Theme 4 CC2 definitions

Globalisation

The ever-increasing integration of the world’s local, regional, and national economies into a single international market

Multinational or Transnational corporation (MNC/TNC)

A company with significant product operations in at least two countries (Sony, BP etc.)

Foreign Direct Investment (FDI)

Investment undertaken in one country by companies based in other countries (Coca cola plant in Nigeria etc.)

Inward investment

Where foreign companies invest in the domestic economy

Outward investment

Where domestic firms invest abroad

Offshoring

The process of relocating business operations to a country other than the one in which the company is headquartered in order to reduce labour costs, tap in to new markets, and take advantage of tax incentives

Outsourcing

The contracting out of a business process to another party

Transfer pricing

An accounting technique used by transnational corporations for reducing taxes on profits by selling goods at a low price internally from a high tax country to another part of the company in a low tax country

De-industrialisation

A fall in the contribution made by the manufacturing sector to national output, employment, and income

De-globalisation

Countries adopting protectionist policies in order to protect domestic employment, leading to a decline in specialisation, world trade, FDI, and short run hot money flows

Containerisation

A system of freight transport for use in sea shipping involving containers of standardised dimensions that has reduced the transport costs of moving goods around the globe