CH 1: The Rise of Globalization

International Bank for Reconstruction and Development (IBRD)

Supports reconstruction and restructuring of member countries using funds raised in international capital markets

International Finance Corporation (IFC)

Provides loans and takes equity position in private companies of developing countries and works toward developing capital markets in those economies

International Development Association (IDA)

Provides long-term low-interest social sector and infrastructure loans to the poorest members using foreign aid funds provided by the rich nation members

Multilateral Investment Guarantee Agency (MIGA)

Provides political risk coverage for private investments made in developing countries

What is the global system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other?

the International Monetary System (IMF)

bandwidth

the amount of data and other information that can be transferred in a second via the Internet

The rapid and progressive fall in prices of digital information technology (IT) equipment and services has increased cyberspace access and accelerated globalization, thereby narrowing what?

the digital divide

What is the period of transformation that adjusts lifestyles to make the Internet and wireless technologies part of everyday life called?

the digital era

Historically, the world has experienced successive waves of what is now described as "globalization." These periods share certain characteristics that include all of the following except for which one?

the infusion of technology

digital divide

the perceived economic gap between countries or people with easy access to digital and information technology (and its benefits) and those with very limited access, or none at all

Arguments against globalization include all the following except which example?

the reappearance of old industries

international monetary system

the system of exchange rates and international payments that enables countries and their citizens to purchase goods and services from one another

A cashier who places a customer's change on the counter so that they may verify the amount of change best demonstrates which of the following?

transparency

The dawn of globalization can be traced back to which century?

15th

In many developing countries, the number of cell-phone subscribers now outnumbers those for fixed-line networks by how many?

20:1

Decoupling

A fundamental global shift in which industrialized country-dependent developing economies begin to grow based on their own underlying economic strengths rather than the ups and downs of the world's richest countries that make up the OECD (Paris-based Organization for Economic Cooperation and Development that accounts for roughly 60 percent of the world economic output in nominal terms).

PricewaterhouseCoopers (PwC), one of the four largest global auditing firms, compares the current ranking of the top ten economies to the anticipated top 10 economies of 2050. PwC anticipates a shift in the global balance of power, especially economic and business power. What countries is it anticipating being the top three countries in the world based on the gross domestic product (GDP) (in order of ranking)?

China, United States, and India

Emerging economies

Countries that are implementing economic reform policies to propel growth through more open trade and free markets.

sustainable development

Economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially, or economically

economic reforms

Economic policy changes that promote private sector development, competitive markets, market pricing, freer trade, and deregulation

1) Because of East Asian economies' excessive dependence on export-led economic growth, the aftereffects of the global financial crisis was a rapid decline in East Asian exports and economic growth slowed down. True or False?

False

1) Canada's domestic vineyards are located in the Mediterranean climatic region of British Columbia and southern Ontario in Western Canada. True or False?

False

2) Because Canada has a small population, domestic wine supplies are almost enough to meet local demand and very little imported wine is needed. True or False?

False

3) The 2008 financial crisis had a negative impact on China, India, and Indonesia because those countries had diversified their trading partners and had large domestic markets. True or False?

False

4) The small wineries of Canada believe that the image of Canadian wines is enhanced because of blending with Australian and Chilean terroir. True or False?

False

India, Indonesia, and Malaysia should be advised to focus their efforts in producing bioethanol. True or False?

False

adaptive institutions

Government organizations that create strong incentives for private investment and operate under a system of checks and balances

institutions

The rules, enforcement mechanisms, and organizations that support market transactions

Countries that suffer most from the effects of globalization are those that have not been able to seize the opportunities to participate in this process. Nations that fall under this category of "real" losers include those that do not provide economic, social, and political freedoms to their citizens. This includes all of the nations below except which one?

India

As part of the World Bank's Strategic Framework, all of the examples below are part of its focus areas that accommodate and facilitate the globalization process except for which one?

It lends countries foreign exchange when needed, on a temporary basis and under adequate safeguards.

antitrust laws

National laws aimed at maintaining competition in all sectors of the economy and preventing monopolistic behavior of firms

In the following, all are developmental institutions closely associated with the World Bank except for which one?

OEDC

digital era

The period of transformation that adjusts lifestyles to make the Internet and wireless technologies a part of everyday life

Globalization

The socioeconomic reform process of eliminating trade, investment, information technology, and cultural and political barriers across countries, which in turn can lead to increased economic growth and geopolitical integration and interdependence among nations of the world

the web

The world wide web, abbreviated "www" and commonly known as the web; a system of interlinked documents contained and accessed via the Internet

Successful institutions play all of the following important roles except for which one?

They help determine what foreign exchange rates should be.

