Study Notes
Globalisation refers to the increased integration and interdependence of economies, characterized by the movement of products, resources, and capital across borders. It is driven by factors such as fewer trade barriers, reduced transportation and communication costs, and the rise of multinational corporations (MNCs).
- Globalisation — increased trade and movement of products and resources between economies. Example: A company in the US sourcing materials from China and selling products in Europe.
- Multinational Corporations (MNCs) — businesses with operations in more than one country. Example: A car manufacturer with factories in multiple countries.
- Foreign Direct Investment (FDI) — investment by a company in a foreign country. Example: Building a factory in another country to produce goods locally.
- Free Trade Agreements — agreements allowing free trade between countries without barriers. Example: The North American Free Trade Agreement (NAFTA).
Exam Tips
Key Definitions to Remember
- Globalisation
- Multinational Corporations (MNCs)
- Foreign Direct Investment (FDI)
- Free Trade Agreements
Common Confusions
- Confusing MNCs with companies that only export products
- Misunderstanding the difference between FDI and simple exports
Typical Exam Questions
- What is globalisation? Globalisation is the increased integration and interdependence of economies.
- How do MNCs impact local economies? MNCs can create jobs, invest in infrastructure, but also outcompete local businesses.
- What are the benefits of free trade agreements? They allow countries to trade without barriers, increasing choice and lowering prices.
What Examiners Usually Test
- Understanding of the reasons for globalisation
- The impact of MNCs on economies
- The role of free trade agreements in globalisation