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Econ (macro) Theme 4 > International Economics > Flashcards

International Economics Flashcards

1
Q

What is globalisation?

A

Globalisation is the process of interaction and integration among people, companies, and government worldwide.

  • aspects to globalisation include economic, cultural, and political
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2
Q

Why does globalisation cause world economy becoming a single economy

A

As it increases the interdependence of economies around the globe.

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3
Q

What is interdependence?

A

Interdependence is the dependence of two or more things on each other.

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4
Q

What are the advantages of globalisation

A
  • brands develop globally
  • labour has been divided between several companies (greater employment)
  • increased migration
  • countries become more interdependent (performance of their country depends on another)
  • more countries involved in global trade E.g. China, India
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5
Q

What are the factors contributing to globalisation (last 50 yrs)?

A
  • economic and political transitions
  • global (transnational) companies
  • trade liberalism
  • communications technology
  • containerisation (transport)
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6
Q

What is bilateral, consensus, multilateral, orthodoxy?

A

Bilateral: involving two parties (especially countries)

Consensus: a general agreement

Multilateral: involving several parties, especially countries

Orthodoxy: authorised or general accepted theory, doctrine, or practice

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7
Q

What is trade liberalism?

A

The removal (reduction) of restrictions on the free exchange of goods and services between nations

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8
Q

What is a comparative advantage?

A

A comparative advantage is when a country produces a good/ service for a lower opportunity cost than other countries

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9
Q

What is high-end?

A

The superior quality or sophistication and usually high in price

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10
Q

Define industrialisation.

A

The development of industries in a country or region on a wide scale.

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11
Q

What is factor endowment?

A

The amount of land, labour, capital and entrepreneurship that a country possess and can exploit for production

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12
Q

What is mutually?

A

Mutually is felt or done by two or more people or groups in the same way

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13
Q

What is product differentiation?

A

The process of distinguishing a product or service from others, to make it more attractive to a target

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14
Q

What is copious?

A

Abundant in supply of quantity

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15
Q

What are the three main reasons why countries trade with each other?

A
  • different factor endowments ( may have good/service insufficient in supply)
  • Price (may be cheaper buying from overseas)
  • product differentiation (may not have a product/ service)
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16
Q

What is specialisation?

A

Specialisation occurs when a firm, individual, region or country focuses its labour and production on a limited range of goods/ services

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17
Q

Why is specialisation beneficial?

A
  • improvement in productivity as repetition of tasks allows the workers to become more efficient at it, making fewer mistakes
  • allows firms to increase quality and quantity goods/services
  • decreases the production costs as more produced given the same time
  • fewer costs allows the firms to reduce prices
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18
Q

how is trade and specialisation related?

A
  • specialisation allows a firm to become more beneficial and have a comparative advantage compared to other firms , making them more attractive for trade
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19
Q

What is absolute advantage?

A
  • absolute advantage is when a country can produce more of a good/service using equal amounts of resources
  • both countries are capable of producing two goods
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20
Q

What is comparative advantage?

A

Comparative advantage is when a country produces a good/services at a lower opportunity cost than another country

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21
Q

What are the advantages of specialisation & trade

A
  • greater world output, gain in economic welfare
  • there is an outward shift in the PPF curve
  • lower average costs
  • consumers have greater variety of goods/ services
22
Q

What are the disadvantages of specialisation & trade

A
  • less developed countries might use non-renewable resources (might run out)
  • there could be structural unemployment
23
Q

What are the disadvantages of globalisation?

A
  • growing inequality
  • higher structural unemployment
  • environmental costs
  • trade imbalances
  • greater risk of external shocks
  • less cultural diversity
24
Q

What is a footloose company?

A

Companies which choose to relocate themselves to reduce production costs

25
Q

What are the impacts of globalisation on individual countries?

A
  • higher living standards
  • comparative advantage
  • countries become specialise & become more productive
  • higher employment
  • countries are more interdependent
26
Q

Impacts of globalisation on consumers?

A
  • lower production costs for firms may be passed on through prices
  • larger markets: more choice
  • higher quality/ quantity of goods/ services
27
Q

What is the impact of globalisation on government?

A
  • can limit Gov ability to increase tax revenue
28
Q

Impact of globalisation on producers?

A
  • development of global supply chains
  • allows firms to develop globally
  • exposed to more competition in a globalised world
  • firms have more choice in suppliers (get cheaper/ higher quality raw materials)
29
Q

Impact of globalisation on workers?

A
  • workers can have access to jobs across the globe
  • offshoring may occur - makes it harder to gain pay rise and improved working conditions
  • workers have less bargaining power
30
Q

Impact of globalisation of the environment?

A
  • clearing of rainforests for farming/ industrial activity
  • increases environmental destruction = global warming through raising greenhouse gas emissions
  • increased industrial activity increases demand for raw materials (copper) and mining raw materials causes environmental destruction
  • increased transportation of goods/ services increases greenhouse gas emissions.
31
Q

What does primary product mean?

A

Goods that are available from cultivating raw materials without a manufacturing process . Significant primary product industries include agriculture, fishing, mining and forestry

32
Q

What is free trade?

A

Free trade is international trade without restrictions such as tariffs.

33
Q

What are tariffs?

A

Tariffs are taxes on imports to a country.

34
Q

What is protectionism?

A

Protectionism is the policy of restricting imports through trade restrictions.

35
Q

What are developed/ developing countries opinions on free trade and protectionism?

A
  • developed countries tend to be nearer free trade
  • developing countries tend to be near protectionism
36
Q

Why do countries use trade restrictions?

A
  • national security
  • public safety
  • tax revenue
  • protect domestic industries
  • retaliation
  • preventing dumping
37
Q

Methods of protectionism?

A
  • tariff
  • quota
  • subsidies to domestic producers
  • Embargo
  • administrate barriers
38
Q

What is a quota?

A

A limit on the number of imports allowed into a country.

39
Q

What is a subsidy?

A

A state grant to firms to encourage production.

40
Q

What is embargo?

A

An official ban on imports or exports

41
Q

What is an infant industry?

A

An industry new to a country but already established in other countries

42
Q

What is a detractor?

A

A person who disparages someone or something.

43
Q

What is a disparage?

A

Regard or represent as being of little worth

44
Q

What is evangelist?

A

An enthusiastic advocate

45
Q

What is a panacea?

A

A solution or remedy for all difficulties or diseases.

46
Q

Why is protectionism important to support infant industries at early stages of development?

A

Without state support new firms are likely to be outcompeted by rivals in other countries.

47
Q

Impact of protectionism on producers.

A
  • import control = less competition - goods/services sold at higher prices
  • imports for production = limits goods and services sold
  • limits foreign competitors (limit is where goods/services are sold)
48
Q

Impact of protectionism on consumers?

A
  • embargo/ quotas limits consumer choice
  • tariffs makes goods/services expensive
  • higher prices for consumers = cannot buy imports
49
Q

Impact of protectionism on workers?

A
  • increases job security
  • ## higher wages ( lower production costs/ higher prices cuz lack of competition)
50
Q

What is tax revenues ?

A

Tax revenue is the income collected by governments through taxation.

51
Q

Impact of protectionism on government.

A
  • tariffs is a large source of gov revenue (funding for running a state)
  • may win political support & protect industries

Econ (macro) Theme 4 (5 decks)

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