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CSEET · Economic and Business Environment · Global Environment

An Indian software firm serves clients in the USA from Pune, while a Korean carmaker assembles cars in Chennai using parts sourced from several countries. Which feature of globalisation do these two situations together most directly illustrate?

The examples illustrate the fragmentation of production and services across countries, known as global value chains. Firms locate different stages of work where they are most efficient and trade the outputs, which is a core feature of globalisation, unlike import substitution, nationalisation or barter.

  1. AFragmentation of production and services across countries through global value chainsCorrect
  2. BImport substitution to protect infant industries
  3. CNationalisation of foreign-owned assets
  4. DBarter trade replacing currency-based settlement

Explanation

Delivering services across borders and assembling goods from components made in many countries show that production stages are spread globally, i.e. global value chains. Import substitution and nationalisation are inward-looking or restrictive, and barter is not involved.

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