Business Studies Unit 4 Topic 2

Topic 2: Changing Global Economy

Changes in trade doe after Second World War:

1. The rise of regional trading blocs - EU and NAFTA lead to trade creation between members, but countries outside of it suffered from trade diversion 
2. De-industrialisation in many advanced economies - advanced economies experienced less national output generated by their manufacturing sectors
3. Increased participation of former communist countries - collapse of communism led to communist countries open up to trade 
4. Emergence of China and India - these countries dramatically increased their share of world trade and share of manufacturing exports

Indicators of growth:

1.) Economic Growth - this is and increase in real GDP or in productive potential of a country; measured by assessing growth in GDP or GDP per capita

2.) Economic Development - measure of increase in living standards of people in a country; can be measured in Human Development Index (HDI); determined by:

• Income per head
• Levels of education
• Healthcare
• Access to housing 
• Access to phone, internet etc.

Key players - emerging economies - BRICS ( Brazil, Russia, India, China & South Africa)

What makes these countries economically powerful?

1. Population size - large population provides a huge market for manufactured goods and provides cheap labour for foreign firms
2. Economic growth - China and India have enjoyed economic growth above 10% which created opportunities for businesses from all over the world
3. Increased purchasing power - in China and India middle class income has increased which lead to an increase in demand for luxury products; increased…