Globalisation (Edexcel IGCSE Economics): Exam Questions

What is the likely impact of lower transport and communication costs on an economy?

Which one of the following is an example of foreign direct investment (FDI)?

Global trade reached a record high of $29 trillion in 2022. It has continued to grow, although at a slower rate since the global health crisis.

With reference to the data above and your knowledge of economics, analyse the possible benefits for consumers of globalisation.

Which one of the following is a disadvantage of multinational corporations (MNCs) operating in a country?

The largest manufacturer and exporter of clothing products is China, with 65% of the world’s clothing being made there. The second largest country for clothing manufacturing is Bangladesh. Clothing exports make up nearly 85% of Bangladesh’s total exports.

With reference to the data above and your knowledge of economics, analyse the likely benefits of globalisation for clothing manufacturers.

Describe the impact of a reduction in the cost of communication on globalisation.

State one possible impact of globalisation on consumers.

Which one of the following is an impact of globalisation?

Which one of the following is an example of Foreign Direct Investment (FDI)?

In 2021, the UK Government investigated multinational corporations (MNCs) suspected of moving profits made in the UK to other countries. It threatened large penalties for firms that were found guilty of not paying business taxes that were due.

The Government estimated that 2,000 large firms with operations in the UK may owe as much as £34.8bn in tax in the 2019–2020 financial year. This was up from £29.9bn in 2018–2019.

With reference to the data above and your knowledge of economics, assess the drawbacks for the UK of having MNCs located within the country.

Which one of the following is the most likely reason for increased globalisation?

In 2022, Kazakhstan’s foreign direct investment (FDI) increased by 17.8% to reach $22.1bn. With its huge amount of natural resources such as oil and gas and agricultural lands, Kazakhstan is the richest country in central Asia.

The top four countries investing in Kazakhstan in 2022 were the Netherlands, the US, Switzerland and Belgium.

According to the Deputy Minister of Foreign Affairs, the growth in FDI reflects foreign investors’ confidence in Kazakhstan due to its ongoing government reforms and low costs of production.

With reference to the data above and your knowledge of economics, evaluate the advantages of an increase in foreign direct investment (FDI) for a country such as Kazakhstan.

A firm is described as a multinational corporation (MNC) if it

Globalisation results in increasing

According to a survey from accounting firm EY, foreign direct investment (FDI) into Ireland increased by 52% in 2018.

With reference to the data above and your knowledge of economics, analyse the benefits of FDI for a country such as Ireland.

Approximately 12% of goods traded globally are via international e-commerce. Tens of millions of small and mid-size firms worldwide have become exporters by joining e-commerce marketplaces such as Alibaba and Amazon.

Explain one reason why the reduced cost of communication has helped to increase globalisation.

By volume, 90% of world trade of goods are transported by sea in containers. There are 5,000 container ships in the world and the largest carries more than 20,000 containers. It now costs only $0.05 to ship a t-shirt across the world from low-cost countries such as Vietnam.

Explain one reason why the reduced cost of transport has helped to increase globalisation.

Figure 4 shows the amount of foreign direct investment (FDI) India received from 2016–2019.

Figure 4

(Source adapted from: https://www.businesstoday.in/current/economy-politics/ (opens in a new tab) india-has-received-highest-ever-fdi-of-6437-billion/story/369313.html)

Calculate, to two decimal places, the annual average value of FDI in $bn for India from 2016–2019. You are advised to show your working.

In January 2019, the Indian Government approved new legislation that improved and simplified its policy on foreign direct investment (FDI). This helped to attract more multinational corporations (MNCs) to the country.

In 2019, India ranked among the top 10 economies benefitting from FDI. The overall growth of FDI in India was due to its many resources. These include a high degree of specialisation in services and a skilled, English-speaking, low-cost labour force. India also has a potential market of over one billion people.

FDI in India has been focused on chemicals, computer software and hardware, telecommunications, the automobile industry, construction, power and pharmaceuticals.

(Source adapted from: https://www.nordeatrade.com/en/explore-new-market/india/investment (opens in a new tab))

With reference to the data above and your knowledge of economics, evaluate the benefits of FDI for a country such as India.

Kenya is the third largest exporter of cut flowers in the world, accounting for 1.3% of its GDP. Kenya’s main airport has a terminal dedicated especially to the transport of flowers and vegetables.

The Kenyan flower industry has created many employment opportunities. Around 100,000 people are employed directly on the flower farms and over 500,000 people benefit indirectly from this industry.

Over half of Kenya’s 127 flower farms are concentrated around Lake Naivasha due to the large amount of water needed to grow the flowers. Some environmental campaigners have expressed concerns over the impact that the flower industry could have on the lake.

With reference to the data above and your knowledge of economics, evaluate the likely benefits for Kenya of the globalisation of its flower industry.

Since 2016, 24 Japanese multinational corporations (MNCs) have invested in Bangladesh. This takes the total to 269 Japanese MNCs in Bangladesh. Low wages and the low cost of production are the main reasons for locating in Bangladesh. The cost of production is four times higher in China compared to Bangladesh.

Investments in Bangladesh have been made by Japanese automobile firm Honda and steel manufacturer Nippon Koei. Nippon Koei has invested $59.19m and recruited 2,500 employees to work in its steel factories.

With reference to the data above and your knowledge of economics, assess the benefits that MNCs bring to a country such as Bangladesh.

The World Trade Organisation (WTO) has estimated that improvements in ship containerisation have lowered sea transportation costs by over 70%. Air-freight costs have fallen by a similar amount.

Analyse how the reduced cost of transport has contributed to the increase in globalisation.

Palm oil is used in food and cosmetics. Palm plantations are a major agricultural activity in Indonesia. Many of the plantations are owned by foreign multinational corporations (MNCs).

Explain one advantage for Indonesia of the palm oil plantations being owned by foreign MNCs.

The consumption of avocados in the US used to be restricted to the summer months when farmers in California harvested their crops. Now avocados are available all year and 90% are imported from Mexico.

Explain one way globalisation has affected consumers in the US.

In August 2018, Mondelez, a food and beverage multinational corporation (MNC), opened its first factories in Bangladesh. Previously, Mondelez had been exporting its products into Bangladesh for 15 years.

Analyse why a MNC, such as Mondelez, might want to invest in Bangladesh.

The increased integration and interdependence of economies is known as

According to the UN there are now over 63,000 multinational corporations (MNCs) and the number is growing daily. Many well-known MNCs, including PepsiCo, the Tata Group and Microsoft, are expanding in India.

Explain one possible reason for the emergence of MNCs in a country such as India.

What is meant by the term multinational corporation (MNC)?