4.1 – Globalisation

4.1.1 – Growing Economies

1. a) Growth rate of the UK economy compared to emerging economies:

Explanation: The UK’s economic growth rate can be contrasted with that of emerging economies, which may be experiencing rapid growth due to factors like industrialization and increasing foreign investments.

1. b) Growing economic power of countries within Asia, Africa, and other parts of the world:

Explanation: Many countries in Asia and Africa are witnessing economic growth due to factors like technological advancements, improved education, and increasing foreign investments, enhancing their economic power globally.

1. c) Implications of economic growth for individuals and businesses:

Trade opportunities for businesses:

Explanation: Economic growth can create new business opportunities, including the expansion into new markets and the development of new products.

Employment patterns:

Explanation: Economic growth can influence employment patterns, potentially creating more jobs and altering the types of jobs available.

1. d) Indicators of growth:

Gross Domestic Product (GDP) per capita:

Explanation: A measure of economic performance, calculated as the total value of goods and services produced over a specific time period per person.

Literacy:

Explanation: Higher literacy rates can indicate economic growth as they suggest a more educated workforce capable of contributing more effectively to the economy.

Health:

Explanation: Improved health indicators can signify economic growth, with healthier populations being more productive.

Human Development Index (HDI):

Explanation: A composite index measuring average achievements in three basic dimensions of human development: health, education, and standard of living.

4.1.2 – International Trade and Business Growth

1. a) Exports and imports:

Explanation: Exports are goods and services sold to other countries, while imports are those bought from other countries. The balance of these affects a country’s trade balance and economic growth.

1. b) The link between business specialization and competitive advantage:

Explanation: Specialization in a particular business area can foster competitive advantage by enhancing efficiency and expertise.

1. c) Foreign direct investment (FDI) and link to business growth:

Explanation: FDI involves investing in a foreign country, potentially spurring business growth through capital infusion and technology transfer.

Absolute and Comparative Advantage:

Explanation: These are economic theories that explain the benefits of trade; absolute advantage refers to the ability to produce more of a good with the same resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost.

Why Do Countries Trade?:

Explanation: Countries engage in trade to benefit from specialization, acquire goods they cannot produce efficiently themselves, and foster economic relationships.

4.1.3 – Factors Contributing to Increased Globalisation

1. a) Reduction of international trade barriers/trade liberalization:

Explanation: The removal or reduction of trade barriers such as tariffs and quotas facilitates global trade and integration.

1. b) Political change:

Explanation: Political developments, including changes in leadership and policies, can influence the level of globalization.

1. c) Reduced cost of transport and communication:

Explanation: Advances in technology have decreased the costs associated with transport and communication, promoting global interconnectedness.

1. d) Increased significance of global (transnational) companies:

Explanation: Transnational companies, operating in multiple countries, play a significant role in driving globalization through their extensive networks and influence.

1. e) Increased investment flows (FDI):

Explanation: Rising levels of FDI contribute to globalization by fostering economic integration and cooperation between countries.

1. f) Migration (within and between economies):

Explanation: Migration facilitates the exchange of skills and cultures, contributing to globalization.

1. g) Growth of the global labour force:

Explanation: An expanding global labor force, driven by population growth and educational advancements, fuels globalization by enhancing productivity and innovation.

1. h) Structural change:

Explanation: Changes in the global economic structure, including shifts in industries and markets, can foster globalization.

Reasons For Increased Globalisation:

Explanation: The drivers of increased globalization include technological advancements, economic policies promoting free trade, and the development of global markets and corporations.

4.1.4 – Protectionism

1. a) Tariffs:

Explanation: Tariffs are taxes imposed on imported goods, used to protect domestic industries from foreign competition.

1. b) Import quotas:

Explanation: Quotas limit the quantity of a particular good that can be imported over a specified period, protecting domestic producers from excessive foreign competition.

1. c) Other trade barriers:

Government legislation:

Explanation: Governments may enact laws to restrict foreign competition and protect domestic industries.

Domestic subsidies:

Explanation: Governments might provide financial aid to domestic industries to help them compete against foreign firms.

4.1.5 – Trading Blocs

1. a) Expansion of trading blocs:

EU and the single market:

Explanation: The EU single market facilitates free movement of goods, services, capital, and people among member countries.

ASEAN:

Explanation: The Association of Southeast Asian Nations promotes economic integration and cooperation among member countries.

NAFTA:

Explanation: The North American Free Trade Agreement, now replaced by the USMCA