Chapter 1 Flashcards
(134 cards)
1
Q
Globalization
A
Globalization is the integration between different countries and economies and the increased impacts of international influences on all aspects of life and economic activity
2
Q
Trade
A
It is a measure of how goods and services produced in an economy are consumed in other economies around the world
3
Q
GWP
A
Gross world product
It is the sum of total output of goods and services produced by all economies around the world
4
Q
Global trade is forecasted to grow by 3% in 2020
A
11
5
Q
Growth in trade highlights
A
- the country doesn’t produce all the items they need
- they don’t produce it as sufficiently as other economies can
6
Q
Trade grows strongly because
A
Technology—reduced the cost of moving goods between countries
Remove barriers and join world organizations to promote trade
7
Q
Trade in services is the fastest growing category of trade
The direction of trade flow has changed in recent years reflecting the change in importance of economic regions
A
11
8
Q
International finance has a major impact of linking economies together
A
Money moves quickly
9
Q
International financial flows expanded substantially due to
A
Financial deregulation
Technological change
10
Q
Exchange traded derivative
A
Main instrument of financial markets
It’s value is based on the value of other assets
国际汇率
11
Q
Forex
A
Networks of buyers and sellers exchanging one currency for another in order to facilitate flows of finance between countries
12
Q
Exchange rate
A
The value of currency is expressed in terms of another currency
13
Q
Interaction of supply and demand
A
Forex
14
Q
Two types of financial flow
A
Speculators are investors who buy or sell financial assets with the aim of making short term price movements or to hedge against further movements and minimize risks of loss
Currency traders
15
Q
Benefit of greater financial flow
A
1) enable country to obtain funds that are used to finance their domestic investment (low savings)
16
Q
Disadvantages of financial flows
A
1) volatility in forex markets and domestic financial markets. Once the upwards or downwards trend in asset prices is established, it tends to continue
2) currency falls and financial crisis
IMF: establish individual economies experiencing currency crisis or financial turmoil and prevent flow on effects
17
Q
FDI
A
FDI refers to the movement of funds between economies for the purpose of establishing a new company or buying a substantial proportion of shares in an existing company (10%or more)
18
Q
Financial flow
FDI
A
Shorter term speculative shifts of mon
Long term to buy/establish business is investment
19
Q
FDI involves the movements of funds that are directly invested in economic activity or in the purchase of companies
A
11
20
Q
FDI flows have traditionally favored developed nations but now it is destined for developing and other economies
A
11
21
Q
Developing countries have increased their share of FDI outflows
A
11
22
Q
TNC
A
Source inputs from other countries
23
Q
TNCs play a vital role in global investment flows
A
Dominant global product and factor markets
Have production facilities in at least 2 countries and are owned by residents of at least two countries
24
Q
TNCs expand or establish production facilities in a country
A
They bring investments, new technologies, skills and knowledge, capitals and employment opportunity
25
Governments encourage TNC
Subsidies and tax concessions
26
A significant cause of the growth of international investment
Increase in international mergers and takeovers
27
TNCs continue to increase in volume and significance
Increase in corss border cartels which reduces competition in economies and disadvantage local consumers
28
Most investment still come from domestic sources
Less than 20%
29
Development in freight technology such as standardized shipping containers and more efficient logistic systems facilitate greater trade in goods
11
30
Cheaper and more reliable international communication through high speed broadband
Allows the provision of commercial services to consumers around the world
31
Technology moves money around the world
11
32
Technology is a driver of globalization
Economies that adopt new technologies tend to be economies that are most closely integrated with other economies in the world
33
Technology is also a driver in trade and investment
For the leading technology innovators and exporters, technology represents a major trade opportunity— they adopt new technologies and they become innovators
34
Business plays key role in developing new technologies will move directly into overseas markets and sell their products
They will bring technological know how into a new market and will invest in the new countries they enter.
