Busi 610 Test 1

Front 1

What are the two major drivers of globalization?

Back 1

lowering trade barriers and technological change

Front 2

What are three reasons for the spread of democracy?

Back 2

totalitarian regimes failed to deliver economic progress to their people, the state's lower ability to control access to uncensored information, and the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms

Front 3

What are the three types of risks that one has to consider before investing in foreign countries?

Back 3

political(the likelihood that political forces will cause changes in business), economic(likelihood that political forces will alter business) and legal(how strong are contract and property rights?) risks

Front 4

What are the four components of Hofstede's research concerning culture and the workplace?

Back 4

power distance, individualism versus collectivism, uncertainty avoidance, and masculinity and femininity

Front 5

What are the simple extensions of the Ricardian Model?

Back 5

immobile resources, diminishing returns, free trade,

Front 6

What are some limitations of the free trade theory?

Back 6

simple world, no transportation costs, no price differences in resources, resources immobile across countries, constant returns to scale, each country has a fixed stock of resources and no efficiency gains in resource use from trade and full employment

Front 7

What consists of Porter's Diamond?

Back 7

factor endowments, demand conditions, related and supporting industries, and firm strategy, structure and rivalry

Front 8

What are the two major drivers of globalization?

Back 8

lowering trade barriers and technological change

Front 9

What two important points does the new trade theory make?

Back 9

First, through its impact on economies of scale, trade can increase the variety of goods available to consumers and decreases the average costs of these goods. Second, in those industries when the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises

Front 10

What three types of accounts are included in the Balance-of-Payment accounts?

Back 10

current, capital and financial

Front 11

What are some instruments of trade policy governments can implement?

Back 11

tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, anti-dumping policies, and administrative policies

Front 12

What are some political arguments for governmental intervention in trade?

Back 12

protecting jobs and industries, national security, retaliation, protecting consumers, advocating human rights and furthering foreign policy objectives

Front 13

What are some economic arguments for governmental intervention in trade?

Back 13

infant industry and strategic trade policy

Front 14

What are two effects of import tariffs?

Back 14

tariffs are unambiguously pro-producer and anti-consumer and import tariffs reduce the overall efficiency of the world economy

Front 15

What are the two objectives of export tariffs?

Back 15

raise revenue for government and reduce export from a sector, often for political reasons

Front 16

What are two ways in which subsidies help domestic producers?

Back 16

competing against foreign imports and gaining export markets

Front 17

What were three reasons for protectionist trends from 1980-1993?

Back 17

the economic success of Japan strained the world trading systems, the world trading system was strained by the persistent trade deficit in the world's largest economy, the U.S., and that many countries were finding ways to get around GATT regulations

Front 18

How do trade barriers constrain a firm's ability to disperse its productive activities?

Back 18

1) tariff barriers raise the cost of exporting products to a country, 2)quotas may limit a firm's ability to serve a country from locations outside of that country, 3)a firm may have to locate more production activities in a given market that it would otherwise, 4) a firm may want to locate som e of its production activities in a given country to reduce the threat of trade barriers being imposed in the future

Front 19

What does globalization of markets refer to?

Back 19

distinct/separate markets merging into a huge global marketplace

Front 20

What does globalization of production refer to?

Back 20

is the sourcing of goods and services from locations around the glove to take advantage of national differences in the cost and quality of various factors of production

Front 21

What are some pros for the globalization debate?

Back 21

lower prices for goods and services, economic growth stimulation, increase in consumer income, creation of jobs, countries specialize in production of goods and services that are produced most efficiently

Front 22

What are some cons for the globalization debate?

Back 22

destroys manufacturing jobs in wealthy, advanced countries, wage rates of unskilled workers in advanced countries declines, companies move to countries with fewer labor and environment regulations and loss of sovereignty

Front 23

What are the four purposes of the UN?

Back 23

to maintain international peace and security, to develop friendly relations among nations, to cooperate in solving international problems and in promoting respect for human rights

Front 24

What are some decisions an international manager may face that a domestic one generally wouldn't?

Back 24

where to produce in the world, whether it is ethical to produce in a country with diminished labor and environmental laws, decide how best to control dispersed production activities, etc

Front 25

What does innovation require?

Back 25

market economy, strong property rights and the "right" political system

Front 26

What are the two most important tenets of individualism?

Back 26

emphasis on the importance of guaranteeing individual freedom and self expression; the welfare of society is best served by letting people pursue their own economic self-interest

Front 27

What are the three components of the HDI, which measures the quality of life in different nations?

Back 27

life expectancy at birth, educational attainment of the adult literacy rate and enrollment in lower to higher forms of education, and whether average incomes based on PPP estimates are sufficient to meet the basic needs of life in a country

Front 28

What are some of the economic implications for the following religions: Christianity, Islam, Hinduism, Buddhism, and Confucianism?

Back 28

protestant work ethic; Islamic economic principles; anti-materialistic, socially stratified; anti-materialistic, social equality; hierarchy, loyalty, honesty, reciprocity

Front 29

What is a mudarabah contract?

Back 29

An Islamic bank lends money to a business and takes a share in the profits that are derived from the investment

Front 30

What is a murabaha contract?

Back 30

the bank will buy something for a borrower at one price and charge a higher price to the borrower to get it from them

Front 31

What is the product-life theory?

Back 31

suggests that early in the life cycle of a product, most new product are produced in and exported from the country in which they are developed. As a new product becomes widely accepted elsewhere however, products start in other countries

Front 32

What are two of the major WTO policing activities?

Back 32

policing organization for manufactured goods, services and intellectual property; responsibility for trade arbitration: reports adopted unless specifically rejected and after appeal, failure to comply can result in compensation to injured country or trade sanctions

Front 33

What is the Infant Industry Argument?

Back 33

developing countries have a comparative advantage in manufacturing; thus governments should temporarily support new industries (through tariffs, import quotas and subsidies) until they have grown strong enough to meet international competition

Front 34

What are the two major reasons why economists are skeptical of the Infant Industry Argument?

Back 34

1) protection of manufacturing from foreign competition does no good unless the protection makes the industry efficient and 2) this argument relies on an assumption that firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market

Front 35

What are some arguments against government intervention in regard to international trade?

Back 35

1) intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors, 2) intervention is dangerous and could invite retaliation, 3) intervention is unlikely to be well executed, given the opportunity for such a policy to be captured by special-interest groups

Front 36

What are the four major reasons why managing an international business differs from a domestic one?

Back 36

1) countries are different, 2) the range of problems confronted in an international business is wider and more complex, 3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, 4) international transactions involve converting money into different currencies

Front 37

What are the components of culture?

Back 37

language, attitudes and beliefs, aesthetics, religion, material culture, societal structure, and education