CBA Ch. 2 HW

According to this video, why might foreign investors be interested in investing in Ethiopia, which is one of the world's most impoverished countries? -skilled labor force -strong domestic market potential -abundant and cheap farmland -well-developed infrastructure -large population of consumers

abundant

What concerns have some economists and opponents of the Ethiopian government raised regarding foreign investment in that nation? -food is exported to rich nations -surplus of food in local markets -creating labor shortages locally -foreigners' profits are too low -inflation due to high local wages

food is exported to rich nations

If a firm has valuable know-how that cannot be adequately protected by contracts, and there is reason to believe that additional costs through transportation or tariffs would be high, the MOST effective approach would be _______________. -licensing -foreign direct investment -exporting

foreign direct investment

The theory that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls rather than sell it in the open market is known as: -internalization theory. -internationalization theory. -strategic behavior theory. -dynamic capabilities theory. -eclectic theory.

internalization theory

What responses might foreign investors provide when replying to complaints that they are not doing enough to improve the Ethiopian economy and society? -they produce for local consumers -nation building is their main goal -they invest for charity, not profit -emphasis is to build local society -new farmland being developed

new farmland being developed

More than half of exports from developing countries go to developed countries

regulation of trade

Favorable business climate exists in importing nation

relevance of major trading partners for managers

Mexico and Canada

Major US trading partners

Mercantilism

Nation welfare is promoted by the accumulate precious metals

Diamond Model of National Competitive Advantage

Related and supporting industries influence trade; the products traded by a country will be influenced by the strength of related and supporting industries

Melissa wonders which countries are the biggest trading partners with the U.S. Which country was not one of the biggest trade partners of the U.S. in 2013? -Canada -China -Spain -Mexico -Japan

Spain

The theory of resource endowment -explains why France sends cosmetics, wine, and clothing to Chile. -states that a nation will trade goods that can be produced with the production factor that is most abundant. -explains why an automobile can be made either by hand or by a capital-intensive process. -explains why transportation costs may be ignored when calculating the costs of imports. -shows how larger countries will have an advantage in trade.

states...

US trade relationship with China

trade deficit

Overlapping Demand

Trade influenced by relative income levels; Patterns of trade reflect the extent to which nations have similar income levels

Comparative Advantage

Trade least inefficiently produced goods

Absolute Advantage

Trade most efficiently produced goods

Value of exports exceeds value of imports

Trade surplus

More than half of exports from developing countries go to developed countries

direction of trade

Economies of scale and the experience curve -explain how international trade in manufactured goods will be linked to gross national income. -state that a nation will trade goods that can be produced with the production factor that is most abundant. -explain why many companies will engage in international trade. -explain the international life cycles of products. -are only relevant for manufacturing industries.

explain why many companies will engage in international trade

For a number of different reasons, a government may impose tariffs. When these add significantly to the cost of the goods, consumers might not want or be able to purchase a firm's products. Under these conditions, the LEAST effective strategy would be ______________________________. -exporting -licensing -foreign direct investment

exporting

If a product is bulky or heavy, transportation costs increase, and unless the product has an extremely high value-to-weight ratio, the LEAST effective strategy would be _____________________. -exporting -foreign direct investment -licensing

exporting

Why are some local people unhappy with foreign investment in Ethiopia, even though it has helped to create jobs in this impoverished nation? -farmers displaced from their land -excessive local food supplies -social problems from high wages -creation of labor shortages too much road building

farmers displaced

If a firm needs to maintain tight control over a foreign operation, and there is reason to believe that additional costs through transportation or tariffs would be high, the MOST effective approach would be _______________. -foreign direct investment -exporting -licensing

foreign direct investment

If a firm's competitive advantage comes from skills and capacities that may be difficult to transfer or protect, and there are reasons to believe that additional costs through transportation or tariffs would be high, the MOST effective approach would be _______________. -foreign direct investment -licensing -exporting

foreign direct investment

Differences in Resource Endowments

A nation trades those materials that are abundant

Which statement best explains the trade in services based on international trade? -The proportion of commercial services exports from Africa has increased since 1980. -The United States proportion of commercial services exports has risen by approximately 50%. -The United States' proportion of commercial services exports has outpaced that of Asia. -The primary-world nations experienced an absolute increase of the dollar volume of their service exports.

