4.1 - Globalisation

Question 1

What are emerging economies?

Answer 1

Nations experiencing rapid industrialisation and economic growth. E.g. India has rapidly growing GDP, a large spending middle class, increasing FDI and a booming technology and manufacturing sector.

Question 2

How does the UK’s economic growth rate compare to emerging economies?

Answer 2

• Generally slower than that of emerging economies like China and India
• Uk typically experiences around 1-3% GDP growth annually

Question 3

What is the impact of growing economic power in Asia, Africa and other regions?

Answer 3

• These regions see increased influence in global trade, investment and production with countries like China and India becoming major economic players.
• China = 5 - 7% GDP growth annually
• India = 6 - 8% GDP growth annually

Question 4

How does economic growth create trade opportunities for businesses?

Answer 4

more disposable income in emerging economies increased demand for consumer goods, luxury products and services, creating opportunities for exporters

Question 5

Why are countries in Asia, Africa and Latin America gaining economic power?

Answer 5

Due to industrialisation, foreign direct investment, improved infrastructure and growing middle classes that increase consumer demand.

Question 6

How does economic growth affect employment patterns?

Answer 6

• It shifts employment from agriculture to industry and services
• increases urbanisation
• creates higher paying jobs
• however, automation and global competition can also lead to job displacement

Question 7

What are some indicators of growth?

Answer 7

• Gross Domestic Product (GDP) per capita
• literacy
• health
• Human Development Index (HDI)

Question 8

What is GDP?

Answer 8

The total monetary value of all goods and services produced within a country over a specific period.

Question 9

What does GDP per capita measure?

Answer 9

• The average income per person in a country, indicating economic prosperity.
• GDP per capita gives a clearer picture of individual wealth and living standards
• A higher GDP per capita suggests greater income levels, better access to goods/ services, improved healthcare and higher living standards

Question 10

Why is literacy an important economic indicator

Answer 10

Higher literacy rates lead to a more skilled workforce, boosting productivity and economic growth.

Question 11

How does health impact economic growth?

Answer 11

A healthier workforce is more productive, reducing absenteeism and healthcare costs.

Question 12

What is Human Development Index (HDI)?

Answer 12

A measure of a country’s overall development, incorporating GDP per capita, literacy rates and life expectancy.

Question 13

What are imports and exports?

Answer 13

• exports - goods and services sold abroad
• imports - goods and services that are bought from other countries

Question 14

How does specialisation improve business performance?

Answer 14

It allows firms to focus on their strengths, increasing efficiency, reducing costs and enhancing product quality.

Question 15

What is competitive advantage?

Answer 15

When a country or business can produce a good or served at a lower opportunist cost than competitors, making trade more efficient.

Question 16

What is Foreign Direct Investment (FDI)?

Answer 16

When a business invest in operation or assets in another country (e.g. building factories, acquiring companies)

Question 17

How does FDI contribute to business growth?

Answer 17

• It provides businesses with access to new markets, resources and lower production costs hole boosting economic development in the host country.
• e.g. Apple building manufacturing plant in India, investing infrastructure, technology and local jobs rather than jus trading goods or services

Question 18

What is trade liberalisation?

Answer 18

The removal or reduction of trade barriers (tariffs, quotas, regulations) to encourage international trade.

Question 19

What is the role of the World Trade Organisation (WTO)?

Answer 19

The WTO promotes free trade by enforcing trade agreements and revolving disputes between countries.

Question 20

How do political changes affect globalisation?

Answer 20

• Pro- business policies, stability and trade agreements encourage global trade, while political instability and protectionism can restrict it.
• e.g. Brexit led to significant changes in trade relationships and economic partnerships between the UK and EU member states.

Question 21

How has reduced transport cost contributed to globalisation?

Answer 21

• Cheaper air and sea freight make it easier to trade internationally, reducing the costs of importing and exporting goods.

Question 22

How has communication technology driven globalisation?

Answer 22

• The internet, mobile technology and digital platforms allow businesses to operate and collaborate across boarders easily.
• e.g. ‘Zoom’ for video conferencing or ‘Slack’ which allows teams to share messages, files and conduct video calls in real time.

Question 23

What are transnational cooperations (TNCs)?

Answer 23

Large multinational companies (e.g. Amazon, Apple) that operate in multiple countries, influencing economies and supply chains.

