Globalisation and multinational companies
Cambridge IGCSE Economics (0455) · Unit 6: International trade and globalisation · 9 flashcards
Globalisation and multinational companies is topic 6.2 in the Cambridge IGCSE Economics (0455) syllabus , positioned in Unit 6 — International trade and globalisation , alongside International specialisation, Free trade and protection and Foreign exchange rates. In one line: Globalisation is the increasing integration and interdependence of national economies. Consumers benefit from greater choice, lower prices, and access to goods and services from around the world. For instance, consumers can buy clothing manufactured in Bangladesh at lower prices than locally produced clothing.
This topic is examined in Paper 1 (multiple-choice) and Paper 2 (structured questions, including data-response items).
The deck below contains 9 flashcards — 3 definitions, 4 key concepts and 2 application cards — covering the precise wording mark schemes reward. Use the 3 definition cards to lock down command-word answers (define, state), then move on to the concept and application cards to handle explain, describe and compare questions.
Globalisation and provide an example of how it impacts consumers
Globalisation is the increasing integration and interdependence of national economies. Consumers benefit from greater choice, lower prices, and access to goods and services from around the world. For instance, consumers can buy clothing manufactured in Bangladesh at lower prices than locally produced clothing.
Questions this Globalisation and multinational companies deck will help you answer
- › Identify two potential advantages of MNCs for host countries.
- › Identify two potential disadvantages of MNCs for host countries.
- › Describe how globalisation can lead to increased competition.
- › Explain how FDI can impact the balance of payments of a host country.
- › Discuss one way that MNCs can contribute to economic development in developing countries.
Define globalisation and provide an example of how it impacts consumers.
Globalisation is the increasing integration and interdependence of national economies. Consumers benefit from greater choice, lower prices, and access to goods and services from around the world. For instance, consumers can buy clothing manufactured in Bangladesh at lower prices than locally produced clothing.
Explain what is meant by a Multinational Company (MNC).
A Multinational Company (MNC) or Transnational Company (TNC) is a company that operates in multiple countries, with its headquarters usually located in its country of origin. An example is McDonald's, which has restaurants in over 100 countries.
What is Foreign Direct Investment (FDI)?
Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. This could involve establishing a new company or acquiring an existing one. Toyota building a factory in the UK is an example of FDI.
Identify two potential advantages of MNCs for host countries.
MNCs can create jobs, boost economic growth, and bring in new technology and skills to the host country. They also often pay taxes, increasing government revenue.
Identify two potential disadvantages of MNCs for host countries.
MNCs may exploit resources, harm the environment, and exert political influence in host countries. They may also repatriate profits back to their home country, limiting the benefits for the host nation.
Describe how globalisation can lead to increased competition.
Globalisation reduces trade barriers, allowing more foreign firms to enter domestic markets. This increases competition, forcing domestic firms to become more efficient or risk losing market share. E.g. Local retailers competing with Amazon.
Explain how FDI can impact the balance of payments of a host country.
FDI inflows initially improve the financial account of the host country's balance of payments. Subsequently, outflows of profits and dividends can worsen the financial account, while increased exports may improve the current account.
Discuss one way that MNCs can contribute to economic development in developing countries.
MNCs often invest in infrastructure, such as roads and ports, which benefits not only the company but also the wider economy. This improved infrastructure facilitates trade and investment, promoting economic development. E.g. Mining companies building roads.
Explain one way governments might try to attract more FDI.
Governments might offer tax breaks or subsidies to MNCs to encourage them to invest in their country. They may also reduce regulations and improve infrastructure.
Key Questions: Globalisation and multinational companies
Define globalisation and provide an example of how it impacts consumers.
Globalisation is the increasing integration and interdependence of national economies. Consumers benefit from greater choice, lower prices, and access to goods and services from around the world. For instance, consumers can buy clothing manufactured in Bangladesh at lower prices than locally produced clothing.
Explain what is meant by a Multinational Company (MNC).
A Multinational Company (MNC) or Transnational Company (TNC) is a company that operates in multiple countries, with its headquarters usually located in its country of origin. An example is McDonald's, which has restaurants in over 100 countries.
What is Foreign Direct Investment (FDI)?
Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. This could involve establishing a new company or acquiring an existing one. Toyota building a factory in the UK is an example of FDI.
More topics in Unit 6 — International trade and globalisation
Globalisation and multinational companies sits alongside these Economics decks in the same syllabus unit. Each uses the same spaced-repetition system, so progress in one informs the next.
Cambridge syllabus keywords to use in your answers
These are the official Cambridge 0455 terms tagged to this section. Mark schemes credit responses that use the exact term — weave them into your answers verbatim rather than paraphrasing.
Key terms covered in this Globalisation and multinational companies deck
Every term below is defined in the flashcards above. Use the list as a quick recall test before your exam — if you can't define one of these in your own words, flip back to that card.
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