GMU MBUS 305 Midterm

What is gross national income (GNI)?

(GNI) Measures the total annual income received by residents of a nation.

What is Andean Community?

A 1969 agreement among Bolivia, Chile, Ecuador, Colombia, and Peru to establish a customs union.

Universal Declaration of Human Rights

A United Nations document that lays down the basic principles of human rights that should be adhered to.

What is a Political Union?

A central political apparatus coordinates economic, social, and foreign policy.

What is Absolute Advantage?

A country has an absolute advantage in the production of a product when it is more efficient than any other country at producing it.

What is Factor Endowments?

A country's endowment with resources such as land, labor, and capital.

What is Ethical Strategy?

A course of action that does not violate a company's business ethics.

What is Import Quota?

A direct restriction on the quantity of a good that can be imported into a country.

What is just distribution?

A distribution of goods and services that is considered fair and equitable.

What is a contract?

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.

European Free Trade Association (EFTA)

A free trade association including Norway, Iceland, Liechtenstein, and Switzerland.

What is a Custom Union?

A group of countries committed to (1) removing all barriers to the free flow of goods and services between each other and (2) the pursuit of a common external trade policy.

What is economic union?

A group of countries committed to (1) removing all barriers to the free flow of goods, services, and factors of production between each other; (2) the adoption of a common currency; (3) the harmonization of tax rates; and (4) the pursuit of a common external trade policy.

What is a Free Trade Area?

A group of countries committed to removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies.

What is export ban?

A policy that partially or entirely restricts the export of a good.

What is Tribal totalitarianism?

A political party that represents the interests of a particular tribe monopolizes power.

What is a representative democracy?

A political system in which citizens periodically elect individuals to represent them in government.

voluntary export restraint (VER)

A quota on trade imposed from the exporting country's side, instead of the importer's; usually imposed at the request of the importing country's government.

What is Ethical System?

A set of moral principles, or values, that is used to guide and shape behavior.

what is United Nations Convention on Contracts for the International Sale of Goods (CISG)?

A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of businesses in different nations.

zero-sum game

A situation in which an economic gain by one country results in an economic loss by another.

What is Ethical dilemma?

A situation in which there is no ethically acceptable solution.

What is a Civil Law System?

A system of law based on a very detailed set of written laws and codes.

What is Theocratic Law System?

A system of law based on religious teachings.

What is common law?

A system of law based on tradition, precedent, and custom; when law courts interpret common law, they do so with regard to these characteristics.

What is religion?

A system of shared beliefs and rituals concerned with the realm of the sacred.

What is the caste system?

A system of social stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime.

What is a Class System?

A system of social stratification in which social status is determined by the family into which a person is born and by subsequent socioeconomic achievements; mobility between classes is possible.

What is culture?

A system of values and norms that are shared among a group of people and that when taken together constitute a design for living.

ad valorem tariff

A tariff levied as a proportion of the value of an imported good. administrative.

What is a tarrif?

A tax levied on imports.

What is export Tariff?

A tax placed on the export of a good.

What is class consciousness?

A tendency for individuals to perceive themselves in terms of their class background.

Central American Common Market

A trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war.

What is Communist Totalitarianism?

A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.

What is Values?

Abstract ideas about what a society believes to be good, right, and desirable.

administrative trade policies

Administrative policies, typically adopted by government bureaucracies, that can be used to restrict imports or boost exports.

What is first mover advantage?

Advantages accruing to the first to enter a market.

What is Location-specific advantages?

Advantages that arise from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets (such as the firm's technological, marketing, or management know-how).

What is regional economic integration?

Agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other.

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

An OECD convention that establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective.

What is purchasing power parity (PPP)?

An adjustment in gross domestic product per capita to reflect differences in the cost of living.

What is CARICOM?

An association of English-speaking Caribbean states that are attempting to establish a customs union.

What is a group?

An association of two or more individuals who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior.

What is Human Development Index (HDI)?

An attempt by the United Nations to assess the impact of a number of factors on the quality of human life in a country.

What is mercantilism?

An economic philosophy advocating that countries should simultaneously encourage exports and discourage imports.

what is Market Economy?

