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15 Cards in this Set
- Front
- Back
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Globalisation |
The process hay have resulted in ever closer links between the worlds economies |
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Three factors contributing to globalisation |
-reduced protectionism -falls in transport costs -improvement in communications |
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2 pros and cons of globalisation for a developing country |
-increased specialisation and trade allows them to utilise comparative advantage and export more -increased FDI ~infant industries can’t grow and compete ~foreign companies use resources and take profits home |
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2 pros and cons of globalisation for a developed country |
-increased migration gives firms cheaper labour -increased communication and ability to sell goods abroad increases exports ~UK manufacturing and low skilled jobs outsourced, increased inequality ~decreases in price of imports increases M |
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Three functions of World Bank and example of their action |
-reconstruction loans for war devastated countries -developmental loans -promoting economic reforms to encourage underdeveloped firms to develop -world bank give Nigeria $2.1bn to rebuild north east after war |
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Three functions of IMF and example |
-ensure stability of system of exchange rates -prevent regional and global economic crises by surveillancing economic trends -provide countries with finance to correct balance of payments problems -corrected Angola’s oil dependency and deficit |
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Three criticisms of World Bank and IMF |
-only look at raw data, ignore negative externalities like environment damage -unintended consequences of things like building dams in traditionally populated areas -leaving countries in high levels of debt |
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What are NGOs and list two pros and cons of them |
Non Governmental Organisations- a non profit group that takes local community action -provide direct assistance with aid, giving people the basics -act as pressure groups to lobby governments to adopt suitable development strategies ~they never actually solve the development problem as it is up to the government ~difficult to do large scale operations like improving infrastructure |
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4 pros and 2 cons of being in a monetary union |
-price stability as exchange rate is harder to influence -easy for consumers to tell what product is cheapest due to common currency -makes companies act more efficiently as increased competition, cost push deflation -attracts FDI as easier to do so ~no control of monetary policy ~floating currency that’s hard to influence makes it hard to change it to benefit economy eg lower it to make exports increase |
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The two things needed to make a monetary union work (optimal currency area) |
-high degree of labour market flexibility, workers are geographically mobile -economic convergence, everyone is at a similar point in development and trade cycle |
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External shocks |
Unexpected events that have a significant impact on national or global economy, can be positive or negative |
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Three main categories for global shocks |
-world demand shocks -world supply shocks -world financial shocks |
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4 possible shock absorbers and how they’d work |
-interest rates, increase demand/ decrease inflation where necessary -fiscal policy to grow/shrink economy -letting float or influencing ex rate -flexible labour market to move employees impacted to another industry |
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Three problems for policy makers when applying policies |
-inaccurate information -risks and uncertainties -inability to control external shocks |
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What are direct controls and give 3 different examples |
Direct controls are forms of control which work outside the market system -maximum price controls -regulatory controls on utilities -minimum prices (including for labour) |
