CH 1
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
Those who support globalization argue that increasing globalization will
lead to reduced prices for goods and services.
The Uruguay Round negotiations resulted in
lowering the trade barriers between various national markets. Side note: Uruguay Round further reduced trade barriers, extended GATT to cover services as well as manufactured goods, provided enhanced protection for patents, trademarks and copyrights, and established the World Trade Organization to police the international trading system.
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
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.
The World Trade Organization (WTO) is the successor to ______.
GATT The WTO replaced GATT as an international organization, but the General Agreement still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations. The World Trade Organization (like the GATT before it), is responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states,. (as of 2020, 164 nations that collectively account for 98% of world trade were WTO members, thereby giving the organization enormous scope and influence. WTO is also responsible for facilitating the establishment of additional multinational agreements among WTO member states. Over its entire history (and that of GATT before it), the WTO has promoted the lowering of barriers to cross-border trade and investment. In doing so, WTO has been the instrument of its member states, which have sought to create a more open global business system unencumbered by barriers to trade and investment between countries.
A(n) ______ business is any firm that engages in cross-border trade or investment.
International
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
T/F: 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
True or False: The International Monetary Fund (IMF) was established to ensure the stability of the international monetary system.
True side note: The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil.
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. side note: the gap between the rich and the poor has gotten wider. They argue that if globalization is such a positive development, this divergence between rich and poor should not have occured.
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
The World Trade Organization (WTO):
founded in 1995 to police the world trading system established by the General Agreement on Tariffs and Trade. side note: many support the WTO, but many argue that many decisions that affect billions of ppl are no longer made by local or national governments, rather by any WTO member nation. Decisions would be deferred to a group of unelected bureaucrats sitting behind closed doors in Geneva (where WTO headquarters is located)
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
According to the critics of globalization, which of the following are results of falling trade barriers? (Check all that apply.)
-The destruction of manufacturing jobs in advanced economies such as the U.S. and western Europe -A depression of wages in developed nations Side note: critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower. The pool of global labor has increased more than fivefold between 1990 and today. The enormous expansion in the global labor force, when coupled with expanding international trade, would have depressed wages in developed nations.
While the United States was the dominant industrial power in the early 1960s, by 2018, _____ took over that role.
China
The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law. Multiple choice question.
Moore's Law Side note: single most important innovation since WW2 has been the development of the microprocessor. - which enabled the explosive growth of high power, low cost computing - vastly increasing the amount of information that can be processed by individuals and firms. Over the past 30 years, global communications have been revolutionized by developments in satellite, optical fiber, wireless technologies and of course the Internet. These technologies rely on the microprocessor to encode, transmit and decode the vast amount of information that flows along these electronic highways. The cost of microprocessors continues to fall, while their power increases (a phenomenon known as Moore's law, which predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.
During the 1960s, which country was the predominant world power in terms of foreign direct investment?
The United States side note: in 1960, the U.S. accounted for 38.3% of world output, measured by gross domestic product (GDP). It has gone down throughout the years at a relative decline, reflecting the faster economic growth of several other economies, particularly China.
Which organization ensures that nation states comply to the rules associated with trade treaties signed by member states?
The World Trade Organization
What is an accurate description of microprocessors?
They can decode vast amounts of information.
How did nation-states react to the economic environment of the 1920s and 1930s?
Trade barriers were increased. Side note: Many of the barriers to international trade took the form of high tariffs on imports of manufactured goods. The typical aim of such tariffs was to protect domestic industries from foreign competition. One consequence was countries progressively raising trade barriers against each other. This depressed world demand and contributed to the Great Depression of the 1930s
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. Side note: by moving their production facilities to nations that do not have such burdensome regulations or that fail to enforce the regulations they have. We might expect free trade to lead to an increase in pollution and result in firms from advanced nations exploiting the labor of less developed nations.
International trade occurs when:
a firm exports goods or services to consumers in another country
Foreign direct investment (FDI) occurs when:
a firm invests resources in business activities outside its home country
In terms of innovation in 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 side note: PLUS the introduction of containerization, which simplifies transshipment from one mode of transport to another. The advent of commercial jet travel, by reducing the time needed to get from one location to another has effectively shrunk the globe.
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. Why? Bc it allows firms to move manufacturing activities to countries where wage rates are much lower.
The Johnson Automotive Group recently closed two of its U.S. 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 (such as labor, energy, land, and capital)
Global institutions are needed to _____.
stabilize and monitor the global marketplace
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
