Globalisation (Edexcel IGCSE Economics): Flashcards
Exam code: 4EC1
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Define globalisation.
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Cards in this collection (39)
Define globalisation.
Globalisation is the economic integration of different countries through the increasing cross-border movement of people, goods and services, technology and finance.
Define free trade.
Free trade is trade between countries with reduced barriers such as lower tariffs and quotas.
Define multinational corporation (MNC).
A multinational corporation (MNC) is a firm that operates in more than one country.
Define the World Trade Organisation (WTO).
The World Trade Organisation (WTO) is the body that negotiates trade agreements between countries to encourage free trade.
What are the four main factors that drive globalisation?
The four main factors that drive globalisation are free trade, reduced transport costs, reduced communication costs and multinational corporations (MNCs).
Is globalisation a new phenomenon?
No, globalisation is not a new phenomenon as it has existed for hundreds of years.
What was the approximate value of global trade in 2000?
The approximate value of global trade in 2000 was $6.45 trillion.
Which transport method carries goods in bulk using metal containers?
Containerised shipping carries goods in bulk using metal containers on a boat.
What effect has globalisation had on industrialisation in developing nations?
Globalisation has speeded up industrialisation in developing nations, while leading to de-industrialisation in developed nations.
True or False?
Innovations such as WhatsApp and WeChat have lowered communication costs and driven globalisation.
True.
Low communication costs from innovations such as WhatsApp and WeChat make it easier for firms to connect and promote themselves globally.
True or False?
Reduced transport costs allow businesses to increase the volume of goods traded globally.
True.
Lower transport costs, such as containerised shipping, let firms trade a greater volume of goods worldwide.
Consumers now source products globally, recognising global wherever they travel.
Consumers now source products globally, recognising global brands wherever they travel.
By 2023, the value of global trade had risen to approximately $ trillion.
By 2023, the value of global trade had risen to approximately $31 trillion.
Define stakeholder.
A stakeholder is any group affected by globalisation, including countries, governments, producers, consumers, workers and the environment.
Define deindustrialisation.
Deindustrialisation is the loss of traditional industries in developed countries as operations move to lower-cost countries.
Define tax avoidance.
Tax avoidance is when global firms use international loopholes or move profits between countries to reduce the corporation tax they pay.
How does hosting global companies benefit governments?
Hosting global companies raises tax revenues, enabling investment in public services such as healthcare, education and infrastructure.
How does globalisation benefit consumers?
Globalisation benefits consumers through increased competition, giving them lower prices and more choice of goods and services.
Why does higher output lower costs for global producers?
Higher output lowers costs for global producers because access to large markets allows them to benefit from economies of scale.
Why can global firms exploit workers in developing countries?
Global firms can exploit workers in developing countries because low trade union membership allows low wages, poor human rights and worsening income inequality.
What is meant by a footloose multinational?
A footloose multinational has no loyalty to a region and can easily move its factories, which may increase regional unemployment.
True or False?
All stakeholders benefit equally from globalisation.
False.
Some stakeholders benefit, while others, often from developing economies, lose out the most.
True or False?
Globalisation increases inequality between the richest and poorest countries.
True.
As globalisation increases, so too does the inequality between the richest and poorest countries.
True or False?
Global firms may move manufacturing to countries with less stringent environmental laws.
True.
Many global firms relocate manufacturing to countries with less strict environmental laws and regulations.
China's growing middle class increased from 3% in 2000 to over in 2023 as incomes rose.
China's growing middle class increased from 3% in 2000 to over 50% in 2023 as incomes rose.
Deforestation in Indonesia for production causes the loss of 45,000 hectares of forest a year.
Deforestation in Indonesia for palm oil production causes the loss of 45,000 hectares of forest a year.
Define multinational corporation (MNC).
A multinational corporation (MNC) is a business that has production facilities in two or more countries.
Define foreign direct investment (FDI).
Foreign direct investment (FDI) occurs when investment by foreign firms results in more than a 10% share of ownership of domestic firms.
Define inward FDI.
Inward FDI occurs when a foreign business invests in the local economy.
Define outward FDI.
Outward FDI occurs when a domestic business expands its operations to a foreign country.
How have MNCs increased cultural globalisation?
MNCs have increased cultural globalisation because global brands such as Coca-Cola, Nike and Apple dominate markets and western values replace local cultures.
Through which methods do businesses typically grow via FDI?
Businesses typically grow through FDI via mergers, takeovers, partnerships or joint ventures with a foreign business to enter new markets.
Why does manufacturing in low-cost countries help an MNC like Nike?
Manufacturing in low-cost countries such as Vietnam lets Nike increase output and benefit from economies of scale.
How can local residents benefit from an MNC investing in their economy?
Local residents can benefit from job opportunities, growth in the local economy, training and improved infrastructure.
What does it mean when an MNC repatriates profits?
Repatriating profits means an MNC sends its profits back to its home country rather than reinvesting them in the host economy.
True or False?
A Chinese firm funding a new railway line in Kenya is an example of inward FDI for Kenya.
True.
Inward FDI occurs when a foreign business invests in the local economy, such as Chinese investors building Kenya's Standard Gauge Railway in 2017.
True or False?
The impact of FDI on economic growth is the same regardless of how the FDI occurs.
False.
The impact depends on how the FDI occurs, such as whether firms hire local workers and reinvest profits or send them home.
MNCs often face criticism for using strategies, such as Apple using tax loopholes in Ireland in 2016.
MNCs often face criticism for using tax avoidance strategies, such as Apple using tax loopholes in Ireland in 2016.
In 2022, of all Nike sales were outside the USA.
In 2022, 57% of all Nike sales were outside the USA.
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