1 Government initiatives to pass laws affecting business operations
and government foreign policy towards international trade.
2 The European Union
2.1 Community of countries that form a single market as a result of laws
centred on the free movement of people, goods, services and capital.
2.2 Consists of 28 member states, combined population
= 500 million. 23% of global nominal GDP.
2.3 EU Expansion
2.3.1 British govs in recent years supported expansion.
2.3.2 Increased size of market for UK exporters: don't have to pay import
taxes or customs duties. > USA (300 million) 'Home market'
2.3.3 Source of labour for British firms: cheap, skilled labour (Poland, Romania). Downward
pressure on wage rates -> helps to prevent wage inflation. Helps economy grow faster.
3 A single European currency
3.1 Benefit: ability to carry out international transactions without
the need to worry about exchange rate fluctuations.
3.2 UK economy not suited to Euro.
3.3 European Central Bank sets one interest rate for
all economies that use the Euro.
4 Free Trade
4.1 WTO promotes free trade. Ultimate goal = end to all
import tariffs and physical limits on goods.
4.2 Free trade in best
interests of LEDC's?
4.2.1 China + India protected infant
industries -> help long-term
4.3 Govs may protect jobs in
home country by using trade
barriers. -> cost advantage.
4.3.1 Can encourage development
of a new industry.
5.1 Laws passed by UK and
5.2 Conservative ->
5.3 Labour -> regulate
5.4 Employment legislation: aims to protect rights of employees i.e right to
fair pay, sick leave, maternity. Min. wage -> inc. labour costs or more
motivated? Right to contract of employment -> meets security needs or
reduces employers' flexibility.
5.5 Consumer protection legislation: designed to ensure consumers are treated
fairly i.e does what it says, correctly labelled, safety, refunds/exchanges. -> min
legal standard means companies can't cut corners to gain a competitive edge.
5.6 Environmental protection legislation: materials, processes, the extent of how
recyclable the product is. Additional cost with not much upside. Many feel a
sense of injustice as other firms have less stringent laws -> unfair advantages
5.7 Health and Safety legislation: ensure safety of employees and
customers. H&S at Work Act 1974 -> major burden on employers -> safe
working environ. (physical conditions, precautions, the way hazardous
substances must be treated. 200,000 injuries + 192 deaths (09 to 10)