Topic 1: Globalisation Flashcards

Question

advantages of free trade

Answer 1

specialisation - economies of scale, lower unit costs, more output/ increased competition/ exchange of knowledge and ideas/more efficient allocation of resources/greater incentive to increase international competitiveness/ higher world output/ greater variety for consumers/ increased living standards due to increased choice and purchasing power

Answer 2

new businesses struggle/ structural unemployment in less efficient firms/ negative externalities/ more dependence on imports due to lack of diversification/ dumping

Answer 3

trade liberalism, stability of trade relations. TFA, 2017, aims to improve efficiency, effectiveness and fairness of agencies that oversee trade. economic benefit of 68 billion - 1 trillion. Doha round - reduce agricultural subsidies in advanced economies and grant developing economies greater market access

Answer 4

ensure global financial stability. IMF injected $250 billion into global economy after GFC. usually require governments to implement structural reform which can be seen as undermining national sovereignty and autonomy

Answer 5

boost development of poorer countries. helps by providing foreign aid and loans, support for long term investment projects and dispute settlements in investment projects. Major goals are to reduce extreme poverty to <3% and reduce inequality by fostering growth for the bottom 40%

Answer 6

``` Designed to maintain international peace and security, fights climate change, gives humanitarian aid, -protects human rights and promotes democracy Sustainable Development Goals (SDGs) - Decent work and economic growth Reduced inequalities Gender equality Quality education ```

Answer 7

It makes policy recommendations to improve the economic performance of its member nations Engages in research, consultation and coordination of economic issues - Promote sustainable economic growth and development - Maintain financial stability - Contribute to global economic development

Answer 8

Members account for 85% of world economy, 75% of global trade, and 66% of world population Aim to - Coordinate fiscal stimulus - Improve supervision of global financial system - Discuss key issues in the global economy

Answer 9

When a group of countries join together to a formal trade relationship excluding other countries E.g. The European Union countries enter preferential trade agreements - free trade between themselves and external tariffs on imports from the rest of the world

Answer 10

Members adopt a common currency and are run by a central bank. The central bank implements one monetary policy, or one interest rate

Answer 11

- multilateral free trade agreement consisting of Canada, Mexico and the USA mainly based on eliminating agricultural protection and tariffs. - US + Canada: opportunity to increase international competitiveness by exploiting lower production costs in Mexico - Mexico: greater access for its exports to the larger markets - consumers have benefited from lower prices and US corporations from the lower costs. NAFTA accounts for 13% of global merchandise trade

Answer 12

Around 98% of Australian merchandise exports to Japan will receive preferential access or enter duty free Reduction or elimination of tariffs on agricultural commodities - 38.5% tariff on Aus beef will be halved over 15 years Elimination of 15% tariff on Australian wine by April 2021 Removal of tariffs on Japanese goods such as cars, electronics and white-goods Aus law firms have greater access to Japanese legal market

Answer 13

Includes ASEAN and their FTA partners - Australia, China, Japan, NZ and South Korea World’s largest FTA covering 30% of the global economy Standardises trade rules across countries Countries in the agreement account for 58% of Australia’s two-way trade and 67% of exports Biggest trade bloc in history Expected to eliminate ~90% of tariffs on imports between its signatories over 20 years Dr Patricia Ranald (Australian Institute of International Affairs) “RCEP has limited gains from trade and ignores labor, human rights and environmental stability issues)

Answer 14

Political and economic union comprised of 27 member states, primarily located in europe Policies aim to ensure the free movement of goods, people, services and capital within the union EU’s Common Agricultural Policy subsidies absorbed 38% of its Budget in 2016 17% of the world market for exports - larger than China or US

Answer 15

Intergovernmental forum comprised of 21 member economies, promoting free trade through the asia pacific region One of the highest level multilateral blocs and exerts significant global influence Promotes balanced, inclusive, sustainable, innovative and secure growth by accelerating regional economic integration Even though APEC members account for approximately 40% of the world population they account for 60% of world GDP and 47% of world trade. Target of “free trade” by 2020 under the Bogor Declaration but tariff levels within countries have dropped from 20% to 13% in 1994 - 2016

Answer 16

