Globalisation

Question 1

What is the growth rate in the UK?

Answer 1

0.2% (December 2018)

Question 2

What is the growth rate in the MINT economies?

Answer 2

Mexico: 0.2%
India: 1.5%
Nigeria: 5.3%
Turkey: -2.4%

Question 3

Why do MINT economies generally have higher rates of growth?

Answer 3

Since they are producing most of the manufactured foods that are globally consumed, hence emerging markets have rapid growth but high risks

Question 4

What is the implication of economic growth for individuals and businesses?

Answer 4

Trade opportunities

Question 5

What are the indicators of growth?

Answer 5

• GDP per capita (how much production of goods divided by population)
• Literacy
• Health
• HDI (GNI + life expectancy + schooling)

Question 6

What is business specialisation?

Answer 6

Increase speed, efficiency and skill along with decreasing the time

Question 7

What is comparative advantage?

Answer 7

To specialise and engage in trade

Question 8

What is competitive advantage?

Answer 8

A business should specialise in any area where it can perform better

Question 9

What is FDI and how does it help businesses grow?

Answer 9

FDI is when a firm takes more than 10% equity stake in a foreign enterprise.

Question 10

What factors contribute to increased globalisation?

Answer 10

• reduction of trade barriers (WTO)
• political changes
• reduced cost of transport and communication
• more transnationals (MNCs)
• increased FDI
• migration
• structural changes (tertiary sector growth)

Question 11

Why would a country use protectionist measures?

Answer 11

• to protect jobs
• to protect infant industries
• to prevent dumping (foreign producers selling goods below cost in domestic market)
• raise revenue
• improve balance of payment
• prevent entry of harmful goods

Question 12

What are forms of trade barriers?

Answer 12

• Tariffs
• Quotas
• Government legislation
• Subsidies

Question 13

What are problems with imposing trade barriers?

Answer 13

• Retaliation

- Inelastic demand for imports

Question 14

What are the types of trading blocs ?

Answer 14

• Regional trade agreements (allows certain types of products from countries) ASEAN
• Free Trade Area (NAFTA)
• Customs Union (members have a common set of barriers against non members, but free trade between them) CARICOM
• Common market (goods, labour and capital move freely) ASEAN
• Single Market (common laws and free movement) EU
• Economic Union (common currency) EU

Question 15

What are the opportunities and drawbacks of being in a trading bloc?

Answer 15

Opportunities: 
- Specialise in competitive advantage 
- bigger market
- economies of scale
- easier resources
- more efficiency 
Drawbacks: 
- too many competitors 
- tensions within regions 
- unequal distributions