Global Dimensions Midterm Study Guide - Kimmel

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.

land

labor

capital

energy

factors of production?

Service Learning

a credit-bearing, educational experience in which students participate in an organized service activity that meets identified community needs and reflect on the service activity in such a way as to gain further understanding of course content, a broader appreciation of the discipline, and an enhanced sense of civic responsibility.

Mississippi Development Authority

Service Learning Partner is the...

market economy

An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

Command Economy

An economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government.

Mixed Economy

an economic system combining private ownership and free market mechanisms landing between market and command economies.

Collectivism

a political system that emphasizes collective goals as opposed to individual goals

Socialism

A system in which society, usually in the form of the government, owns and controls the means of production.

(roots with Karl Marx)

Individualism

An emphasis on the importance of guaranteeing individual freedom and self-expression

Representative Democracy

a political system in which citizens periodically elect individuals to represent them in government.

Communist Totalitarianism

a version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship

Theocratic Totalitarianism

a political system in which political power is monopolized by a party, group, or individual that governs according to religious principles

tribal totalitarianism

A political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power.

right-wing totalitarianism

A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism.

Pseudo-Democracies

-Many nations lie between pure democracy and complete totalitarianism

--Authoritarian elements capture much of the machinery of state and use this in an attempt to deny basic political and civil liberties

--Russia under Vladimir Putin

privatization

transfers the ownership of state property into the hands of private investors (seen as a way to stimulate gains in economic efficiency by giving new private owners a powerful incentive - the reward of greater profits)

Deregulation

Removal of government restrictions concerning the conduct of a business.

Expropriation

Forced transfer of assets from a company to the government with compensation

1. Strawman - friedman doctrine, cultural relativism, the righteous moralist, the native immoralist

2. Utilitarian

3. Kantian

4. Rights Theories

5. Justice Theories

What are all the ethical approaches? 5

strawman approach

raised by scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise

SM - Friedman Doctrine

the only social responsibility of business is to increase profits, so long as the company stays within the rules of law

SM - cultural relativism

the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate

SM - Righteous Moralist

One who claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries

SM - Naive Immoralist

one who asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either

Utilitarian Ethics

these hold that the moral worth of actions or practices is determined by their consequences

Kantian Ethics

the belief that people should be treated as ends and never as means to the ends of others

Rights Theories

a twentieth-century theory that recognizes that human beings have fundamental rights and privileges that transcend national boundaries and cultures

Justice Theories

focus on the attainment of a just distribution of economic goods and services

constant returns to specialization

The units of resources required to produce a good are assumed to remain constant no matter where one is on a country's production possibility frontier.

Dimishing returns

occurs when more units of resources are required to produce each additional unit

____ show that is is not feasible for a country to specialize to the degree suggest be the simple Ricardian model. ___ to specialization suggest that the gains from specialization are likely to be exhausted before specialization is complete.

Economies of Scale

cost advantages associated with large scale production

Mercantilism

an economic philosophy advocating that countries should simultaneously encourage exports and discourage imports

absolute advantage

a country has this in the production of a product when it is more efficient than any other country at producing it

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Factor Endowment Theory

A theory that suggests that nations will develop comparative advantages based on their locally abundant factors. (advanced factors like communication infrastructure and sophisticated/skilled labor are most significant for competitive advantage)

new trade theory

The observed pattern of trade in the world economy may be due in part to the ability of firms in a given market to capture first-mover advantages.

import

bring (goods or services) into a country from abroad for sale.

export

A good or service produced in the home country and sold in another country.

Foreign Direct Investment (FDI)

Investment made by a foreign company in the economy of another country.

stock of FDI

the total accumulated value of foreign-owned assets at a given time

outflow of FDI

Flow of foreign direct investment out of a country

inflow of FDI

flow of FDI into a country

GDP (Global Domestic Product)

the total market value of all final goods and services produced annually in an economy

GNP (Gross National Product)

total dollar value of goods & services produced by a nation at home or away

GNI (Gross National Income)

The value of the output of goods and services produced in a country in a year, including money that leaves and enters the country

PPP (Purchasing Power Parity)

an adjustment made to the GNI to account for differences among countries in the cost of goods

(the buying power of income in a country)

Gini

A statistical formula that measures the amount of economic inequality within a country. "0" corresponds with perfect equality and "100" represents perfect inequality.