Regional intergovernmental organisation made up of 10 southeast asian countries which promotes intergovernmental cooperation and facilitates economic, political, security, military, educational and socio cultural integration among its members Aus and NZ joined in 2010 (ASEAN-Australia-New Zealand Free Trade Area) - ASEAN nations committing to eliminating tariffs on 96% of Australian exports to the region This is the largest preferential trade agreement that Australia has concluded representing 20% of Australia’s trade in goods/services.

Answer 17

Levels the playing field as all signatories treat each other equally Increases trade for every participant Standardised commerce regulations for all trade partners which saves companies legal costs Allows countries to negotiate trade deals with more than one country at a time Makes emerging markets stronger to help developed economies over time, middle class population increases

Answer 18

Complex, difficult and time consuming to negotiate Public often misunderstands them Some companies and regions suffer when trade borders disappear Gives competitive advantage to giant multinationals and small businesses cannot compete

Answer 19

Opens markets to successful industries Increases trade between the two members Consumers benefit from lower costs Easier to negotiate than multilateral agreements

Answer 20

Less successful companies go out of business | May trigger competing bilateral agreements

Answer 21

increase in GDP over time. A quantitative measure of the performance of an economy

Answer 22

structural changes needed for growth to occur in an economy and to sustain increase in living standards. A qualitative measure of the performance of an economy

Answer 23

Richest 1% own 44% of the world’s wealth | Number of billionaires it took to equal the wealth of the world’s poorest 50% fell from 380 to 26 between 2009 and 2019

Answer 24

comparison of annual incomes, which are direct returns from the factors of production of citizens

Answer 25

the comparison of asset ownership of citizens

Answer 26

GNI measure the sum of value added by all resident producers in the economy plus primary income from foreign sources, on a purchasing parity basis Human Development Report in 2016 “inequalities in income influence inequalities in other dimensions of well being” HDI: scale of 0 to 1 taking into account life expectancy, education levels and gross national income per capita

Answer 27

Advanced economies have created most of the existing global environmental problems including pollution and energy use due to high rates of production and consumption Emerging economies deplete the environment in the pursuit of higher economic growth OECD report predicts by 2050, the world economy will be 4x bigger than it is today, using 80% more energy

Answer 28

GFC exposed the issue of financial contagion. Due to the globalised nature of the US, foreign banks and investors experienced spill-over effects and there was worldwide panic in financial markets Advanced economies contracted by 3.4% and the world economy experienced a recession

Answer 29

Rapid increases in trade, investment and TNCs Created a global web of production facilities and supply chains, connecting economies TNCs are criticised for taking advantage of poorer countries by lower labour costs and natural resources, as well as for exploiting global tax laws In 2019, Apple was accused of labour violations in China. Apple denies most allegations but acknowledged that they exceeded the number of contract workers allowed by Chinese Law and agreed to compensate workers

Answer 30

Increased opportunities for economies of scale, specialisation, and taking advantage of lower input costs Increased technological innovation due to increased competition internationally, which has stimulated productivity levels Financial Contagion - when financial crises can be transmitted quickly Increased income inequality and the emigration of skilled labour from developing countries to advanced economies According to the IMF, income inequality has increased by 0.45% per year over the past 3 decades Easing trade restrictions have lowered prices which can improve living standards Increased negative externalities such as environmental degradation and exploitation of the labour forces of developing nations

Answer 31

High income levels, average per capita income over US 30,000 p.a. slower growth in recent decades Market based economies, services e.g. usa and australia

Answer 32

Income levels vary but fast growth in income levels Strongest growth rate in the world and favourable prospects Industrialising, manufacturing e.g. China India

Answer 33

Low-income levels, around half of population in absolute poverty Moderate growth rates but population growth also high Heavily reliant on agriculture and (in more extreme cases) foreign aid e.g. egypt and cambodia

Answer 34

global trade system - favours advanced economies and fta are dominated by advanced economies. e.g. failure of doha round Global Financial Architecture - high foreign debt burdens, investment into emerging economies Global Technology Flows

Answer 35

economic resources - lack of natural resources, labour supply and quality, lack of infrastructure and capital, poverty cycles institutional factors - political instability and corruption

Topic 1: Globalisation Flashcards

(59 cards)