Edward Imm INTB 3080 Exam 1

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)

The 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)

An international organization made up of 193 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation. Trying to make the world a better place.

Group of 20 (G-20)

Established in 1999, the G20 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. Trying to help the world.

International Trade

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

Foreign Direct Investment (FDI)

Direct investment in business operations in a foreign country.

Role of Technological Change

-Communications

-Internet

-Transportation Technology

Containerization

Simplifies transshipment from one mode of transport to another.

Stock of FDI

The total accumulated value of foreign-owned assets 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.

Political System

System of government in a nation.

Collectivism

A political system that emphasizes collective goals as opposed to individual goals.

Socialists

Those who believe in public ownership of the means of production for the common good of society.

Communists

Those who believe socialism can be achieved only through revolution and totalitarian dictatorship.

Social Democrats

Those committed to achieving socialism through democratic means.

Privatization

The sale of state-owned enterprises to private investors.

Individualism

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

Democracy

Political system in which government is by the people, exercised either directly or through elected representatives.

Representative Democracy

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

Totalitarianism

Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

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.

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.

Legal System

System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained.

Common Law

A system of law based on tradition, precedent, and custom. When law courts interpret, they do so with regard to these characteristics.

Civil Law System

A system of law based on a very detailed set of written laws and codes.

Theocratic Law

A system of law based on religious teachings.

Contract

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.

Contract Law

The body of law that governs contract enforcements.

Property Rights

Bundle of 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

Violation of property rights through theft, piracy, blackmail, and the like by private individuals or groups.

Public Action

The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats.

Foreign Corrupt Practices Act (FCPA)

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

Intellectual Property

Products of mind, ideas

Patent

Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention.

Copyrights

The exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

Trademarks

The design and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

World Intellectual Property Organization

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

Paris Convention for the Protection of Industrial Property

International agreement to protect intellectual property.

Product Safety Laws

Set certain safety standards to which a product must adhere.

Product Liability

Involves holding a firm and its officers responsible when a product causes injury, death, or damage.

Gross National Income (GNI)

Measures the total annual income received by residents of a nation.

Purchasing Power Parity (PPP)

An adjustment in gross domestic product per capita to reflect differences in the cost of living.

Human Development Index (HDI)

An attempt by the United Nations to assess the impact of a number of factors on the quality of human life in a country.

Deregulation

Removal of government restrictions concerning the conduct of a business.

First-Mover Advantage

Advantages accruing to the first to enter a market.

Late-Mover Disadvantage

Handicaps experienced by being a late entrant in a market.

Political Risk

The likelihood that political forces will cause drastic changes in a country's business environment that will adversely affect the profit and other goals of a particular business enterprise.

Brenton Woods

-New Hampshire

-Reduction in Tariffs

-Creation of GATT (now is WTO)

-Creation of IMF

World Bank

-Takes from wealthy and gives to poor

-Poor countries can now buy from wealthy countries

GDP

-4 major countries make up 41/80 of GDP

-USA 330 million

-Europe 750 million

-China 1.3 million

-Japan 1.7 million

Pigs

Portugal, Italy, Greece, Spain

-Not doing as much as they should.

Brics

Brazil, Russia, India, China, South Africa

-Economies that were growing.

Drivers of Globalization

-Technology advances

-Transportation

-Changing demographics

-Rise of multinational enterprise

OECD (Organization for Economic Cooperation and Development)

-Based in France

-Looking around the world for injustices

-2 major issues in globalization debate

-World is poor

-Environmental impact

Utility Patent

How something works.

Design Patent

How something looks.

Human Development Index (HDI) List

-Life expectancy

-Education

-Income

GDP Drawbacks

-Non-market production

-Calculation Complexity

-Underground economy

-Changes in quality not reflected in price

-Bartering

Countries becoming Wealthy

-Institutions (biggest factor)

-Culture

--Modesty

--Sympathy

-Geography

--Natural resources

Leading to Poverty

-Corruption

-Religion

--Believing you are supposed to be there

-Land locked

--No water

-Bad climate

--Tropical

Ways to raise money in a company

Debt - Interest

Equity - Issue shares of stock

Channel Stuffing

shipping surplus inventory to wholesalers and retailers at an excessive rate

Mixed Economy

market-based economic system with limited government involvement

Grease money/speed money

Payment to government official to receive the standard treatment of that country

Bribe

make illegal payments to in exchange for favors or influence

Determining factors for economic development

Insinuations, Culture, Geography

Austerity Measures

Cut government spending