International Business
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| Globalization | process by which perceived distance is shrinking, material culture is starting to look the same the world over, national economies are merging into one. | ||||
| Who has the highest level of ouput in the world? | US | ||||
| US GDP? | $42, 129 per capita | ||||
| How much of the worlds GDP doe the US produce? | 20.4 | ||||
| Globalization of markets? | refers to the merging of historically distinct & separate natikonal markets into 1 huge global marketplace. | ||||
| What % of small businesses export? | 90% | ||||
| Globalization of production? | Sourcing of goods & services from locations around the globe to take advantage of national differences in the cost & quality of various factors of production. | ||||
| Factors of production? | Components of production such as labor, energy, land, & capital | ||||
| GATT | General Agreement on Tariffs & Trade. Intl treaty that committed signatories to lowering barriers to the free flow of goods across national borders; led to the WTO (World Trade Organization. | ||||
| What is the WTO responsible for? | Primarily policing the world traiding systems and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. | ||||
| What do critics accuse the WTO of? | The org is usurping the national sovereignty of individual nation-states. | ||||
| What does IMF stand for? | International Monetary Fund | ||||
| What is the difference between the IMF & the World Bank? | IMF was setup to maintain order in the international monetary system and the World Bank was set up to promote economic development. | ||||
| What are considered infrastructure investments | Building dams or roads | ||||
| What stipulations does the IMF make to give loans to cash strapped nation-states? | Adopt specific economic policies aimed at returning their troubled economies to stability and growth. | ||||
| United Nations? | Intl org made up of 191 countries charged with keeping internaltional peace, developing cooperation between nations, amd promoting human rights. | ||||
| What are the four purposes of the UN? | To maintain international peace and security, develop friendly relations amoung nations, cooperate in solving international problems and in promoting respect for human rights and to be a center for harmonizing the actions of the nations. | ||||
| Factors of production | Labor, energy, land, & Capital | ||||
| Intl Trade | occurs when a firm exports goods or services to consumers in another country | ||||
| FDI | Foreign Direct Investment occurs when a firm invests resources in business activities outside its home country. | ||||
| Moore's Law | Premise that the power of microprocessor technology doubles & its cost of production drops in half every 18 mo's. | ||||
| Stock of FDI | total accumulated value of foreign owned assets at a given time. | ||||
| MNE | Multinational enterprise any business that has productive activities in 2 + countries. | ||||
| Political economy | political, economic, and legal sytems of a country are interdependent; they interact and influence each other. | ||||
| Political system | system of govt in a nation | ||||
| Collectivism | political system that stresses the primary of collective goals over individual goals | ||||
| Plato | believed that society should ve stratified into classes with those best suited to rule | ||||
| Socialism | political system that believes in state ownership of a country's means of production, distribution, & exchange so that all can benefit | ||||
| Communits | Those who believe that socialism can only be realized through violent revolution & totalitarian dictatorship | ||||
| Social Democrats | Those who believed in achieving socialism through democratic means | ||||
| Individualism | The philosophy that an individual should have freedom in his or her economic & political pursuits. | ||||
| Representative Democracy | Citizens periodically elect individuals to represent them in govt functions | ||||
| Communist Totalitarian | Advocating socialisism can only be achieved through a totalitarian dictatorship | ||||
| Right-Wing Totalitarianism | Politial pwr is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts political freedom & speech | ||||
| Tribal Totalitarianism | Political system that a party or group represent interests of a particular tribe monopolizes political pwr | ||||
| Market Economy | Interaction of supply & demand determines the quantity in which goods & sercvices are produced | ||||
| Command Economy | Govt plans the allocation of resources | ||||
| Legal System | rules that regulate behavior by which the laws of a country are enforced | ||||
| Common Law | System of law based on tradition, precedent, & custom | ||||
| Civil Law System | system of law based on a derailed set of written laws and codes | ||||
| Theocratic Law System | system of law based on religious teachings | ||||
| Property Rights | Bundle of legal rights over the use to which a resource is put and over the use of any income that may be derived | ||||
| Organization Culture | refers to values & norms shared among employees of an org. | ||||
| Quota Rent | extra profit producers make when supply is artifically limited by an export quota | ||||
| Local Content Requirement | A requirement that some specific fraction of a good be produced domestically | ||||
| Administrative Trade Policies | rules adopted by govts that can be used to restrict imports or boost exports | ||||
| Dumping | Selling goods in a foreign market below costs of production | ||||
| Countervailing Duties | Antidumping Policies | ||||
| Antidumping Policies | designed to punish foreign firms that engage in dumping | ||||
| Helms Burton Act | passed in 1996, this law allows Americans to sue foreign firms that use Cuban property confiscated from them during Cuba's 1959 revolution | ||||
| D'Amato Act | Passed in 1996, this law allows Americans to sue foreign firms that use property in Libya or Iran confiscated from Americans | ||||
| Infant Industry Argument | Proposal that developing countries have a potential comparative adcantage in manufacturing | ||||
