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Theme 4, Part 1- Globalisation - Coggle Diagram
Theme 4, Part 1- Globalisation
Growing Economies
Emerging Economy
- growing population
- rapid growth and lots of risk
- growing middle class and spending
GDP
- Gross Domestic Product
- a measure of the size of an economy
- total output of a country
Why Emerging Economies Grow
- growing market, growing population, growing working class
- low labour cost
- access to natural resources (oil, gas, cobalt)
FDI
- Foreign Direct Investment
- when MNC's bring skill and capital to countries
BRICS
- Brazil
- Russia
- India
- China
- South Africa
MINT
- Mexico
- Indonesia
- Nigeria
- Turkey
Indicators of growth
- Literacy= more educated population means better skilled workforce
- Health= healthy population mean more reliable working population
- HDI= Human Development Index, measure of economic growth combining life expectancy, education, income
Offshoring vs outsourcing
- Offshoring= moving a businesses entre operations to another country
- Outsourcing= having part of the business operations done in another country
Implications of economic growth
- trade opportunities
- strong infrastructure
increased domestic competition
India vs China
China
- huge population
- 10% economic growth rate a year
- GDP growth 7% a year
India
- population growing faster than China
- highly educated population
- poor infrastructure
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Protectionism
Protectionism definition
- giving preference to domestic producers by making it harder for foreign countries to export their products into your country
Tariffs
- a tax imposed on imported goods to make them more expensive and therefore making domestic goods more favourable
Pros:
- help domestic firms survive
- protect domestic jobs
- increase tax revenue for the country
Cons:
- could reduce consumers ability to buy products, reducing the standard of living
- could reduce competitiveness making business 'easy'
Quotas
- a physical limit on the amount of a certain product a country can import over a certain time period
Pros:
- better revenue and success foe domestic businesses
- prevents unemployment in the domestic market
Cons:
- no extra tax revenue gained by the government
Legislation and Regulations
- legislation can act as a barrier to imports
Subsidy
- a payment made by the government to a business producing a certain product or in a location that the government is aiming to support
- domestic subsidies= instead of making imports harder, domestic subsidies help support domestic businesses and locations
Trade Blocs
Trade Blocs Definition
- a trading bloc is a group of countries that sign up to free trade between them such as the EU
Dumping
- when a company exports a products at a lower price than the one normally charged in its own home market which is a form of predatory pricing
Impact on businesses of trading blocs
Pros:
- free movement of goods creates a free market
- protected from competition in other parts of the world
- as trade grows, other government can support in other ways such as aiding infrastructure developments
- free movement of labour
Cons:
- competition can increase due to a more free trade
- new rules and regulations may need to be agreed (minimum wage?)
- could strain the relationship with countries that aren't in the trading bloc
Examples of trading blocs
- EU (European Union)
- ASEAN (Association of South East Asian Nations)
- MERCOSUR (Spanish for South American Common Market)
- USMCA (United States Mexico Canada Agreement)
- EAC (East African Community)