theme 4

• Emerging Market


  country is becoming developed:

  - high rates of economic growth

  - growing middle class = increase in incomes

  - increased supply - access to raw materials

  - greater movement of goods/services between countries
• BRICS


  Brazil

  Russia

  India

  China

  South Africa

  
• NAFTA


  North American Free Trade Agreement (US, Mexico, Canada)

  
  

  free trade area - barriers to trade are reduced

  
  

  mexico= cost effective due to lower wages

  
• ASEAN


  the Association of Southeast Asian Nations

  
  

  an alliance that promotes economic growth and peace in the region

  
  

  made up of 10 countries- including thailand, malaysia and indonesia

  
  

  allows free movement of labour and capital between member countries- not people

  
  

  free trade area- lowers buysiness costs- economies of scale- increase market share

  
• EU


  European union

  
  

  28 european countries

  
  

  no trade restrictions

  
  

  no bordees between member states for the movement of labour, products and capital- free movement

  
  

  all countries have the same regulations about products
• MINT


  Mexico

  Indonesia

  Nigeria

  Turkey
• impact of economic growth on businesses

  - potential for increased profits (businesses enter new markets and gain more customers)- income elastic

  
  

  - reduced costs of production (lower labour costs)

  
  

  - increased trade opportunities (demand for goods and services increases)- disposable incomes are rising

  
  

  - increase in investment - as the economy grows the business will want to expand = increase in FDI
• implications of economic growth on individuals

  - reduced unemployment - there is more demand which requires more labour

  
  

  - increased average incomes- due to employment

  
  

  - access to quality public services as more tax revenue is generated - the government can improve the quantity/quality of services
• Impacts of Emerging markets

  - increase in average incomes

  . allows consumers to spend more on both imports and domestically produced goods and services

  . Buying more domestic goods encourages growth of domestic firms = more market power and allowing them to compete internationally.
• Indicators of growth


  GDP per capita

  HDI

  Literacy Rate - ability to read and write

  Health
• HDI


  a collection of statistics that are combined into an index, ranking countries according to their human development
• Exports


  goods or services that a firm produces in its home market, but sells in a foreign market
• Imports


  goods and services that are bought into one country from another
• Competitive advantage


  factors that allow a company to produce goods or services better or more cheaply than its rivals
• when one business in one country buys operations (factories/offices) in another country
• government legislation


  laws made by the government

  
  

  can restrict international trade
• Tariffs


  taxes that are imposed on imports
• Containerisation


  transporting large amounts of goods in steel containers overseas therefore reducing the transport costs of moving thousands of different goods separately across the globe
• Globalisation


  process where economies have become increasingly integrated and inter-dependent
• Factors contributing to Globalisation


  Trade liberalisation- (removal of barriers to trade)

  Political change

  Reduced cost of transport and communication

  Increased significance of global companies

  Increased investment flows

  Migration

  Growth of global labour force

  Structural change
• Multinational Companies


  has operations in more than one country.
• Embargo


  a complete ban on international trade - usually for political reasons
• Import Quota


  a physical limit on the quantity/volume of imports allowed into a country
• domestic Subsidy


  sums of money provided by the government ot domestic firms in a certain industry- reduces production costs
• Trade barriers


  measures designed to restrict trade
• Protectionism


  an approach used by a government to protect domestic producers
• Common market


  a group of countries that acts as a single market, without trade barriers between member countries (ASEAN)
• Customs union


  an agreement between two or more countries(members) to remove trade barriers and lower or eliminate tariffs however they adopt a common set of barriers for non-members
• Free Trade area


  a region where an agreement is formed by a group of like-minded countries that agree to reduce trade barriers
• Regional trade area


  agreement made between two or more countries within a geographical region, which is designed to facilitate trade by bringing down barriers
• Single market


  a market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country
• Trading bloc


  a group of countries that have signed a regional trade agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves
• Examples of trading bloc

  ASEAN

  NAFTA

  EU
• negative impacts on businesses inside the trading bloc

  increased competition- Smaller organisations suffer to remain competitive= forced out of business= increases unemployment levels

  
  

  tension within countries- inefficiency- increased competition between countries within the bloc- less competition from businesses in countries outside the bloc

  
  

  Harms global trade= more expensive to import products from countries not in the bloc= increased costs= may have to find new suppliers

  
  

  operating as one market= new rules and regulations -adjust operations to comply with rules and regulations- increases costs
• positive impacts on businesses inside the trading bloc

  fewer regulations = easier to obtain materials, labour and capital- Labour easier to recruit (free movement of labour- allows businesses to source workers from a wider pool= improve efficiency/quality of work

  
  

  fall in production/transport costs

  
  

  access to more markets- sell to more customers due to free movement of goods- increases sales volume

  
  

  removal of trade barriers= cheapest supplier= increase demand= obtain their supplies= lowers costs - Improves competition= firms more efficient= offer customers more competitive prices
• Economies of scale


  unit costs fall as output rises
• Labour productivity


  the amount of goods and services produced by one hour of labour

  
  

  formula: total output/ number of employees
• Offshoring


  relocation of business activities from the home country to a different international location
• Outsourcing


  hiring a third party to perform business operations that are formerly done by the company's in-house staff
• Pull factors


  factors that entice firms into new markets