An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

What is oligopoly?

An industry composed of a limited number of large firms.

What is World Intellectual Property?

An international organization whose members sign treaties to agree to protect intellectual property.

What is countervailing duties?

Antidumping duties.

What is Multipoint competition?

Arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.

What is ethnocentrism?

Behavior that is based on the belief in the superiority of one's own ethnic group or culture; often shows disregard or contempt for the culture of other countries.

What is Property Rights?

Bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

What is economies of scale?

Cost advantages associated with large-scale production.

What is antidumping goal?

Designed to punish foreign firms that engage in dumping and thus protect domestic producers from unfair foreign competition.

What is innovation?

Development of new products, processes, organizations, management practices, and strategies.

What is the European Parliament?

Elected EU body that provides consultation on issues proposed by the European Commission.

What is the Smoot-Hawley Act?

Enacted in 1930 by the U.S. Congress, this act erected a wall of tariff barriers against imports into the United States.

When and Why was the Group of Tewnty(G20) created?

Established in 1999, the G20 comprises the finance ministers and central bank governors of the 19 largest economies in the Page 11world, plus representatives from the European Union and the European Central Bank. Collectively, the G20 represents 90 percent of global GDP and 80 percent of international global trade. Originally established to formulate a coordinated policy response to financial crises in developing nations, in 2008 and 2009 it became the forum through which major nations attempted to launch a coordinated policy response to the global financial crisis that started in America and then rapidly spread around the world, ushering in the first serious global economic recession since 1981.

What is a greenfield investment?

Establishing a new operation in a foreign country.

What is uncertainty avoidance?

Extent to which cultures socialize members to accept ambiguous situations and to tolerate uncertainty.

What is Quota rent?

Extra profit producers make when supply is artificially limited by an import quota.

What is offshore production?

FDI undertaken to serve the home market.

What is inflows of FDI?

Flow of foreign direct investment into a country.

What is outflows of FDI?

Flow of foreign direct investment out of a country.

Association of Southeast Asian Nations (ASEAN)

Formed in 1967, an attempt to establish a free trade area among Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Vietnam, and Thailand.

What is North American Free Trade Agreement (NAFTA)

Free trade area among Canada, Mexico, and the United States.

What is a subsidy?

Government financial assistance to a domestic producer.

What is strategic trade policy?

Government policy aimed at improving the competitive position of a domestic industry and/ or domestic firm in the world market.

What is a patent?

Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention.

What is Society?

Group of people who share a common set of values and norms.

What is late mover advantage?

Handicaps experienced by being a late entrant in a market.

What is Social Strata?

Hierarchical social categories often based on family background, occupation, and income.

Why was the IMF created?

IMF was established to maintain order in the international monetary system; the World Bank was set up to promote economic development.

What is Market imperfections?

Imperfections in the operation of the market mechanism.

What is Current Account?

In the balance of payments, records transactions involving the export or import of goods and services.

What is External StakeHolders?

Individuals or groups that have some claim on a firm such as customers, suppliers, and unions.

What is Paris Convention for the Protection of Industrial Property?

International agreement to protect intellectual property.

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the WTO.

What is Product Liability?

Involves holding a firm and its officers responsible when a product causes injury, death, or damage.

What is totalitarianism?

Is a form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties.

What is a Multinational Enterprise (MNE)

Is any business that has productive activities in two or more countries.

What is a International Business?

Is any firm that engages in international trade or investment. A firm does not have to become a multinational enterprise,investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses.

What is Globalization of Markets?

It Refers to the merging of historically distinct and separate national markets into one huge global market.

What is Globalization of production?

It Refers to the sourcing of goods and services from locations around the globe to take advantage of national difference s in the cost and quality factors of production such as labor,energy,land, and capital.

What is a Communist?

It is believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.

What is General Agreement on Tariffs and Trade(GATT)?

It is the successor, to the World Trade organization;the International Monetary Fund and its sister institution, the World Bank; and the United Nations. All these institutions were created by voluntary agreement between individual nation-states, and their functions are enshrined in international treaties. .

What does Political economy mean?

It is to stress that the political, economic, and legal systems of a country are interdependent; they interact with and influence each other, and in doing so, they affect the level of economic well-being.

