Globalization: Markets, Production, and Challenges

Political Risk

The risk of adverse political events or actions that can impact business operations

Inflation rate

The rate at which the general level of prices for goods and services is rising

Foreign Corrupt Practices Act (FCPA)

A US law that prohibits bribing foreign officials

China

A country transitioning from a centrally planned economy to a state capitalist market economy

Gini coefficient

A measure of income inequality within a country

PPP (Purchasing Power Parity)

A measurement of the relative purchasing power of different currencies

Currency Crisis

A rapid and unintended depreciation of a country's currency

State Capitalism

An economic system in which the government plays a large role in the economy and supports key industries

Technological progress

Advancements in technology that enable globalization

Developed Countries

Countries with high per capita GDP, advanced technologies, and good infrastructure

Emerging Markets

Countries with intermediate per capita GDP, growing middle class, and transitioning economies

Developing Countries

Countries with low per capita GDP, outdated technology, and poor infrastructure

Globalization of markets

Expanding markets beyond national boundaries to sell to multiple countries

Globalization of competition

Increased competition among companies from different countries

Interdependent

Mutually reliant on each other

Services

Non-tangible economic activities, such as healthcare and entertainment

Facilitating Payments

Payments made to facilitate routine governmental actions

Globalization of production

Producing goods and services in different countries to take advantage of best and/or cheapest inputs

Culture

The collective programming of the mind that distinguishes one human group from another

Transportation costs

The cost of moving goods from one place to another

Communication costs

The cost of transmitting information from one place to another

Individualism vs. Collectivism

The degree to which individuals prioritize their own goals versus the goals of the group

Communication Styles

The different ways in which people communicate, including direct and indirect styles

Power Distance

The extent to which a society accepts and expects power to be distributed unequally

Uncertainty Avoidance

The extent to which a society is comfortable with ambiguity and uncertainty

Time Orientation

The extent to which a society values and prioritizes time

Political/Legal Environment

The laws, regulations, and political stability of a country that affect business operations

Unemployment rate

The percentage of the labor force that is unemployed and actively seeking employment

Gross National Income (GNI)

The total income earned by a country's residents, including income from abroad

Gross National Product (GNP)

The total market value of all goods and services produced by the residents of a country, regardless of location

Gross Domestic Product (GDP)

The total market value of all goods and services produced within a nation's borders in a year

Value of exposed goods as share of GDP

The value of goods traded internationally as a percentage of a country's GDP

Globalization

The widening and deepening of interdependent relationships among people from different nations

Bilateral Investment Treaties (BITs)

Treaties between two countries that regulate and protect foreign investments

Currency Hedging

Using financial instruments to protect against unfavorable currency fluctuations