presented by the free trade areas or common market, and can range from new investments through to join venture and mergers. 4 - Business Strategy --> A business may not have been able to export to a neighbouring country because of the existence of trade barriers. Once these barriers are negotiated away as part of a trade agreement, they may be able to do do.

Question 45

how is economic growth measured

Answer 45

gdp

Question 46

why are employment patterns an important indicator of the health of an economy

Answer 46

high unemployment indictes a low economy growth

Question 47

what are the brics countries

Answer 47

brazil russia india china south africa

Question 48

what are the mint countries

Answer 48

mexico indonesia nigeria turkey