Theme 4 Topic 2 - International Trade and Globalisation Flashcards
What are three things the UK economy is strong in?
Knowledge sector, Service sector, High value manufacturing
Define Exports
Goods or services produced in the firm’s home market but then sold to a foreign market
Define Imports
Goods or services bought from a foreign country
Define Trade Deficit
Imports are greater than exports
Define Trade Surplus
Exports are greater than imports
What are four things the level of imports and exports are affected by?
Tariffs, Quotas, Government regulations, Exchange rates
Define Comparative Advantage
A theory that a country should specialise in products or services that it produces more efficiently than in other countries
Define Specialisation
Focusing on a limited range of goods/services to enable greater efficiency or develop greater expertise
Define Competitive Advantage
The advantages a firm has over rival products from overseas
What are three things a competitive advantage can take the form of?
Highly trained and skilled staff, Intellectual property and patents, Innovation and R&D
Define Foreign Direct Investment (FDI)
Investing in setting up operations or buying assets in businesses in another country
What are five reasons to undertake FDI?
Keep control over operations, Keep close to customers, Overcome trade barriers, Avoid expensive shipping costs, Impose their own methods of working (corporate culture)
Define Greenfield Site
Starting from scratch rather than taking over another firm
What are three types of FDI?
Joint venture, Cross border mergers or acquisitions, Building greenfield facilities
Define Globalisation
The coming together of world economies to form one large market