What is externalities?

Knowledge spillovers.

What is Traffic rate quota?

Lower tariff rates applied to imports within the quota than those over the quota.

What is a mixed economy?

MOST COUNTRIES ARE A MIXED ECONOMY! A blend of command and market, here in the US we are a mixed economy because anyone can own and open a business but the government has certain laws you follow (taxes, can't sell certain things to minors, etc.)

What is internalization theory?

Marketing imperfection approach to foreign direct investment.

What is Balance of payments account?

National accounts that track both payments to and receipts from foreigners.

What is infant industry argument?

New industries in developing countries must be temporarily protected from international competition to help them reach a position where they can compete on world markets with the firms of developed nations.

What is Mores?

Norms seen as central to the functioning of a society and to its social life.

What is licensing?

Occurs when a firm (the licensor) licenses the right to produce its product, use its production processes, or use its brand name or trademark to another firm (the licensee). In return for giving the licensee these rights, the licensor collects a royalty fee on every unit the licensee sells.

What is Naive immoralist?

One who asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

What is righteous moralist?

One who claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

Mercosur

Pact among Argentina, Brazil, Paraguay, and Uruguay to establish a free trade area.

What is a Internal StakeHolder?

People who work for or own the business such as employees, directors, and stockholders.

multilateral or bilateral trade agreements

Reciprocal trade agreements between two or more partners.

What is individualism?

Refers to a philosophy that an individual should have freedom in his or her economic and political pursuits.

What is Democracy?

Refers to a political system in which government is by the people, exercised either directly or through elected representatives.

What is Collectivism?

Refers to a political system that stresses the primacy of collective goals over individual goals.

corporate social responsibility (CSR)

Refers to the idea that business people should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences.

What is Globalization?

Refers to the shift toward a more integrated and independent world economy. Globalization has several facets, including the globalization of markets and globalization of production.

What is Optimal currency area?

Region in which similarities in economic activity make a single currency and exchange rate feasible instruments of macroeconomic policy.

What is deregulation?

Removal of government restrictions concerning the conduct of a business.

What is right-wing totalitarianism?

Right-wing totalitarianism generally permits some individual economic freedom but restricts individual political freedom,frequently on the grounds that it would lead to the rise of communism.

What is Folkways?

Routine conventions of everyday life.

What is exporting?

Sale of products produced in one country to residents of another country.

What is dumping?

Selling goods in a foreign market for less than their cost of production or below their "fair" market value.

What is Product Safety Law?

Set certain safety standards to which a product must adhere.

What is Norms?

Social rules and guidelines that prescribe appropriate behavior in particular situations.

What is sustainable strategies?

Strategies that not only help the multinational firm make good profits but that do so without harming the environment, while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its multiple stakeholders.

Court of Justice

Supreme appeals court for EU law.

What is a legal system?

System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained.

What is Specific Tariff?

Tariff levied as a fixed charge for each unit of good imported.

Treaty of Rome

The 1957 treaty that established the European Community.

What is Free trade?

The absence of barriers to the free flow of goods and services between countries.

Central America Free Trade Agreement (CAFTA)

The agreement of the member states of the Central American Common Market joined by the Dominican Republic to trade freely with the United States.

What is Flow of FDI?

The amount of foreign direct investment undertaken over a given time period (normally one year).

What is Social Structure?

The basic social organization of a society.

What is cultural relativism?

The belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate.

Kantian ethics

The belief that people should be treated as ends and never as means to the ends of others.

What is a contract Law?

The body of law that governs contract enforcement.

What is Trademarks?

The designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

What is Copyrights?

The exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

What is Social Mobility?

The extent to which individuals can move out of the social strata into which they are born.

What is Public Action?

The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats.

What is a Pure Command Economy?

The government plans the goods and services that a country produces, the quantity in which they are produced,and the prices at which they are sold.

What is European Council?

The heads of state of EU members and the president of the European Commission.

What is a Stakeholders?

The individuals or groups that have an interest, stake, or claim in the actions and overall performance of a company.

What is Legal risk?

The likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rights.

new trade theory

The observed pattern of trade in the world economy may be due in part to the ability of firms in a given market to capture first-mover advantages.