Globalization has the potential to increase the quality of life for people, but there is no guarantee. To maximize profits, some multinational corporations (MNCs) may try to pay low wages to workers in developing countries. Developing countries do all of the following to prevent this except which one?

They slow down the expansion of technology

2) China and India have a large growing middle-income class with strong appetites for the consumption of domestic goods and services as well as of imports. True or False?

True

3) Canadians consume a lot of blended wines that are labeled as cellared in Canada. True or False?

True

4) Countries that try to keep their currencies weak may increase exports in the short run but at the expense of high import costs that could lead to rising inflation. True or False?

True

Bioethanol costs less to produce from sugarcane than from corn; hence, Brazil is a more efficient (low-cost) producer of bioethanol and the United States. True or False?

True

Biofuels come in two major forms, (a) bioethanol and (b) biodiesel, that, when commercially produced, could become environment friendly and at the same time lead to energy security in countries dependent onimportedcrudeoil. TrueorFalse?

True

Globally, if countries decide to consume more "envi- ronment friendly" biofuels, one should expect to see higher prices for sugar, corn, wheat, beets, palm oil, and so forth, which in turn should raise farm income. True or False?

True

International Center for the Settlement of Investment Disputes (ICSID)

Works on issues related to foreign investment disputes

To attract foreign and domestic private investments, which are the crucial engines of sustainable economic growth and globalization, governments need to put in place all of the following except which element?

a free press

capital markets

a stock exchange where long- term financial instruments such as stocks and bonds can be issued, bought and sold

transparency

a system of full disclosure and openness that aims to avoid any semblance of corruption and cronyism

accountability

a system of responsibility in which an authority, such as the government, is answerable for its actions

multipolar world

a world economy in which the engines of growth could comprise several major industrialized and emerging economies, such as the United States, the European Union, China, India, Brazil, Russia, and South Africa rather than the United States alone

What are government organizations that create strong incentives for private investment and operate under a system of checks and balances that function best in a democratic system of government called?

adaptive institutions

What are national laws aimed at maintaining competition in all sectors of the economy and preventing monopolistic behavior of firms called?

antitrust laws

To provide instant access to market information and government programs to remote villagers, with Internet prices falling, governments in emerging economies are facilitating the spread of what resource to rural towns?

broadband

What is a significant factor in determining where multinational corporations conduct business according to a survey by the World Bank?

corporate social responsibility practices

What term refers to a fundamental global shift in which developing economies that were once dependent upon industrialized countries for economic advancement begin to solidly grow based on their own underlying economic strengths rather than the ups and downs of the world's richest countries?

decoupling

What term describes the perceived economic gap between countries or people with easy access to digital and information technology (and its benefits) and those with very limited or no access?

digital divide

Which example refers to a country's transition from being a source of inexpensive labor to growing hotbeds of innovation in diverse fields, such as telecommunications, automobile manufacturing, biotechnology, and health care?

emerging economies

According to the World Bank, more than 600 million Chinese citizens have advanced out of poverty since the implementation of economic reforms that started in 1978 in their country. Since India initiated economic reforms in 1991, the country has become a fast-growing economy, with the middle class exceeding 500 million out of a total population of some 1.37 billion. Several positive factors have affected economic growth and income, such as those identified in the earlier examples, but they likely could not have occurred without what?

globalization

Which of these encompasses the socioeconomic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries, which could lead to increased economic growth and geopolitical integration and interdependence among nations of the world?

globalization

Arguments against globalization include all of the examples below except for which one?

loss of global control over economic policies and developments

Investors have greater confidence when conducting business in countries that have which elements?

low crime, effective courts, and a free press

liberalization of the trading system

lowering and/or removing trade barriers such as tariffs, quotas, and subsidies

The International Monetary Fund (IMF) continues to provide all of the following services except for which example below?

participates in trade liberalization

This protection has always been fundamental to market economies, as it enables buyers and sellers to conduct transactions with a high degree of trust. This protection covers what?

property right

Singapore is a country in which government actions are fully disclosed and discussed before they are implemented. This is an example of which practice that helps attract foreign and domestic private investments?

property rights good governance

The International Development Association (IDA) performs which of the following functions?

provides long-term, low-interest social sector and infrastructure loans to the poorest members utilizing foreign aid funds provided by rich nation members

Economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially, or economically, is referred to as what kind of development?

sustainable

China's unprecedented economic growth since 1978 has left a legacy of environmental degradation and made it the world's largest emitter of greenhouse gases. Pollution has made cancer China's leading cause of death. Finding solutions depends upon a shared, single vision to meet the needs of the present without compromising the future. What type of development solution does China need?

sustainable development

What are the three important institutions that will continue to guide the future direction of globalization?

the International Monetary Fund the World Bank the World Trade Organization