Globalisation and trade restrictions
Globalisation & multinationals
- Globalisation = the world's economies becoming more joined (trade, travel, the internet, cross-border firms).
- A multinational company (MNC) produces in more than one country (the host country):
- + jobs, investment, skills/technology, tax,
- − profits flow home, local firms pushed out, low wages/pollution.
Practice
A multinational company is one that:
MNCs produce across countries — bringing jobs and technology, but sending profits home.
Trade protection
- Trade protection = barriers to limit imports:
- tariff (tax on imports), quota (limit on amount), subsidy (to home firms), embargo (total ban).
- Reasons: protect jobs, an infant industry, stop dumping (selling below cost), raise revenue.
- Costs: higher prices, weak protected firms, and retaliation (a trade war).
Practice
A tariff is:
A tariff taxes imports (raising their price); a quota limits the amount; an embargo bans trade.
Practice
A cost of trade protection is that:
Protection raises prices, keeps weak firms going, and can spark a trade war (retaliation).
You've got it
Key idea
- globalisation joins economies; multinationals bring jobs/tech but send profits home
- protection tools: tariff, quota, subsidy, embargo
- protection saves jobs/infant industries but raises prices and risks retaliation