econ nat 5 fullll

Define global trade

the import and export of goods and services across international boundaries

Name some benefits of trade

Greater choice and variety as not all countries produce the same goods
Lower prices because some countries can produce goods cheaper than others can
Augments home supplies

Same some disadvantages of global trade

Resource depletion and climate change
Unemployment due to competition from abroad
Increases the gap between rich and poor
Harmful goods can enter a country
Loss of strategic industries
Smaller firms can't compete with larger, global firms

Name some barriers to trade

A tariff, quota, high safety/quality standards and an embargo

What is a tariff

A tax placed on imported goods

What is a quota

A limit on the amount of a certain good allowed to enter the country

What is an embargo

A complete ban on certain goods (or goods from a particular country)

Name some reasons for introducing trade barriers

To protect infant industries so that they do not face competition
To raise revenue so that the government
To protect domestic jobs so that the government JSA payments do not increase

To protect strategic industries so home countries do not have to rely on foreign suppliers who may not be able to transport supplies
To prevent harmful products being sold so that domestic consumers are protected
To reduce imports so that the balance of trade deficit will improve

What's the definition of a multinational

A company that operates in more than one country.
A company that has an HQ in one country and production facilities in others
A multinational company is one where branches or production facilities are located worldwide

Name some reasons for becoming a MNE

To reduce production costs
To reduce transport costs
To penetrate markets protected by import controls
To take advantage of host government financial assistance
To escape government regulation at home
To earn higher profits after tax.

What are some reasons for an MNE locating in the UK

skilled labour force
low wage rates relative to some other areas of the EU
inside the EU tariff barrier
good infrastructure
financial inducements from central and local government
external economies of scale (particularly for electronics), e.g. a concentration of local suppliers and services.

good education

What are some advantages for host country of an MNE

Employment
Incoming firms come with advanced technical and management skills

wide choice of products

What are some disadvantages for host country of an MNE

Research and development may take place in country of origin.

bad working conditions, only gets low skilled jobs, exploits country, no investment in instrastructure

Name some effects on the home country (MNE)

Jobs lost overseas with a negative multiplier effect, deindustrialisation (dont produce stuff anymore), exports fall

What is an exchange rate?

the price of one currency in terms of another

What are some factors affecting the value of the pound

Foreigners wanting to buy UK goods and services
UK citizens wanting to buy foreign goods and services
Foreigners wanting to invest in the UK
UK citizens wanting to invest abroad
Foreign governments wanting to hold pounds as a reserve
UK central banking wanting to hold foreign currency as a reserve

What are some characteristics of developing economics

General poverty, low gdp, low standard of living, limited exports, only exports primary products, low level of gov spending, low standard in education, low productivity, lack of capital

Name some developing economies

Mali
Niger
Malawi
Mozambique
Uganda
Somalia
Yemen
Nepal
Afghanistan
Senegal
Sudan

What is a loan in aid

Cash on which Interest is charged

What is debt relief in aid

When rich countries write off the debts that developing countries owe them

What is technical aid

When experts go to help workers learn how to operate machinery, equipment etc

What is capital equipment in aid

Provides machinery

What is tied aid

When a country provides money but the recipient has to spend it on goods from the donor country

What is bilateral aid?

When one country directly transfers money or assets to another country

What is food/emergency aid

Provides food/shelter etc usually when a natural disaster occurs

What is charitable aid

Donations from citizens in other countries

What is military aid

Provides equipment and personel

What are some emerging economies

Turkey
India
Mexico
Brazil
South Africa
Thailand
Malaysia
China

What are some characteristics of emerging economies

Rapid increase in economic growth
Improving standard of living
Moving from primary to secondary industry
Large export markers for manufactured goods
Have large investments in capital
Have invested in training and education
Improving infrastructure

What are some advantages of emerging markets for UK

Source of cheap labour and resources for UK firms
UK firms can send profits back to UK

What are some disadvantages of emerging markets to the UK

Greater unemployment as UK firms leave to set up in emerging markets
Imports increase due to cheaper goods being made available

Pound appreciation- pound becomes stronger

£1 buys u more foreign stuff- purchasing power of uk ppl abroad increases

Foreign currency buys less uk stuff

Purchasing power of foreigners in uk falls

Pound depreciation- becomes weaker

£1 buys u less of foreign styffm purchasing power abroad falls,

Impact or pound appreciation in exchange rates of the price of imports and exports

Uk exports more expensive for foreigners - value of exports fall

Imports from other countries to uk is less expensive- value of imports rise

Current account deficit increases

Impact or pound depreciation in exchange rates of the price of imports and exports

Uk exports become cheap for foreigners- value of exports rise

Imports more expensive for uk- imports value fall

Current account deficit decreases

Impact or pound appreciation in exchange rates on individuals and firms

Greater purchasing power in foreign countries, foreigners have less purchasing power, exporters will get less demand= less revenue= less workers

Importerrs lower costs =lower prices

Impact or pound depreciation in exchange rates on individuals and firms

Less purchasing power abroad for uk, foreigners have more purchasing power, exporters will get more demand= more revenue

Importers have higher costs= increase prices