4.1 globalisationn

Question 1

trade opportunities for international business:

Answer 1

• increased FDI
• opportunity for exporting to developing countries
• better infrastructure, developing countries becoming more production locations

Question 2

indicators of growth:

Answer 2

• real GDP
• GDP per capita
• comparing currencies

Question 3

measures of health:

Answer 3

• life expectancy
• infant mortality
• access to clean water
• doctors per 100,000

Question 4

HDI measures:

Answer 4

• life expectancy
• mean years of schooling
  GNI per capita

Question 5

what is foreign direct investment?

is it risky?

Answer 5

• involves direct investment into a country

- more risk than exporting/importing, allows a firm to access comparative/competitive advantage

Question 6

reasons for FDI:

Answer 6

• investment in expanding industry and fast growing, profitable business
• access to infrastructure
• access to local knowledge/skills
• access to foreign brands
• access to local resources

Question 7

what is globalisation?

Answer 7

• the increasing integration and cooperation between countries and the growth of international trade

Question 8

key factors of globalisation:

Answer 8

• multicultural society
• flow of capital between countries
• economic inter-dependency between countries
• goods and services traded throughout the world
• interchange of technology

Question 9

what is protectionism?

Answer 9

• involves protecting domestic business and home industries against foreign competition and limiting the number of imports on the country

Question 10

benefits of free trade:

Answer 10

• provides growth opportunities

- allows businesses to access components, raw materials and finished goods far cheaper

Question 11

what are examples of protectionism in practice?

Answer 11

• tariffs
• subsidies
• quotas
• technical barriers

Question 12

what are tariffs?

Answer 12

• tax on imports that increase the price of imported goods

Question 13

what are subsidies?

Answer 13

• government grants given to support exporting business to they can lower their prices to compete internationally

Question 14

what is a quota?

Answer 14

• physical limits set on the number of units that can be imported into a country

Question 15

what is a technical barrier?

Answer 15

• e.g. rules and regulations governing the standard of products entering the country

Question 16

what is a trading bloc?

Answer 16

• partnerships and agreements between nations to allow free trade and the collaboration and integration of economic, political and cultural practices

Question 17

what are examples of trading blocs?

Answer 17

• NAFTA (north american free trade agreement)
• EU
• ASEAN (association of southwest asian nations)

Question 18

benefits of trading blocs?

Answer 18

• opportunity to expand into new markets
• benefit from comparative advantage
• easier to source labour if free movement is permitted
• aligns international legislation making markets more efficient

Question 19

drawbacks of trading blocs?

Answer 19

• countries outside bloc may have better comparative advantage
• infant industries are vulnerable to large international competitors
• tensions with regions outside of bloc