"The primary-world..."

Choose the selection that best depicts the direction of world trade in 2013. -Approximately 25% of exports from developed countries go to other developed countries. -The proportion of exports from developing nations to developed countries increased from 50% in 1970 to about 72% in 2013. -More than half of the exports from developing nations go to developed countries. -The share of world trade accounted for by members of regional trade agreements decreased from 70% in 1980 to about 40% by 2013.

"more than half"

Choose the selection that best depicts world trade in merchandise in 2013. -The largest merchandise importers in 2013, in order, were the U.S., China, Germany, Japan, and France. -For services, the nations with the largest level of exports in 2013, in order, were the U.S., Germany, the U.K., China, and France. -The largest merchandise exporters in 2013, in order were China, the U.S., Germany, the United Kingdom, and Japan. -For services, the nations with the largest level of imports in 2010, in order, were the U.S., Germany, China, the U.K., and Japan.

"the largest merchandise exporters..."

Which statement reflects how evenly trade has grown? -China is now the second largest exporter in the world. -The proportion of merchandise from Asia has tripled since 1980. -The proportion of merchandise exports coming from North America, Latin America, Africa, and the Middle East has decreased since 1980. -The European Union's proportion of world trade has been holding steady for the last decade.

"the proportion of merchandise exports...."

Which statement accurately portrays the volume of goods and services traded in 2013? -The volume of goods and services traded in 2013 was almost 6 times larger than the $4 trillion of trade in 1990. -Trade in services including activities such as travel, music, and movies accounted for about $18 trillion of total trade in 2013. -Physical goods such as automobiles, food, and clothing accounted for about one third of all international trade in 2013. -Trade in services is growing more slowly than trade in merchandise.

"the volume...."

Mr. Lamourdia Thiombiano of the United Nations Food and Agriculture Organization suggests that the situation regarding foreign investment in Ethiopia does not have to be a zero sum game. What does he suggest in order to ensure that both Ethiopia and the foreign investors can benefit from the situation? -return to a colonial system -increased charity from abroad -replace Ethiopia's government -a mandatory code of conduct -a voluntary code of conduct

a voluntary code of conduct

What benefits should a country such as Ethiopia expect from foreign investors in the agricultural sector? -emphasis on local development -development of local universities -willingness to have limited profits -access to advanced technology -improving local government

access to advanced technology

The theory of overlapping demand suggests that: -international trade in services will be more common between countries with high and low relative levels of labor costs. -countries with similar geography will have similar demand traits. -trade wars will usually occur between countries that have similar levels of income. -international trade in manufactured goods will be more common between countries with similar levels of income. -if a home country can find a product that is desired in another country, then producing demand for that product within the home country will result in increased economic growth.

international trade in manufactured goods

If a firm's know-how, skills, and capabilities can be protected by contract, and if tight control over foreign operations is not vital to remain competitive, and there are reasons to believe that additional costs through transportation or tariffs would be high, the most effective approach would be _______________. -foreign direct investment -exporting -licensing

licensing

The international product life cycle theory -may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in foreign markets first. -may have its greatest usefulness in explaining trade and investment behavior when product life cycles are short. -may have its greatest usefulness in explaining the emergence of "born global" companies. -may have its greatest usefulness in explaining trade and investment behavior when international firms first introduce new products in their home markets. -may have its greatest usefulness in explaining whether companies will innovate or imitate.

may have its greatest usefulness in explaining trade and investment behavior when international firms first introduce new products in their home markets