ECONOMIC DEVELOPMENT AND GROWTH Economic growth increases total income in society, creating more jobs and income which can be redistributed. However, it increases inequality (through relative poverty) because it benefits the highly skilled and wealthy classes more...
ISSUE WITH INEQUALITY Weak demand in goods and services Consumption levels are dependent on wages of those in lower/middle end of income scale rather than profits of the wealthy Household debt With stagnant wages, households rely increasingly on debt to maintain...
Wealth – stock of assets e.g. savings, house, car etc. Income – money received on a regular basis e.g. from job, dividends or welfare payments The poverty trap is a mechanism which means the poor are forced to stay on low income and cannot escape from...
Absolute poverty – not having sufficient income to cover basic needs such as food, water, clothing, shelter etc. Relative poverty – not having sufficient income to fully participate within society. MEASURES OF POVERTY –...
The minimum wage was introduced in 1999 by Labour in the UK. The National Minimum Wage is an example of a minimum price. It must be set above the free market price, like other minimum prices or it will be ineffective. Minimum wage in developing countries is often set...
FACTORS AFFECTING DEMAND FOR LABOUR There are many factors which affect demand of labour which can be remembered using the acronym PET WASP: Firm’s profits – if firms are more profitable, they employ more workers Economic cycle – in a recession...
A multinational corporation is one that operates and has assets in multiple countries but usually operates from a head office in their home country. They have grown recently due to domestic markets becoming saturated (overseas expansion is an extension strategy). As...
STAKEHOLDER CONFLICTS There may be stakeholder conflicts due to the many different types of people that are invested in the actions of an MNC. One example of this is the shareholder model which means that profits need to be high. This means they may have to keep up...
It is difficult to control an MNC as laws and other regulations passed only applies to the business operating within that country. Therefore, if there was a production subsidiary set up in a different country which violated regulations, the parent company would not be...
There are three main reasons for growth in the global labour market: Industrialisation – process moves from a primarily agricultural industry to a more manufacturing sector. Mainly seen in developing and emerging economies e.g. movement from rural to...
Firms face difficulties when they operate on countries across the globe as they must be aware of the country’s culture and preferences when conducting business. These social differences are the different ways of communicating and expectations of behaviour held by...
A change in exchange rates has many different effects in an economy and specifically on: The balance of payments (current account) Economic growth (of firms) Employment levels The rate of inflation FDI flows Balance of payments – an accounting record of all...
Push factors – Factors that push businesses out of domestic markets as they are not favourable, as a result are led towards international trade. Saturated markets make it difficult to establish a business and remain competitive. A...
FACTORS INFLUENCING EXPANSION INTO A MARKET Levels of growth of disposable income – exporters must know the potential profitability of different economies. Growing income means there is promise but this depends on the distribution of income e.g. high taxes...
Global marketing strategy – when firms have a common marketing strategy for all operations across the globe which is most effective when firms have similar expectations of all the countries they operate in. Glocalisation – this is when products and marketing...
Protectionism – the act of guarding a country’s industries from foreign competition by imposing restrictions on free trade This is done to avoid foreign imports replacing domestic substitutes which leads to business closures and...
Why has the global labour force grown? INDUSTRIALISATION Process moves from a primarily agricultural industry to manufacturing of goods. Mainly seen in developing and emerging economies An example of this developing would be the movement of workers from rural to urban...
Increasing trade liberalisation Trade liberalisation is the gradual removal/reduction of restrictions on the free exchange of goods between nations. This is increasing due to a number of factors: Increasing number of trade blocs Rise of emerging markets e.g. China and...