The global drive towards net-zero carbon emissions has triggered a massive transformation in energy systems across both developed and developing economies. Emerging market nations, particularly in Southeast Asia and Latin America, are seeking significant capital to expand their solar, wind, and smart grid infrastructure. Bilateral partnerships, such as those established between the UK and transition economies, are designed to facilitate these large-scale transitions.
While critics suggest that capital outflows could divert domestic funding away from UK-based projects, proponents highlight the mutual advantages. The UK's advanced engineering, financial services, and consultancy sectors are highly competitive globally, presenting unique strengths. In the long term, if host countries transitioning to renewable energy become more open to overseas capital and foreign direct investment (FDI), the benefits could return directly to the domestic UK economy, supporting high-value employment and research and development.
Extract C refers to the possible benefit to the UK and other advanced economies if emerging market nations transitioning to renewable energy become more open to overseas capital in the long term.
Explain the term 'foreign direct investment' (FDI) and analyse two possible economic benefits for the UK economy when it invests in overseas green infrastructure.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.