Chapter 4 Material

Inversion

-Companies avoid taxes in their home countries -merge with companies located in other countries and shifting HQ there

Major Multinational Enterprises

-Defined by UN as fins that control assets abroad -Most global commerce carried out by small number of powerful firms

Corporate Political Systems

-Democracy -Free Enterprise System -Central State Control

Entering/Competing in the Global Marketplace

-Develop global market channels -Establish global operations -Develop global supply chains

International Financial and Trade Institutions

-World Bank -International Monetary Fund -World Trade Organization

Free Enterprise System

-based on the principle of voluntary associations and exchange -members of society satisfy most of their economic needs through voluntary market transactions

Central State Control

-economic power is concentrated in hands of government officials, political authorities -central gov. owns property used to produce goods and services

World Trade Organization

-international body that establishes ground rules for trade among nations -major objective is to promote free trade; attempts to eliminate barriers to trade -conducts "rounds" of negotiations on various topics

Democracy

-presence of political freedom -fair elections -separation of powers -independent media -open society

World Bank

-provides economic development loans to member nations -funds used for roads, dams, power plants, other infrastructure projects, education, health, social services -funding provided by member countries, international capital markets

An individual who is a supporter of globalization would argue that it helps the developing world by

-providing people in developing countries with more jobs -allowing new ideas and technological innovations to spread quickly -giving entrepreneurs access to foreign investment funds to support economic development

International Monetary Fund

-purpose is to stabilize the system of currency exchange rates and international payments to enable member companies to participate in global trade -lends foreign exchange to member countries

Foreign District Investment

-worldwide flow of capital -occurs when company, individuals, or fund invests money in another country by buying shares of stock in or loaning money to a foreign firm

True

Although many firms conduct business across national boundaries, most global commerce is carried out by a small number of powerful firms

Most nations in the world share similar political, social, and economic beliefs

False

Which statements are true about global income?

Income is how much one earns in one day or a year; and income at the bottom of the pyramid varies from place to place

The primary purpose of the International Monetary Fund is to

Lend foreign currency to member countries

Globalization directly and indirectly influences the politics, environment, geopolitics, and economics of virtually every country in the world

True

Globalization is accepted worldwide and creates little controversy

True

A society where economic power is concentrated in the hands of government officials and political authorities is called

a central state control system

Develop global market channels

build successful business in home country, export products or services to buyers in other countries

Civil Society

comprises nonprofit, educational, religious, community, family, and interest-group organizations

Index of Economic Freedom

fundamental rights of every human being to control his or her own labor and property

Experts attribute the growth of nongovernmental organizations to

greater openness in many societies

Bottom of the Pyramid

individuals earning below $3000 a year in local purchasing power

Establish global operations

locate manufacturing plants or service operations in other countries as a way to cut costs

Inequality

measured by wealth and income

Develop global supply chains

purchase raw materials, components, or other supplies from sells in other countries; work may be subcontracted

Wealth

refers to assets a person accumulates and he or she owns at a point in time

Income

represents how much a person earns in a day or year

The deep anti-Americanism that exists in some parts of the world is thought to be caused by

resentment of cultural penetration from U.S. based multinational enterprises

Globalization

the increasing movement of goods, services, and capital across national borders

Microfinance

when financial organizations provide loans to low-income clients or solidarity lending groups who traditionally lack access to banking or related services