What is Privatization?

The sale of state-owned enterprises to private investors.

Caribbean Single Market and Economy (CSME)

The six CARICOM members that agreed to lower trade barriers and harmonize macroeconomic and monetary policies.

long-term versus short-term orientation

The theory of the extent to which a culture programs its citizens to accept delayed gratification of their material, social, and emotional needs. It captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.

What is Stock of FDI?

The total accumulated value of foreign-owned assets at a given time.

constant returns to specialization

The units of resources required to produce a good are assumed to remain constant no matter where one is on a country's production possibility frontier.

What is Organizational culture?

The values and norms shared among an organization's employees.

What is Theocratic totalitarianism?

Theocratic totalitarianism is found in states where political power is monopolized by a party, group, or individual that governs according to religious principles.

individualism versus collectivism

Theory focusing on the relationship between the individual and his or her fellows; in individualistic societies, the ties between individuals are loose and individual achievement is highly valued; in societies where collectivism is emphasized, ties between individuals are tight, people are born into collectives, such as extended families, and everyone is supposed to look after the interests of his or her collective.

what is Power Distance?

Theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities. High power distance cultures are found in countries that let inequalities grow over time into inequalities of power and wealth; low power distance cultures are found in societies that try to play down such inequalities as much as possible.

masculinity versus femininity

Theory of the relationship between gender and work roles. In masculine cultures, sex roles are sharply differentiated and traditional "masculine values" such as achievement and the effective exercise of power determine cultural ideals; in feminine cultures, sex roles are less sharply distinguished, and little differentiation is made between men and women in the same job.

utilitarian approaches to ethics

These hold that the moral worth of actions or practices is determined by their consequences.

What is a Socialist?

Those who believe in public ownership of the means of production for the common good of society.

What is entrepreneurs?

Those who first commercialize innovations.

What is Trade Creation?

Trade created due to regional economic integration; occurs when high-cost domestic producers are replaced by low-cost foreign producers within a free trade area.

What is Trade Diversion?

Trade diverted due to regional economic integration; occurs when low-cost foreign suppliers outside a free trade area are replaced by higher-cost suppliers within a free trade area.

What is the Maastricht Treaty?

Treaty agreed to in 1992, but not ratified until January 1, 1994, that committed the 12 member states of the European Community to a closer economic and political union.

rights theories

Twentieth-century theories that recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

what is Foreign Corrupt Practices Act (FCPA)?

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

What is Cross-Cultural Literacy?

Understanding how the culture of a country affects the way business is practiced.

What is Private Action?

Violation of property rights through theft, piracy, blackmail, and the like by private individuals or groups.

What does Political System Mean?

We mean the system of government in a nation. Political systems can be assessed according to two dimensions. The first is the degree to which they emphasize collectivism as opposed to individualism. The second is the degree to which they are democratic or totalitarian. These dimensions are interrelated; systems that emphasize collectivism tend to lean toward totalitarianism, whereas those that place a high value on individualism tend to be democratic.

What is Social Democrats?

committed themselves to achieving socialism by democratic means, turning their backs on violent revolution and dictatorship.

European Union (EU)

is the product of two political factors: (1) the devastation of western Europe during two world wars and the desire for a lasting peace and (2) the European nations' desire to hold their own on the world's political and economic stage. In addition, many Europeans were aware of the potential economic benefits of closer economic integration of the countries.

What is the World Trade Organization(WTO)?

it is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules Page 10laid down in trade treaties signed by WTO member states.

What Is International Trade?

occurs when a firm exports goods or services to consumers in another country.

What Is Foreign direct investment(FDI)?

occurs when a firm invests resources in business activities outside its home country.

What is intellectual property?

refers to property that is the product of intellectual activity, such as computer software, a screenplay, a music score, or the chemical formula for a new drug. Patents, copyrights, and trademarks establish ownership rights over intellectual property.

What is the stock of foreign direct investment (FDI)?

refers to the total cumulative value of foreign investments as a percentage of the country's GDP.

When was the International Monetary Fund (IMF) and the World Bank created?

were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire.

What is Moores Law?

which predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.