Chapter 1: Globalization

While the United States was the dominant industrial power in the early 1960s, by 2018, _____ took over that role.

China

Critics of globalization protest in order to

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

International trade occurs when a firm _____.

exports goods or services to consumers in another country

A U.S.-based shoe company has decided to invest in a British company that specializes in clasps and buckles. This would be an example of _____.

foreign direct investment

Which term refers to the shift toward a more integrated and interdependent world economy?

globalization

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

increased

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

international

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.

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.

Global institutions are needed to _____.

stabilize and monitor the global marketplace.

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

technology

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

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

Those who support globalization argue that increasing globalization will

lead to reduced prices for goods and services.

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

markets

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.

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

move production activities to more desirable locations.

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

multinational enterprise

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

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

democracy

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

eliminate manufacturing jobs in wealthy economies.

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 United States and the product was assembled in the United States. 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 are

higher than in countries not facing revolutions.

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

65 percent

According to the critics of globalization, which of the following are results of falling trade barriers? (Check all that apply.)

A depression of wages in developed nations The destruction of manufacturing jobs in advanced economies

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

The United States

Select the four facts that described the demographics of the global economy up until the 1960s.

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

Which of the following are notable trends in the demographics of multinational enterprises since the 1960s? (Check all that apply.)

The rise of non-U.S. multinationals The growth of mini-multinationals

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

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.

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.