Ch.1 Globalization

globalization

Trend away from distinct national economic units and toward one huge global market.

globalization of markets

Moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

globalization of production

Trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production.

factors of production

Inputs into the productive process of a firm,including labor, management, land, capital, and technological know-how.

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the WTO.

World Trade Organization (WTO)

Organization that succeeded the General Agreement on Tariffs and Trade (GATT) as a result of the successful completion of the Uruguay Round of GATT negotiations.

International Monetary Fund (IMF)

International institution set up to maintain order in the international monetary system.

World Bank

International institution set up to promote general economic development in the world’s poorer nations.

United Nations (UN)

International organization made up of 193 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation.

Group of Twenty (G20)

International organization, established in 1999, that comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.

international trade

A firm exports goods or services to consumers in another country.

foreign direct investment (FDI)

Direct investment in business operations in a foreign country.

outward stock of FDI

Total accumulated value of assets owned by firms domiciled in a nation outside of that nation’s borders at a given time.

multinational enterprise (MNE)

A firm that owns business operations in more than one country.

international business

Any firm that engages in international trade or investment.

Moore’s law

The power of microprocessor technology doubles and its costs of production fall in half every 18 months.