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37 Cards in this Set

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What are the two major drivers of globalization?
lowering trade barriers and technological change
What are three reasons for the spread of democracy?
totalitarian regimes failed to deliver economic progress to their people, the state's lower ability to control access to uncensored information, and the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms
What are the three types of risks that one has to consider before investing in foreign countries?
political(the likelihood that political forces will cause changes in business), economic(likelihood that political forces will alter business) and legal(how strong are contract and property rights?) risks
What are the four components of Hofstede's research concerning culture and the workplace?
power distance, individualism versus collectivism, uncertainty avoidance, and masculinity and femininity
What are the simple extensions of the Ricardian Model?
immobile resources, diminishing returns, free trade,
What are some limitations of the free trade theory?
simple world, no transportation costs, no price differences in resources, resources immobile across countries, constant returns to scale, each country has a fixed stock of resources and no efficiency gains in resource use from trade and full employment
What consists of Porter's Diamond?
factor endowments, demand conditions, related and supporting industries, and firm strategy, structure and rivalry
What are the two major drivers of globalization?
lowering trade barriers and technological change
What two important points does the new trade theory make?
First, through its impact on economies of scale, trade can increase the variety of goods available to consumers and decreases the average costs of these goods. Second, in those industries when the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises
What three types of accounts are included in the Balance-of-Payment accounts?
current, capital and financial
What are some instruments of trade policy governments can implement?
tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, anti-dumping policies, and administrative policies
What are some political arguments for governmental intervention in trade?
protecting jobs and industries, national security, retaliation, protecting consumers, advocating human rights and furthering foreign policy objectives
What are some economic arguments for governmental intervention in trade?
infant industry and strategic trade policy
What are two effects of import tariffs?
tariffs are unambiguously pro-producer and anti-consumer and import tariffs reduce the overall efficiency of the world economy
What are the two objectives of export tariffs?
raise revenue for government and reduce export from a sector, often for political reasons
What are two ways in which subsidies help domestic producers?
competing against foreign imports and gaining export markets
What were three reasons for protectionist trends from 1980-1993?
the economic success of Japan strained the world trading systems, the world trading system was strained by the persistent trade deficit in the world's largest economy, the U.S., and that many countries were finding ways to get around GATT regulations
How do trade barriers constrain a firm's ability to disperse its productive activities?
1) tariff barriers raise the cost of exporting products to a country, 2)quotas may limit a firm's ability to serve a country from locations outside of that country, 3)a firm may have to locate more production activities in a given market that it would otherwise, 4) a firm may want to locate som e of its production activities in a given country to reduce the threat of trade barriers being imposed in the future
What does globalization of markets refer to?
distinct/separate markets merging into a huge global marketplace
What does globalization of production refer to?
is the sourcing of goods and services from locations around the glove to take advantage of national differences in the cost and quality of various factors of production
What are some pros for the globalization debate?
lower prices for goods and services, economic growth stimulation, increase in consumer income, creation of jobs, countries specialize in production of goods and services that are produced most efficiently
What are some cons for the globalization debate?
destroys manufacturing jobs in wealthy, advanced countries, wage rates of unskilled workers in advanced countries declines, companies move to countries with fewer labor and environment regulations and loss of sovereignty
What are the four purposes of the UN?
to maintain international peace and security, to develop friendly relations among nations, to cooperate in solving international problems and in promoting respect for human rights
What are some decisions an international manager may face that a domestic one generally wouldn't?
where to produce in the world, whether it is ethical to produce in a country with diminished labor and environmental laws, decide how best to control dispersed production activities, etc
What does innovation require?
market economy, strong property rights and the "right" political system
What are the two most important tenets of individualism?
emphasis on the importance of guaranteeing individual freedom and self expression; the welfare of society is best served by letting people pursue their own economic self-interest
What are the three components of the HDI, which measures the quality of life in different nations?
life expectancy at birth, educational attainment of the adult literacy rate and enrollment in lower to higher forms of education, and whether average incomes based on PPP estimates are sufficient to meet the basic needs of life in a country
What are some of the economic implications for the following religions: Christianity, Islam, Hinduism, Buddhism, and Confucianism?
protestant work ethic; Islamic economic principles; anti-materialistic, socially stratified; anti-materialistic, social equality; hierarchy, loyalty, honesty, reciprocity
What is a mudarabah contract?
An Islamic bank lends money to a business and takes a share in the profits that are derived from the investment
What is a murabaha contract?
the bank will buy something for a borrower at one price and charge a higher price to the borrower to get it from them
What is the product-life theory?
suggests that early in the life cycle of a product, most new product are produced in and exported from the country in which they are developed. As a new product becomes widely accepted elsewhere however, products start in other countries
What are two of the major WTO policing activities?
policing organization for manufactured goods, services and intellectual property; responsibility for trade arbitration: reports adopted unless specifically rejected and after appeal, failure to comply can result in compensation to injured country or trade sanctions
What is the Infant Industry Argument?
developing countries have a comparative advantage in manufacturing; thus governments should temporarily support new industries (through tariffs, import quotas and subsidies) until they have grown strong enough to meet international competition
What are the two major reasons why economists are skeptical of the Infant Industry Argument?
1) protection of manufacturing from foreign competition does no good unless the protection makes the industry efficient and 2) this argument relies on an assumption that firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market
What are some arguments against government intervention in regard to international trade?
1) intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors, 2) intervention is dangerous and could invite retaliation, 3) intervention is unlikely to be well executed, given the opportunity for such a policy to be captured by special-interest groups
What are the four major reasons why managing an international business differs from a domestic one?
1) countries are different, 2) the range of problems confronted in an international business is wider and more complex, 3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, 4) international transactions involve converting money into different currencies
What are the components of culture?
language, attitudes and beliefs, aesthetics, religion, material culture, societal structure, and education