Impact of Globalisation on Local and National Economies | Edexcel A-Level Economics B (9EB0)
Impact of Globalisation on Local and National Economies
- 162 questions
- 11 subtopics
- Theme 3: the global economy
- Paper 2 and Paper 3
Impact of Globalisation on Local and National Economies is examined in Paper 2, Competing in the global economy, and in Paper 3, The economic environment and business.
It covers multinational corporations and local labour markets, multinational corporations and local firms, multinationals, the local community and the environment, foreign direct investment, growth and the balance of payments, technology transfer, skills and business culture, multinationals and consumers, tax revenues and transfer pricing, stakeholder conflicts, pay and working conditions, emissions, waste disposal and supply chain ethics, ethical marketing: labelling and promotion and controlling multinational corporations.
Sample questions from Impact of Globalisation on Local and National Economies
Answer each one closed book first, then open the answer.
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Multinational corporations and local labour markets
Why might a multinational's presence worsen working conditions at local competing firms?
Show the answer
Local firms facing lower-cost competition may try to survive by lengthening hours, using casual contracts or cutting spending on safety. -
Multinational corporations and local firms
What are forward linkages?
Show the answer
Forward linkages arise when local firms use a firm's output as an input, or distribute, install and service its products. -
Multinationals, the local community and the environment
What two positive effects can a multinational have on a local community?
Show the answer
It may fund schools, clinics, roads and sports facilities, and the wages it pays raise local demand and the tax receipts that support public services. -
Foreign direct investment, growth and the balance of payments
How does inward investment raise a country's productive capacity?
Show the answer
It adds to the capital stock and brings better technology, shifting the long-run aggregate supply curve to the right. -
Technology transfer, skills and business culture
Why is the skills benefit small when a multinational carries out only final assembly in a host country?
Show the answer
Assembly needs repetitive low-skill tasks while design, research and management remain in the home country, so little valuable knowledge is transferred. -
Multinationals and consumers
Define predatory pricing.
Show the answer
Predatory pricing is setting price below cost to force rivals out of the market, with the intention of raising price once the competition has gone. -
Tax revenues and transfer pricing
What is a tax haven?
Show the answer
A country that offers very low or zero taxes together with financial secrecy in order to attract profits and funds to be registered there. -
Stakeholder conflicts, pay and working conditions
What is the shareholder value model of business objectives?
Show the answer
It is the view that a firm's only responsibility is to maximise the return to its owners within the law, leaving wider social aims to government.
The 11 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Multinational corporations and local labour markets | Multinational corporations and local wages, direct and indirect job creation, the local multiplier effect, paying above the going wage, pressure on local employers' conditions, footloose capital and plant closures, job quality, health and safety standards, working-condition criticisms, expatriate managers, cyclical output, and dependence on one employer. | 15 |
| Multinational corporations and local firms | How multinational retailers take market share from local shops and undercut them, monopsony power over local suppliers, benefits to local firms, backward and forward linkages, productivity spillovers, crowding out, national sourcing, infant industries, dependence on one customer, joint ventures, competition in concentrated markets, and local innovation. | 15 |
| Multinationals, the local community and the environment | Negative externalities imposed on local communities, the marginal social and private cost diagram and welfare loss, over-production, positive community effects, corporate social responsibility as investment, greenwashing, the uncovered costs of displacement, resource extraction, the pollution haven argument, the race to the bottom, and local policies against external costs. | 15 |
| Foreign direct investment, growth and the balance of payments | Foreign direct investment, greenfield and brownfield, where it appears in the balance of payments, repatriated profits and the current account, trade balance effects, productive capacity and the AD/AS diagram, actual and potential growth, overstated benefits, GNI against GDP, exchange rate effects, location factors, trade blocs, hot money, investment incentives, and financing deficits. | 16 |
| Technology transfer, skills and business culture | Technology transfer and its channels, long-run growth, human capital and why multinationals train local workers, final assembly with few skills, changing management practice, business culture and imposing a home culture, new business formation, inappropriate technology, licensing, patents, just-in-time supplier standards, and technology transfer as a condition of market access. | 15 |
| Multinationals and consumers | Consumer benefits from multinational entry, economies of scale and lower prices, consumer surplus after a monopoly, temporary gains and predatory pricing, homogenisation of tastes, global branding and price, independent cafes against a global chain, local adaptation, product safety, market power in developing economies, international price discrimination, and exchange rate sensitivity. | 13 |
| Tax revenues and transfer pricing | Tax revenue from multinational investment, transfer pricing and profit shifting and calculating the tax saved, tax havens, avoidance against evasion, the arm's length principle, why tax authorities struggle, a global minimum corporation tax, tax holidays, the tax burden, tax competition, measures against aggressive tax planning, reputational effects, and disallowed management fees. | 15 |
| Stakeholder conflicts, pay and working conditions | Stakeholders in a multinational, conflicts between shareholders and workers, host governments and customers, conflicts over time, the shareholder value model, the living wage against the minimum wage, criticism despite above-local pay, garment factory conditions, the case for and against low-wage factory work, relocation and bargaining power, ethical audits, the cost of a pay rise, and institutional investors. | 15 |
| Emissions, waste disposal and supply chain ethics | Carbon footprints and supply chain emissions, cap-and-trade schemes and permit prices, carbon taxes, polluting stages in weakly regulated countries, exported electronic waste, the circular economy, commercial reasons to cut packaging, extended producer responsibility, enforcing environmental agreements, labour exploitation and child labour, and the cost of policing supply chains. | 16 |
| Ethical marketing: labelling and promotion | Misleading product labelling and how it causes market failure, information asymmetry, misleading environmental claims, mandatory nutrition labelling, inappropriate promotional activity, advertising demerit goods and the effect of an advertising ban, weaker marketing standards abroad, social media and unethical campaigns, regulatory responses, and voluntary ethical codes. | 12 |
| Controlling multinational corporations | Why national governments struggle to control multinationals, regulatory capture and political influence, the threat of relocation, legal instruments and deterrent fines, pressure groups and their tactics, social media and its limits, self-regulation and its advantages and weaknesses, and international coordination. | 15 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
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