Flashcards in 2.4 Life in a Global Economy Deck (63)
Loading flashcards...
1
Define Globalisation
The growing interconnectivity of different countries stemming from an improvement in communication and trade
2
Define FDI
Big businesses investing in new markets
3
What 2 things does FDI do for an economy?
- Creates jobs
- Enhances prosperity
4
How do some governments encourage investment into their country?
Offer incentives for investors like reduced tax
5
Define 'World Trade and GDP'
Measure of output and income
6
How has World Trade changed with globalisation?
It has become easier and therefore more common
7
How has globalisation affected the GDP of smaller countries?
Increased
8
How has globalisation led to increased migration?
International trade enhances competition so social structures change as more skilled workers are required
9
Give the 5 factors that have led to globalisation in the last 50 years?
- Trade Liberalisation
- Capital Market Liberalisation
- Political change in the USSR and China
- Reduced cost of travel and transport
- Increased significance of global transnational companies
10
Explain what Trade Liberalisation is
Trade becoming easier and more common
11
How has Trade Liberalisation led to globalisation?
Makes markets more competitive and increases exports
12
What is Capital Market Liberalisation?
Moving large sums of money from one economy to another
13
How has Capital Market Liberalisation led to globalisation?
More free trade has fostered economic growth
14
How can Capital Market Liberalisation be bad for the global economy?
A disaster in one country is going to have a big effect in other countries
15
When did the USSR collapse?
1989
16
Why has the cost of travel and transport fallen?
Advancements in technology have made it easier and cheaper
17
How is globalisation important in dynamic markets?
It allows businesses to quickly make decisions and communicate quickly
18
Define containerisation
The advancement of technology of using container ships
19
How has the increase of transnational companies led to globalisation?
Retailers have been able to shop around for cheaper products in wider markets
20
What is the fact that can be used in explaining the increase of transnational companies?
Some firms have GDP higher than entire countries
21
Define what is meant by a 'Developed Country'
A country that has industrialised long ago and has very high living standards
22
Give 3 characteristics of a 'Developed Country'
(Primary, Tertiary, Skilled workers)
- Small Primary Sector
- Large Tertiary Sector
- Highly skilled and educated population
23
Give 5 characteristics of a 'Developing Country'
(Primary, Secondary, Skilled workers, Welfare Sector, Labour)
- Large Primary Sector
- Small Secondary Sector
- Unskilled Workforce
- Small Welfare Sector
- Labour intensive
24
Give 4 characteristics of an 'Emerging Economy'
(Economic Growth, Living Standards, Expansion, Migration)
- Very high economic growth
- Rapidly rising living standards
- Expansion fastest in manufacturing
- Huge rural to urban migration
25
Give the 5 main indicators of economic growth
- HDI (Human Development Index)
- GDP per Capita
- Literacy Rate
- Health
- Mean/Median incomes
26
Give 1 reason that someone would measure economic growth with GDP per capita
Gives an average income that's easily comparable with other countries
27
Give 2 reasons why it could be bad to measure economic growth with GDP per capita
- Exchange rates skew the data
- Won't account for the hidden economy
28
Give 1 reason that someone would measure economic growth with the Literacy Rate
Shows the government's investment into education
29
Give 2 reasons why it could be bad to measure economic growth with the Literacy Rate
- Can be difficult to measure
- Doesn't only show economic growth
30
Give 2 reasons that someone would measure economic growth with Health
- Shows government investment into healthcare
- Can be reflective of wages (healthcare isn't free)
31
Give 2 reasons why it could be bad to measure economic growth with Health
- Can be misleading
- Doesn't only show economic growth on its own
32
What is the HDI?
A composition of Gross National Income with life expectancy and schooling years
33
What range of numerical values can the HDI take?
0-1 scale
34
Give 2 reasons that someone would measure economic growth with the HDI
- Easily collectable data
- More representative than a factor on its own
35
Give 2 reasons why it could be bad to measure economic growth with the HDI
- Doesn't show spread
- Doesn't show unemployment
36
Give 1 reason that someone would measure economic growth with Mean/Median incomes
Can provide some additional information about income distribution and living standards
37
Give 1 reason why it could be bad to measure economic growth with Mean/Median incomes
Can't tell the effects of inequality
38
Define specialisation
When an individual, firm or country concentrates on the production of a limited range of goods
39
Give an advantage of specialisation for a business
- Gain a competitive advantage through pricing
40
Give 2 advantages of specialisation on an economy
- Jobs created
- Exports increase which increases AD
41
Give a disadvantage of specialisation
Risk isn't spread
42
Define Comparative advantage
A natural ability to produce a good for a lower cost than competitors (e.g. tropical countries with tropical fruits)
43
Define Absolute advantage
An ability for a country/firm to produce a product using less resources than another
44
Define Trading Bloc
The umbrella term for groups of countries that come together to conduct free trade
45
Give the 3 types of Trading Bloc
- Free Trade Area
- Common Market
- Single Market
46
Define Free Trade Area
Groups of countries that trade freely with few or no trade barriers
47
Give the 2 features of a Common Market
Free international Trade
Free Movement of Goods and People
48
What is meant by a single market?
Member countries agreeing to harmonise their regulations so all businesses are on a level playing field
49
Give 2 advantages for a business of being in a Trading Bloc
- Encourages Efficiency as competition increases
- No retaliation through tariffs or anything
50
Give an advantage for the economy of being in a Trading Bloc
Exports increase which boosts AD
51
Give a disadvantage for the economy of being in a Trading Bloc
Imports alos increase which reduces AD through the BOP
52
Give 2 disadvantages for a business of being in a Trading Bloc
- Limits them to trade with only member countries
- Consumer choice is expanded so demand may fall as cheaper alternatives are discovered
53
Define visible import
Tangible goods that have to be driven through the channel tunnel or air-freighted
54
Define Invisible import
Services (e.g. tourism, finance)
55
Give an advantage of being in a common market for a business in terms of competitive advantage
Can find workers from abroad with the same skill set who will work for less
56
Define depreciation
When the market value of a currency falls against another
57
Define appreciation
When the market value of a currency rises against another
58
Draw the graph for appreciation
see poster
59
Draw the graph for depreciation
see poster
60
What is the effective exchange rate?
A weighted index of exchange rates which rolls all foreign currencies together in proportion to their relative importance in the economic trade pattern
61
What does a rising figure in the effective exchange rate mean?
They are less likely to be competitive
62
What does a falling figure in the effective exchange rate mean?
Depreciation
63
