3.1 Globalisation

3.1 Globalisation

1. Growing economies

   • Emerging markets
     • BRIC
     • MINTS
     • Primary sector to Secondary/Tertiary
       • Rising incomes
       • Increasing quality of life
     • New opportunities

2. Trade and growth

   • Trade liberalisation
   • FDI = GROWTH
   • Specialisation

3. Trading blocs

   • EU Single Market
     • Harmonisation
       • Same standards
     • Brexit
   • NAFTA
   • No trade barriers
   • Trade creation - Lower costs due to reduced/eliminated tariffs
   • Trade diversion- Diverting trade from a supplier outside of the trading block to one within the trading block due to lower costs
     • Tariffs
     • Quotas
     • Embargos
   • Interdependance
     • Free movement of people, reduce pressure on skill shortages

4. Trade policy and negotioations

   • Protectionism
     • Protect infant industries with trade barriers
     • Subsidies
       • Artificial cost reduction
   • International trade organisations
     • Manage disputes / trade wars
       • e.g. USA vs China - tyres
     • G20 Summit
     • WTO / World Bank
       • Cannot enforce legislation
     • Bilateral trading agreements
       • A trade deal between two nations

5. Exchange rate changes

   • Impacts
     • Change in balance of payments
     • Employment/unemployment
     • FDI flows
       • Hot money
     • Inflation
   • Eurozone
     • Harmonisation

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