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Theme 4 Econ Flashcards

(67 cards)

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1
Q

What is globalisation?

A

The deepening of relationships between countries through increasing trade, investment, and migration.

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2
Q

What are characteristics of globalisation?

A

Increased trade, capital flows, global branding, specialisation, labour migration, and integrated global supply chains.

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3
Q

What are causes of globalisation?

A

Containerisation, lower transport costs, trade liberalisation, FDI, migration, technology transfer, and communication advances.

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4
Q

What are benefits of globalisation?

A

Economies of scale, innovation, lower prices, faster growth, labour movement, and global awareness.

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5
Q

What are costs of globalisation?

A

Inequality, environmental damage, systemic risk, trade imbalances, job losses, tax avoidance, brain drains.

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6
Q

What is de-globalisation?

A

Reversal or slowing of globalisation due to protectionism, crises, nationalism, etc.

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7
Q

What is comparative advantage?

A

When a country can produce a good at a lower opportunity cost than another.

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8
Q

What is absolute advantage?

A

When a country can produce more of a good with the same resources than another.

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9
Q

What are the assumptions of comparative advantage?

A

No transport costs, no trade barriers, perfect information, and full employment.

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10
Q

What is a trading bloc?

A

A group of countries with reduced trade barriers between them, possibly with a common external tariff.

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11
Q

What is protectionism?

A

Policies such as tariffs, quotas, and subsidies used to protect domestic industries.

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12
Q

What are arguments for protectionism?

A

Protects jobs, infant industries, national security, balances payments, and prevents dumping.

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13
Q

What is the WTO?

A

The World Trade Organisation: facilitates negotiations, settles disputes, monitors compliance, and helps developing countries trade.

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14
Q

What is the balance of payments?

A

A record of all money flows in and out of a country, including current, capital, and financial accounts.

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15
Q

What causes a current account deficit?

A

Low investment, high consumption, weak competitiveness, or structural issues.

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16
Q

How can a current account deficit be reduced?

A

Depreciation, deflationary policies, tariffs, or supply-side reforms.

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17
Q

What is the Marshall-Lerner condition?

A

For depreciation to improve the current account, PEDx + PEDm must be greater than 1.

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18
Q

What is a floating exchange rate?

A

An exchange rate determined by supply and demand with no government intervention.

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19
Q

What is a fixed exchange rate?

A

An exchange rate pegged by the central bank to another currency, requiring intervention.

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20
Q

What are the advantages of floating exchange rates?

A

Policy independence, shock absorption, reduced speculative attacks, and automatic correction of trade imbalances.

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21
Q

What is the terms of trade?

A

The rate at which a country’s exports exchange for imports. ToT = (Export price index / Import price index) × 100.

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22
Q

What is international competitiveness?

A

The ability to sell goods and services profitably abroad through price and non-price factors.

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23
Q

What causes income and wealth inequality?

A

Wage gaps, education, globalisation, tax systems, discrimination, and inheritance.

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24
Q

What is absolute poverty?

A

Living without basic needs like food, shelter, and clean water.

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25
What is relative poverty?
Living below a certain percentage of median income in a country.
26
What is the Human Development Index (HDI)?
A composite index measuring health, education, and income levels from 0 to 1.
27
What is primary product dependency?
Reliance on exporting raw materials, which can lead to volatility and underdevelopment.
28
What is the resource curse?
When natural resource wealth harms development due to currency appreciation and poor governance.
29
What is capital flight?
Large outflows of financial assets from a country, usually due to instability or lack of confidence.
30
What is the Harrod-Domar model?
A model where growth depends on savings and the efficiency of investment (capital-output ratio).
31
What is slowbalisation?
A slowdown in the pace of globalisation.
32
What is an MNC or TNC?
A company that operates in more than one country, with global supply chains and markets.
33
What is the systemic risk of globalisation?
The risk that shocks in one region can quickly spread globally due to interconnectivity.
34
What is international specialisation?
When countries focus on producing goods where they have a comparative advantage and trade for others.
35
What are mutually beneficial terms of trade?
A trade ratio that lies between the opportunity costs of two countries, benefiting both.
36
What is competitive advantage?
Advantage from technology, quality, or innovation rather than cost or opportunity cost.
37
What is the gravity theory of trade?
The idea that countries trade more with nearby nations due to lower transport costs and stronger ties.
38
What is intra-regional trade?
Trade between countries in the same geographic region.
39
What is primary product dependency?
Economic reliance on the export of raw materials or agricultural goods.
40
What are examples of trading blocs?
EU, USMCA, ASEAN, EFTA, ACFTA, with varying degrees of integration.
41
What is a customs union?
Free trade among members and a common external tariff on non-members.
42
What is a single market?
Free movement of goods, services, capital, and labour with harmonised regulations.
43
What is trade creation?
When removing tariffs increases trade within a bloc and leads to gains from specialisation.
44
What is trade diversion?
When trade shifts from a more efficient global producer to a less efficient bloc member.
45
What are tariffs and quotas?
Tariffs are taxes on imports; quotas limit import quantities.
46
What are subsidies?
Government payments to domestic firms to reduce costs and boost competitiveness.
47
What are non-tariff barriers?
Regulations and standards that limit imports, e.g. safety, environmental rules.
48
What is the impact of a subsidy on imports?
Subsidy shifts domestic supply right, reducing imports.
49
What is a preferential trading area?
A bloc offering preferential access to certain products from member countries.
50
What is a monetary union?
A group of countries using a common currency and central bank, e.g., Eurozone.
51
What is the capital account in BoP?
Records transfers of capital and the acquisition/disposal of non-financial assets.
52
What is the financial account in BoP?
Records investment flows including FDI, portfolio investment, and changes in reserves.
53
What is a current account surplus?
When exports of goods, services, and income exceed imports.
54
What is the J-curve effect?
Initially, depreciation worsens the trade balance before improving it as PEDs adjust.
55
What is hot money?
Short-term capital moving between countries to take advantage of interest rate changes.
56
What is managed floating exchange rate?
Market-driven exchange rate with occasional central bank intervention.
57
What are the SDGs?
UN Sustainable Development Goals – 17 targets for global development by 2030.
58
What is the Kuznets Curve?
Suggests inequality rises during early development but falls as income increases.
59
What is microfinance?
Financial services for low-income individuals or groups who lack access to traditional banking.
60
What are infrastructure gaps?
Inadequate physical systems like roads, power, and water that hinder development.
61
What is the savings gap?
Insufficient domestic savings to finance investment needed for development.
62
What is external debt?
Money a country owes to foreign lenders, including governments and institutions.
63
What is capital flight?
Large-scale exit of financial assets due to economic or political instability.
64
What are demographic challenges to development?
Population growth, ageing, migration, and urbanisation impacting resources and services.
65
What are property rights?
Legal rights to use and benefit from property, essential for investment and growth.
66
What is the Harrod-Domar growth equation?
GDP growth = Savings ratio / Capital-output ratio.
67
What are market-oriented development strategies?
Policies like trade liberalisation, privatisation, FDI promotion to boost growth.

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