Globalization Ch. 1 Practice Flashcards

This set of vocabulary flashcards covers the fundamental definitions, institutions, drivers, and demographic shifts associated with early 21st-century globalization as described in Chapter 1.

Globalization of Markets

The merging of historically distinct and separate national markets into one huge global marketplace.

Globalization of Production

Sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production.

Factors of Production

Inputs into the productive process of a firm, including labor, energy, land, and capital.

General Agreement on Tariffs and Trade (GATT)

An international treaty that committed signatories to lowering barriers to the free flow of goods across national borders; it was later extended by the Uruguay Round.

World Trade Organization (WTO)

The organization that polices the world trading system and ensures nation-states adhere to the rules; as of $2021$, it had $164$ nations accounting for $98$ percent of world trade.

International Monetary Fund (IMF)

Established to maintain order in the international monetary system, it is often seen as the lender of last resort for nation-states.

World Bank

An international institution focused on promoting economic development by making low-interest loans to cash-strapped governments for significant infrastructure investments.

United Nations (UN)

An international organization of $193$ member countries that promotes peace through international cooperation and collective security based on the UN Charter.

Group of Twenty (G20)

Comprises finance ministers and central bank governors of the $19$ largest economies plus the European Union and the European Central Bank; represents $90$ percent of global GDP.

Foreign Direct Investment (FDI)

Occurs when a firm invests resources in business activities outside its home country.

International Trade

Occurs when a firm exports goods or services to consumers in another country.

Moore’s Law

The prediction that the power of microprocessor technology doubles and its cost of production falls in half every $18$ months.

Multinational Enterprise (MNE)

Any business that has productive activities in two or more countries.

Outward Stock of Foreign Direct Investment (FDI)

The total cumulative value of foreign investments by firms domiciled in nations outside of that nation’s borders.

Mini-multinationals

Medium-sized and small-sized businesses that are increasingly engaging in international trade, aided by the lower barriers provided by the internet.

Globalization of Production Implications

Technological changes in transportation, such as commercial jets and containerization, have made locating production in geographically separate locations more economical.

The Changing World Output

A demographic shift where the U.S. share of world output dropped from $38.3$ percent in the $1960s$ to $24.7$ percent in $2020$, reflecting faster growth in economies like China.

Robert Reich's "Global Products"

The concept that modern products are no longer purely national, but are sourced from a globally dispersed supply chain.