IntB Chapter 1 Globalization

True or false: Experts forecast that world trade will continue to decline more rapidly than world production.

False

A(n) ______ is any entity that conducts business in at least two countries.

multinational enterprise

True or false: While lowering trade barriers initially made global production possible, the advent of technology made globalization a reality.

True

As international trade expands, the economies of the world's nation-states are becoming ______.

more intertwined

If you were to describe the global economy of the twenty-first century, it would be accurate to say that

more nations are becoming part of the developed world.

A(n) ______ business is any firm that engages in cross-border trade or investment.

international

Brite-Way Lighting is based in California and sells products within the United States as well as to ten foreign countries. Brite-Way Lighting is an example of a(n) _____ business.

international

True or false: The first web browser was introduced to the public in the 1970s and started the explosive growth of the Internet in foreign transactions.

False

Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests.

True

True or False: The International Monetary Fund (IMF) was established to ensure the stability of the international monetary system.

True

True or false: Containerization made the process of moving goods from one country to another less labor intensive.

True

When NAFTA was first introduced, what was the biggest argument opponents presented?

U.S. firms would move manufacturing to Mexico and feel free to pollute the air and employ child labor.

Select the four facts that describe the demographics of the global economy up until the 1960s. (Check all that apply.)

US dominance in world foreign direct investment Dominance of large, multinational US firms in international business scene Roughly half of the globe was off-limits to Western international business US dominance in the world economy and world trade

The ______ was established on October 24, 1945. Today, one of its key purposes is to maintain international peace and security.

United Nations

During the 1960s, which country was the predominant world power in terms of foreign direct investment?

United States

The negotiations called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system.

Uruguay Round

What is an accurate description of the globalization of production?

Locating each stage of production where it can be done most economically

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.

Moore's

Critics of globalization point out that free trade

allows firms to abuse the weak labor and environmental laws in developing countries

One concern voiced by critics of globalization is that

an interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations.

According to critics of globalization, increased free trade and investment over the past few decades have

broadened the gap between the rich and poor nations.

The globalization of markets and production implies that

domestic firms are facing intense competition from foreign firms.

The globalization of _____ is the term used to describe the merging of national markets into one large global place.

markets

As the barriers to the free flow of goods, services, and capital fell during the 1970s, one motivation for foreign direct investment by non-US firms was the desire to

move production activities to more desirable locations.

Land, labor, capital, and energy are all examples of factors of _____.

production

The development of the microprocessor has

reduced the cost of global communications.

Some demonstrations against globalization are based on the idea that falling barriers to international trade

result in job losses in industries targeted by foreign competitors.

How did nation-states react to the economic environment of the 1920s and 1930s?

trade barriers were increased

The division between rich and poor nations has (increased or decreased?) with the advent of globalization?

increased

The United Nations was established by _____ countries committed to preserving peace through economic cooperation and trade support.

51

During the 1960s, US firms created just over _____ of worldwide foreign direct investment and British firms were second accounting for just over 10 percent.

65%

We live in an ever-increasing knowledge society. How does this affect international trade?

Consumers know more about goods made worldwide which drives demand for those goods.

A critic of globalization would say that falling trade barriers result in what two situations?

Depression of wages in developed nations. Destruction of manufacturing jobs in advanced economies

The World Trade Organization (WTO) is the successor to ______.

GATT

______ refers to the shift toward economic international integration.

Globalization

Just a few decades ago, it would have cost a business much more money to find buyers in a foreign country. What has helped lower the cost of this process and allows buyers and sellers to easily find each other regardless of their location?

Internet

The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.

Internet

What is an accurate description of the World Bank?

It focuses on helping developing countries to fight poverty through investments in the underlying structure of the country.

In the early 1960s, the US was the world's dominant industrial power. How does the US position compare today?

It has diminished in power.

What is one benefit of the Internet?

It makes it easier for buyers and sellers to connect.

Which statement best describes the International Monetary Fund (IMF)?

The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil.

What is an accurate description of microprocessors?

They can decode vast amounts of information.

Why would a company engage in the globalization of production?

To lower their overall cost structure

When global institutions were introduced in the 1940s, governments in struggling nations would turn to the _____ for low-interest loans needed for infrastructure projects such as building roads.

World Bank

Which organization verifies that nation-states comply to the rules associated with trade treaties signed by member states?

World Trade Organization

Current trends indicate that, due to the emerging economies, the world is moving _____ an economic system that is more favorable for international business.

closer to

In terms of transportation technology occurring since the 1950s, the development of _____ has essentially reduced the size of our entire world. (Check all that apply.)

commercial jets superfreighters

Moore's Law predicts that

computer power will approximately double every 18 months.

A refrigerator parts manufacturer in China receives an order and loads the goods into a large receptacle that is then loaded on a ship headed for the United States. When the ship docks, this receptacle is placed onto a truck and the goods are delivered to a warehouse in Iowa. This scenario shows how _____ made the delivery of goods in the global marketplace much easier.

containerization

Former communist nations present opportunities to Western international business as these nations show continued commitment to _____.

democracy

Critics of globalization protest in order to

diminish the impact of the culture of multinational enterprises on the world.

Studies exploring the share of labor in national income over the last two decades show that the share of national income accounted for by skilled labor has

increased

The opponents of globalization argue that falling barriers to international trade will

eliminate manufacturing jobs in wealthy economies.

International trade occurs when a firm _____.

exports goods or services to consumers in another country

The Johnson Automotive Group recently closed two of its US manufacturing facilities and opened a new facility in Asia to take advantage of lower labor costs and savings in energy costs. The company made this change in order to benefit from _____.

factors of production

Influential economists, politicians, and business leaders who favor globalization argue that

falling barriers to international trade drive the economy toward greater prosperity.

The International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system.

global institutions

It is common practice for people today to use products that are produced or assembled in various nations around the world. This is a reflection of _____.

globalization

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes which creates a _____.

globalization of markets

When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the USA and the product was assembled in the USA. Today, he sources the components from China. The change at this company is an example of the _____.

globalization of production

According to the supporters of globalization, falling barriers to international investment

help to create employment opportunities in countries that participate in the global trading system.

The risks of doing business in countries that are facing revolutions is

higher than in countries not facing revolutions.

Foreign direct investment occurs when a(n)

investment is made by a company based in one country into a company or entity based in another country.

The Uruguay Round negotiations resulted in

lowering the trade barriers between various national markets.

Companies rely on containerization to _____.

simplify the transfer of shipments from one form of transport to another

Detailed analysis of data over the last two decades shows that the share of national income enjoyed by (skilled or unskilled?) labor has increased, suggesting that the fall in labor's share in national income is due to a fall in the share taken by (skilled or unskilled?) labor.

skilled unskilled

The four basic purposes of the United Nations include _____.(Check all that apply.)

solve humanitarian, cultural and social issues maintain international peace develop friendly relations between nations be a center for harmonizing the actions of nations

Global institutions are needed to

stabilize and monitor the global marketplace.

A country with high _____ has a barrier to international trade.

tariffs on imports of foreign goods

Advances in information processing and communication are two ways _____ has made the globalization of markets a reality.

technology

The decline of the United States standing in industrial power since the 1960s, is considered a relative decline because it is a reflection of

the faster economic growth of other economies

Paragon Corp., based in Ohio, sources goods from Southeast Asia to take advantage of labor cost savings. This company is benefiting from _____.

the globalization of production

There have been two notable trends in the demographics of multinational enterprises since the 1960s. These include _____.

the rise of non-US multinationals the growth of mini-multinationals