key terms 4.1- Globalisation

Question 1

what is economic growth?

Answer 1

an increase in a country’s productive capacity

Question 2

what are emerging economies?

Answer 2

the economies of developing countries where there is rapid growth but also significant risk

Question 3

what is a human development index (HDI)?

Answer 3

a collection of statistics that are combined into an index, ranking countries according to their human development

Question 4

what is a literacy rate?

Answer 4

the percentage of adults (over 15) that can read and write

Question 5

what is a purchasing power parity (PPP)?

Answer 5

a measure of real growth that uses the price of purchasing a standardised basket of goods and services in order to compare prices across economies

Question 6

what is comparative advantage?

Answer 6

the theory that a country should specialise in products and services that it can produce more efficiently than other countries

Question 7

what is a competitive advantage?

Answer 7

the idea that a business should specialise in any area where it can perform better than its competitors

Question 8

what is division of labour?

Answer 8

different workers specialising in different productive activities

Question 9

what are exports?

Answer 9

goods or services that a firm produces in its home market but sells in a foreign market

Question 10

what is a foreign direct investment?

Answer 10

investing by setting up operations or buying assets in businesses in another country

Question 11

what are imports?

Answer 11

goods and services that are bought into one country from another

Question 12

what is international trade?

Answer 12

exporting and importing

Question 13

what is specialisation?

Answer 13

a production strategy where a business focuses on a limited scope of products or services.

Question 14

what are tariffs?

Answer 14

taxes that are imposed on imports

Question 15

what is a foreign direct investment (FDI)?

Answer 15

business investment undertaken by a firm in another country

Question 16

what is globalisation?

Answer 16

the growing integration of the world’s econmoies

Question 17

what are transnational/ multinational companies?

Answer 17

companies that own or control production or service facilities outside the country in which they are based

Question 18

what is the world trade organisation (WTO)?

Answer 18

an international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers.

Question 19

what does the WTO do? (3)

Answer 19

• polices free trade agreements
• settles trade disputes between governments
• organises trade negotiations

Question 20

what are administrative barriers?

Answer 20

rules and regulations that make it difficult for importers to penetrate an overseas market

Question 21

what is dumping?

Answer 21

where an overseas firm sells large quantities of a product below cost in the domestic market

Question 22

what are embargoes?

Answer 22

a complete ban on international trade

Question 23

what is an import quota?

Answer 23

a physical limit on the number of imports allowed into a country

Question 24

what are infant industries?

Answer 24

new industries that have yet to establish themselves

Question 25

what is protectionism?

Answer 25

an approach used by a government to protect domestic producers

Question 26

what is a subsidy?

Answer 26

financial support given to a domestic producer to help compete with overseas firms

Question 27

what are tariffs/custom duties?

Answer 27

a tax on imports to make them more expensive

Question 28

what are trade barriers?

Answer 28

measures designed to restrict rade

Question 29

what s the common market?

Answer 29

a market where goods,labour and capital can move freely across the member states

Question 30

what is the customs union?

Answer 30

a union where member states remove all trade barriers between themselves and members adopt a common set of barriers against non-members

Question 31

what is an economic and monetary union?

Answer 31

an economic union that uses a common currency

Question 32

what is an economic union?

Answer 32

ape of trade bloc involving both a customs union and a common market

Question 33

what is a free trade area (FTA)?

Answer 33

a region where member states remove all trade barriers between themselves but each member state keeps different barriers against non-member states

Question 34

what is a preferential trading area (PTA)?

Answer 34

a type of trading bloc where certain types of products from participating countries receive a reduced tariff rate

Question 35

what is a regional trade agreement (RTA)?

Answer 35

agreement made between 2 or more countries within a geographical region, which is designed to facilitate trade by bringing down barriers

Question 36

what are rules of origin?

Answer 36

a system of allocating certificates whereby a defined amount of a product or service must be certified as being created within that region

Question 37

what is a single market?

Answer 37

a market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country

Question 38

what is a trading bloc?

Answer 38

a group of countries that has signed a regional trade agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves