Business and the international economy
Globalisation & multinationals
- Globalisation = growing trade and movement of goods, money and people, so the world acts like one market (cheaper transport, the internet, fewer tariffs).
- A multinational company makes/sells in more than one country:
- + new jobs, investment, technology, more tax,
- − profits sent abroad, local firms forced out, pollution, too much power.
Practice
A multinational company is one that:
Multinationals operate across countries — bringing jobs and technology, but sending profits abroad.
Practice
Globalisation has grown partly because of cheaper transport, the internet and fewer tariffs.
Lower transport/communication costs and fewer trade barriers drive globalisation.
Exchange rates and trade
- A stronger currency → exports dearer, imports cheaper.
- A weaker currency → exports cheaper, imports dearer.
- Memory aid SPICED: Strong Pound → Imports Cheaper, Exports Dearer.
Practice
If the currency gets stronger, exports become:
SPICED: Strong currency → Imports Cheaper, Exports Dearer.
You've got it
Key idea
- globalisation ties countries into one market; multinationals bring jobs/tech but send profits abroad
- stronger currency → exports dearer, imports cheaper (and vice versa)
- remember SPICED: Strong Pound → Imports Cheaper, Exports Dearer