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Unit 6 International trade and globalisation
10a Janet Cheng, 10b Emily…
Unit 6 International trade and globalisation
10a Janet Cheng, 10b Emily Cheung
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6.2 Globalisation, free trade and protection
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Globalisation: process of interaction and integration among
the people, companies, and governments of different nations
MNCs (multinational corporations): Businesses which have their
operations, factories and assembly plants in more than one country
Benefits to host country:
$ employment and training to labour force
$ Transfers of skills and expertise
$ extend consumer and business choice
$ source of significant tax revenues
Benefit to home:
$ create opportunities for marketing
$ create employment opportunities
$ aids and encourages the economic growth and development
$ maintain favourable balance of payments
Protection:
$ Tariffs: indirect taxes on imported (or exported) goods
$ Import quotas: limit on the number of imports allowed into a country in a given period
$ Subsidies: government allows subsidies to domestic producers so that they can increase their output and reduce costs
$ Embargoes: complete ban on imports of a good to a country
Consequences of protection:
$ Restrict consumer choice
$ Restrict new revenue and employment opportunities
$ Protect inefficient domestic firms
$ Other countries may retaliate
$ Unable to grow and develop, lose out on benefits of free trade
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