HDI (Human Development Index)

a measure of a country's standard of living, including health and education

Culture model

What model is this?

religion

political philosophy

economic philosophy

education

language

social structure

What are the branches on the culture model?

the ethics model

what model is this?

societal culture

decision making processes

leadership

unrealistic performance goals

organizational culture

personal ethics

what are the branches of the ethical model?

World Bank and International Monetary Fund

These two institutions were created in 1944 by 44 nations that met at Bretton Woods, New Hampshire

The General Agreement on Tariffs and Trade

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

Declining Trade and Investment Barriers ( + technological trade )

What are two macro factors that underline the trend toward greater globalization?

united nations

the goal of this institution is to preserve peace through international cooperation and collective security

G20

this institution comprises the finance ministers and central bank governors of the largest economies in the world, plus representatives form the European Union and the European Central Bank.

it has declined

How has the share of the U.S. world output changes since the 1960s?

brings the world together and we are able to gain more money through trade

Argument for Globalization

some people take advantage of other countries wage rate. they will pay Americans $9 an hour, but the majority of their workers are in Honduras making $0.50 an hour.

Argument against Globalization

Saudi Arabia

The opening case of chapter 2, "National Differences in Political, Economic, and Legal Systems" focuses on transformation in _____

democracy --> <---totalitarianism

Complete the missing end of this political dimension:

common law

a system of law based on precedent, tradition, and customs

treat the convention's rules as a part of it's law

When a country adopts the United Nations Convention on Contracts for the International Sale of Goods, it signals to the other adopters that it will:

property rights

the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource

private action

the theft, piracy, blackmail, and the like by private individuals or groups

the payment of speed, grease, or facilitating payments.

The U.S. Foreign Corrupt Practices Act allows...

trademark

Designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products

WIPO (World Intellectual Property Organization)

An international organization whose members sign treaties to agree to protect intellectual property

pensions and retirement age

from the opening case of chapter 3, a central problem in brazil's economic recovery has been ___

it has maintained high protections of domestic companies

from the opening case of chapter 3, what has been Brazil's approach to trade barriers (prior to 2016)?

Shadow Economy

another name for the black market or economy

UN

Which institution adopted Amartya Sen's work?

it doesn't consider cost of living

Why is GNI per person misleading?

black economy

an unreported sector of the primary economic system in which transactions are handled in cash only

life expectancy at birth, educational attainment, and the sufficiency of average incomes to meet basic needs of life

What are the three measures considered in HDI (human development index)?

market economy and strong property rights

What is required for innovation and entrepreneurship to grow in a country?

OECD (Organization for Economic Cooperation and Development)

promotes policies that improve economic and social well-being of people around the world

UNESCO (United Nations Educational, Scientific and Cultural Organization)

based on the idea of establishing peach through moral and intellectual collaboration

innovation and entrepreneurship

What are the engines of economic growth?

benfits, cost, risks

What contributes to overall attractiveness? (three things in the country attractiveness model)

business ethics

accepted principles of right or wrong governing the conduct of business people

the sullivan principles

widely accepted business practices that suggest a company may operate within an unethical system if (1) it acts ethically and (2) it actively promotes social change toward ethical behavior

employment practices

human rights

enviormental regualtions

corruption

moral obligation of multinational corp.

What are 5 areas where the most ethic issues happen in companies?

tragedy of the commons

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

Corporate social responsibility (CSR)

the idea that business people should consider the social consequences of economic actions when making business decisions and that there should be a resumption in favor of decisions that have both good economic and social consequences

moral courage

the will to stand up for what is right, regardless of personal cost (walk away from profit, because its unethical)

The Product Life Cycle Theory

a theory helps to explain that production becomes more international as the product matures.

Hecksher-Ohlin

Who is best known for factor endowments?

Porter's Diamond of Competitive Advantage

This is what?

Factor conditions

Demand conditions

Related and supporting industries

Firm strategy, structure, and rivalry

What are the areas of Porter's Diamond of Competitive Advantage?

tariff

tax levied on imports

specific tariff

tariff levied as a fixed charge for each unit of good imported

ad valorem tariff

a tariff levied as a proportion of the value of an imported good

subsidy

A government payment that supports a business or market

import quota

a direct restriction on the quantity of a good that can be imported into a country

tariff rate quota

lower tariff rates applied to imports within the quota than those over the quota