ib chapter 1

supporters

- benefits of the globalization trend outweigh the costs. all countries will benefit - tougher environmental and labor standards are associated of economic progress - as countries get richer from free trade, they implement tougher environmental and labor regulations - the power of organizations is limited to what nation-states agree to grant - the best way for the poor nations to improve their situation is to reduce barriers and implement economic policies on free market economies

critics

- falling barriers to trade are destroying manufacturing jobs in advanced countries - firms avoid costly efforts to adhere to labor and environmental regulations by moving production to countries where such regulations do not exist, or are not enforced - unelected bureaucrats have the power to impose policies on the democratically elected governments of nation states - believes that if globalization was beneficial there should not be a divergence between rich and poor nations

factors of production

- land- natural resources - labor- the effort - capital- equipment

supporters for an interdependent global economy:

- they believe that increased trade and cross-border investment mean: - lower prices - greater economic growth - higher consumer income - more jobs

critics for an interdependent global economy:

- they worry globalization will cause - job losses - environmental degradation - cultural imperialism of global media and MNEs

what is driving globalization?

1) lower barriers - decline in barriers to the free flow of goods, services, and capital - views the world - base production in the most optimal location - firms can find their home markets under attack by foreign firms 2) technology - microprocessors and telecommunications - internet and www - transportation technology - low costs for transportation, information processing, communication, global communications networks, global media

4 important trends of the changing demographics of the global economy

1) the changing world output and world trade 2) the changing foreign direct investment picture 3) the changing nature of the multinational enterprise 4) the changing world order

multinational enterprise (mne)

any business that has productive activities in 2+ countries

globalization in terms of

markets and production

globalization of markets

the merging of historically distinct and separate national markets into one huge global marketplace - falling trade barriers - consumers' tastes and preferences - firms promote the trend by offering the same basic products worldwide

Globalization

the shift towards a more integrated and interdependent world economy. the world is moving away from self-contained national economies, toward an interdependent, integrated global economic system.

globalization of production

the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land, labor, and capital - lower their overall cost structure - improve the quality or functionality of their product offering

true

true or false? efficiency gains associated with containerization have caused transportation costs to fall dramatically

false

true or false? in the early 1960s, the United States was by far the world's dominant industrial power. However by 2016, it lost its dominant position and now, is no longer the world's largest industrial power

true

true or false? today global communication networks and global media are creating a worldwide culture

true

true or false? underlying the trend towards greater globalization is technological change and a decline in barriers to the free flow of goods, services, and capital

B. small, U.S. entrepreneurial firms dominated the international business scene.

Although the characteristics of the global economy have changed dramatically over the past 30 years, as late as the 1960s all of the following demographic characteristics were true, except:  A. the U.S. dominated the world economy. B. small, U.S. entrepreneurial firms dominated the international business scene. C. the U.S. dominated the world foreign direct investment picture. D. roughly half the world was governed by centrally planned economies of the Communist world.

d) large, small, and medium-sized

Firms that are involved in international business tend to be a) large b) small c) medium-sized d) large, small, and medium-sized

D. creation of absolutely homogeneous consumer markets.

Technological innovations have facilitated all of the following except:  A. globalization of production. B. globalization of markets. C. creation of electronic global marketplaces. D. creation of absolutely homogeneous consumer markets.

d) the globalization of markets

The merging of historically distinct and separate national markets into one huge global marketplace is known as a) global market facilitation b) cross-border trade c) supranational market integration d) the globalization of markets

c) globalization

The shift toward a more integrated and interdependent world economy is referred to as a) economic integration b) economic interdependency c) globalization d) internationalization

b) the globalization of production

The sourcing of good and services from around the world to take advantage of national differences in the cost and quality of factors of production is called a) economies of scale b) the globalization of production c) global integration d) global sourcing

b) the development of the microprocessor

What is the single most important innovation to the globalization of markets and production? a) advances in transportation technology b) the development of the microprocessor c) advances in communication d) the Internet

a) trade

Which is not a factor of production? a) trade b) land c) capital d) energy

c) the share of world trade accounted for by developing countries is rising

Which of the following trends is true? a) the United States is accounting for a greater percentage of world trade than ever before b) the United States is accounting for a greater percentage of foreign direct investment than ever before c) the share of world trade accounted for by developing countries is rising d) the share of foreign direct investment by developing countries is declining

a) globalization raises consumer income

Which of these is not a concern of anti-globalization protesters? a) globalization raises consumer income b) globalization contributes to environmental degradation c) globalization is causing a loss of manufacturing jobs in developing countries d) globalization implies a loss of national sovereignty

c) the World Trade Organization

Which organization is responsible for policing the world trading system? a) the International Monetary Fund b) the United Nations c) the World Trade Organization d) the World Bank