Question 24

How does the increase in significance of TNCs contribute to increased globalisation?

Answer 24

• TNCs expand their operations across multiple countries which drives international trade, investment and technology transfer
• drives local economies and employment while also influencing global trade patterns and investment decisions

Question 25

Why is FDI important for globalisation?

Answer 25

It allows businesses to expand internationally, access new markets and invest in infrastructure and job creation abroad.

Question 26

How does migration contribute to globalisation?

Answer 26

- The movement of skilled and unskilled workers across boarders fills labour shortages, transfers knowledge and increased economic interdependence. - movement of skilled professionals from countries like India and China to the US

Question 27

What is structural change in an economy?

Answer 27

A shift in economic focus from primary industries (Agriculture) to secondary (manufacturing) and tertiary (services), leading to industrialisation ad increased trade.

Question 28

How does structural change lead to globalisation?

Answer 28

- moving from primary sectors to secondary an tertiary increases enhances productivity and efficiency. - this shift encourages countries to engage in international trade, attract FDI and adopt technological advancements - often involve the development of better infrastructure and communication systems.

Question 29

What are tariffs?

Answer 29

Taxes on imported goods to protect domestic industries by making foreign products more expensive.

Question 30

How do tariffs affect businesses?

Answer 30

They benefit domestic producers but can lead to higher consumer prices and potential trade wars.

Question 31

What are the benefits of tariffs?

Answer 31

- Protection of domestic industries - protect local businesses from foreign competition allowing them to grow and maintain jobs. - Revenue generation - tariffs provide governments with revenue, which can be used for public services and infrastructure development. - Trade balance improvement - by making imports more expensive, tariffs can help reduce trade deficits by encouraging consumers to buy domestically produced goods.

Question 32

What are the drawbacks of tariffs?

Answer 32

- higher prices for consumers - tariffs can lead to increased prices for imported goods, which may reduce consumer purchasing power and choice. - retaliation from other countries - imposing tariffs can lead to trade wards, where affected countries retaliate with their own tariffs, harming international trade relations - inefficiency and misallocation of resources - protecting inefficient domestic industries may led to misallocation of resources, stifling innovation and competitiveness in the long run.

Question 33

What are import quotas?

Answer 33

Limits on the amount of of a product that can be imported, protecting domestic producers from foreign competition.

Question 34

What are the advantage of import quotas?

Answer 34

- protection of domestic industries - import quotas limit the quantity of foreign goods entering a market, helping local businesses compete and maintain market share. - job preservation - quotas can help preserve jobs in affected sectors - stability in local markets - quotas can help stabilise prices in domestic markets by controlling the supply of imported goods, reducing volatility.

Question 35

What are the disadvantages of import quotas?

Answer 35

- higher prices for consumers - quotas can lead to higher prices for imported goods , as limited supply may increase demand for more expensive domestic alternatives. - limited consumer choice - may reduce the variety of goods available to consumers, limiting their options. - inefficiency and reduced competitiveness - may encourage inefficiency and complacency, leading to a lack of innovation and lower overall competitiveness in the global market.

Question 36

How does government legislation act as a trade barrier?

Answer 36

Regulations (e.g. safety standards, environmental laws) can make it harder for foreign businesses to enter a market

Question 37

What are domestic subsidies?

Answer 37

Financial support given to domestic businesses to make them more competitive against foreign companies.

Question 38

What are trading blocs?

Answer 38

Groups of countries that agree to trade freely with each other while imposing tariffs on non-members.

Question 39

What is the EU’s Single Market?

Answer 39

- A trading bloc that allows free movement of goods, services, capital and labour across member states - EU countries include: France, Germany, Spain

Question 40

What is ASEAN?

Answer 40

The Association of Southeast Asian Nations, promoting economic cooperation and trade among 10 Southeast Asian countries.

Question 41

What is NAFTA? What replaced it?

Answer 41

- North American Free Trade Agreement was a deal between the US, Canada and Mexico - it was replaced by the USMCA in 2020.

Question 42

What are the benefits of trading blocs for businesses?

Answer 42

- provide access to larger markets - reduce trade costs - encourage competition and investment

Question 43

What are the drawbacks of trading blocs for businesses?

Answer 43

- may create barriers for non- member countries - increase competition - lead to trade disputes