| Strategic Trade Policy | Govt policy aimed at either helping the countries domestic firms retain first-mover gains | ||||
| Corn Laws | placed a high tariff on imports of foreign corn | ||||
| Smoot Hawley Act | passed in 1930, US law erected a wall of tariff barriers against imports | ||||
| Greensdield Investment | establisment of a new operation in a foreign country | ||||
| Flow of FDI | amount of FDI UNDERTAKEN OVER A GIVEN TIME PERIOD; NORMALLY A YR | ||||
| Stock of FDI | total accumulated value of foreign owned assets at a given time | ||||
| Gross fixed capital formation | summarizes the totsl smount of capital invested in factories, stores,etc | ||||
| Oligopoly | Industry component of a limited number of large firms | ||||
| Multipoint Competition | arises when two or more enterprises encounter each other in different reional markets, etc | ||||
| Eclectic Paradigm | Theory that combining localtion specific assets or resource endowmenrs and the firms own unique assets often requires FDI. | ||||
| Exporting | sale of products produced in 1 country to residentsof another country | ||||
| Licensing | occurs when a firm (licensor) grants a foreign entity (licensee) the right to produce its product, use its production processes, etc | ||||
| Location-specific advantages | advantages that arise from utilizing resource endowments or assets thar are tied to a particular foreign location & that a firm finds valuable to combine with its own unique assets, etc | ||||
| Pragmatic Nationalism | FDI has both benefits & costs | ||||
| Balance of Payment Accounts | national accounts that track both payments to and receipts from foreigners | ||||
| Current Account | in the balance of payments, this records transactions involving the esport or import of goods & services | ||||
| Offshore Production | FDI undertaken to serve the house market | ||||
| Regional Economic Integration | Agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barrirtd to the free flow of goods | ||||
| Free Trade Area | Area in which all barriers to the trade of goods & services among member countries are removed | ||||
| EFTA | includes norway, iceland,switzerland; most enduring free tade agreement | ||||
| Customs Union | group of countries committed to eliminating tade barriers & adopting a common external trade policy | ||||
| Common Market | has no barriers to trade ntwn member countries Pg. 265 | ||||
| Economic Union | involes the free flow of products and factors of production btwn member countries & the adoption of a common external trade policy | ||||
| Political Union | central political apparatus coordinates the economic, social, & foreign policy | ||||
| Trade creation | occurs when high cost domestic producers are replaced by low cost producers within the free trade area. | ||||
| Trade diversion | occurs when lower cost external suppliers are replaced by higher costs suppliers w/in the free trade area | ||||
| Treaty of Rome | provided the cration of a m\common market | ||||
| Maastricht Treaty | Treaty committing members of the EC to adopt a common currency | ||||
| Andean Pact | Agreement unites Bolivi, Chile, Ecuador, Peru | ||||
| Mercosur | Free trade pact btwn Brazil, Argentina, Paraguay, Venezula, etc | ||||
| Foreign Exchange Rate | Rate @ which 1 currency is converted into another. | ||||
| Foreign Exchange Market | A market for converting the currency of 1 country into that of another country. | ||||
| Foreign Exchange Risk | Ris that changes in exchange rates will hurt the probabibility of a business deal | ||||
| Currency Speculation | Moving funds from one currency to another over the short term in hpoes of profiting from shifts in exchange rates | ||||
| Hedging | Insuring 1's bus against froeign exchage risk by using forward exchanges or currency swaps. | ||||
| Spot Exchange Rate | Rate @ which a foreign exchange dealer converts currency on any particular day. | ||||
| Forward Exchange | When 2 parties agree to exchange currency & execute a deal @ some specific date in the future. | ||||
| Currency Swap | simultaneous purchase & sale of a given amount of foreign exchange for two different value dates. pg. 301 | ||||
| Arbitrage | Purchase of securitir\es in 1 market for immediate resale in another market to profit from a price discrepancy. | ||||
| Law of 1 Price | principle that in comparative markets free of transportation costs & barriers to trade, identical products sold in diff countries must sell of the same price | ||||
| Efficient Market | Market in which prices reflect all avail info & trade is not restricted. | ||||
| Relatively Efficent Market | Market in which few impediments to intl trade & investment exists. | ||||
| PPP theory predicts | that changes in relative prices will result in change in exchange rates | ||||
| PPP theory predits | that exchange rates are determined by relative pricesm & changes in relative prices will result in a change in exchange rates. | ||||
| Govt policy determines | whether the rate of growth in a country's money suppky is grater then the rate of growth in output. | ||||
| Purchasing Power Parity Puzzle | failure of a strong link betwn relative inflation rates & exchange rate movements pg 309 | ||||
| Fisher effect | Theory that nominal interest rates in 4ach country equal the required real rate of interest & expected rate of inflation. | ||||
| Mercantilism | Economic philosophy advocating that countries should simultaneously encourage exports and discourage imports. | ||||
| Zero sum game | A situation in which a gain by one country results in a loss by another. | ||||
| Absolute Advantage | When 1 county is more efficient than another country in producing a particular product. pg 161 | ||||
| PPF Production Possibility Frontier | Various output possiblities a country can produce from its resource pool. pg 161 | ||||
| Factor Endowments | Extent to which a country is endowed with such resources as land, labor, and capital. |
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Created by:
kembap
on 2008-04-24