In this way technology drives foreign investments
35
Improvements in technology
- reduces cost in business that have been a barrier
| - greater communication between and within economies
36
Internet usage users
- integrates nature of global economy
| - rapid spread of technologies
37
Migration is the movement of people between different countries on a long term basis
Less internationalised
For the search of better work opportunities
Economic and political motivations
Political unrest or conflict
38
International division of labor
It is how the task in the production process are allocated to people in different countries around the world
39
Highly skilled labor
Greater awards
40
Low skilled labor
Demanded by advanced economies where not enough people born locally to do certain types of work
41
Barriers for immigration
Language
Immigration restrictions
Cultural factors
Incompatible education and professional qualifications
42
Corporations shift production is between economies in search for the most efficient and cost affective labor
Global supply chain with production facilities in several countries which results in the Development of export orientated economies that can compete on the basis of the abundance of low-wage labors
43
Comparative advantage
Developing countries have a large population of workers with only Basic labor skills and education levels giving them a comparative advantage in labor intensive manufacturing
44
Business cycle
Business cycle refers to the fluctuations in the level of economic activities due to either domestic or international influences
45
Gross domestic product
Gross domestic product is the total market value of all final goods and services produced in economy in a given period of time
46
International business cycle
International business cycle refers to the fluctuations in the level of economic activity in the global economy overtime
47
For most countries economic growth is stronger when the rest of the world is growing strongly and wake her when the rest of the world is growing weaker
Downturn in the US in 2008 spread to other advanced industrialized economies a result in the biggest global recession since 1930s and it results in a large fall in world trade and this highlights the close relationships between trade and economic growth
48
Increase integration of economy during globalization
If there is a boom or recess in one country this will affect its demand for goods and services from other countries
forecasted global economic growth have been scaled down since the Trump administration Escalated trade tensions with China by making tariff increases because of this concern about the effect of the global economy
Economic conditions in one country will affect whether business in that country will invest in new operations in other countries. For example Brazil has a negative outflow of US 13 billion in 2018
Transnational corporations are increasingly important means by which global upturns and downturns are spread throughout the global economy for example German bank announced 180,000 job losses across its offices
Financial flows: Short-term financial flaws play in important role in transmitting the international business cycle. countries with strong financial integration will experience an increase in financial floss between themselves especially in response to imminent external shocks
49
Financial market and confidence and its influence on international business cycle
Consumer confidence and investors are constantly influenced by conditions in other countries this is highlighted by the strong correlation between movements in share prices of the worlds major stock exchanges
50
Global interest rate levels
Monetary policy conditions in individual economies are strongly influenced by interest rate if higher economic growth makes it necessary for the central bank in the US to increase interest rate displaces pressure all central banks and other economies to follow suit
51
Commodity prices
Global prices of key commodities such as energy minerals play in important role eat influencing inflation investment employment growth and other feature of the international business cycle
52
International organizations
G20 or G7 Camplay important role in influencing global economic activity
53
Development in freight technology such as standardized shipping containers and more efficient logistic systems facilitate greater trade in goods
11
54
Cheaper and more reliable international communication through high speed broadband
Allows the provision of commercial services to consumers around the world
55
Technology moves money around the world
11
56
Technology is a driver of globalization
Economies that adopt new technologies tend to be economies that are most closely integrated with other economies in the world
57
Technology is also a driver in trade and investment
For the leading technology innovators and exporters, technology represents a major trade opportunity— they adopt new technologies and they become innovators
58
Business plays key role in developing new technologies will move directly into overseas markets and sell their products
They will bring technological know how into a new market and will invest in the new countries they enter.
In this way technology drives foreign investments
59
Improvements in technology
- reduces cost in business that have been a barrier
| - greater communication between and within economies
60
Internet usage users
- integrates nature of global economy
| - rapid spread of technologies
61
Migration is the movement of people between different countries on a long term basis
Less internationalised
For the search of better work opportunities
Economic and political motivations
Political unrest or conflict
62
International division of labor
It is how the task in the production process are allocated to people in different countries around the world
63
Highly skilled labor
Greater awards
64
factors that weaken international business cycle
Interest rate: high, strengthen ea
Low, dampen ea
Government economic policy decisions
Fiscal policies: if the government in one country raises tax while the other cut its taxes, economic growth is likely to move in opposite directions
Exchange rates: differ between countries and impact on the level of investment, trade, competitiveness and confidence within economies
Structural factors: countries have different levels of resilience in their financial system, different levels of innovation and take up of new technology
Regional factors: some economies are closely integrated within their neighbors and are therefore very influenced by the level of economic activities of their trading partners
65
Regional business cycles
Fluctuations in the level of economic activity in a geographical region of the global economy over time
Regional cycles are a result of cross border integration
66
East Asia region
China and Japan both experience a slowdown in recent years and the region contribute to experience stable growth due to upswing elsewhere in the region
67
Sub Saharan Africa
Dependent on high income economies for 80% of their exports and is influenced by the performance of other countries
68
The growth of world trade is an important indicator of the extent of globalization
11
69
The process of globalization has occurred in areas with few barriers and is driven by
Speculative activity
70
TNCs
Transfer of technological know how and FDIs
71
Economic Integration
Economic integration refers to the liberalization of trade between two or more countries or many countries within a region or between regions stop this liberalization of trade may lead to the formation of a free trade area custom union common union or a monetary union
72
Integration induces
Increased trade and investment flows and writing standards of living
73
Greater international economic integration has also be accompanied by increasing proportion of world trade carried out by multinational corporations
11
74
GDP is measured in real purchasing power
11
75
Economic integration occurs when
Trade barriers are reduced or removed between countries to facilitate the growth in free international trade and flows of economic investment stop this cat occur through the signing of regional free trade agreements between member countries stop economic integration can also be promoted through the standardization of customization of products and services which are marketed and distributed on a global basis.
76
Characteristics of the globalization process
Integration of national financial system has created a powerful world financial system.Financial deregulation has led to the integration of capital markets and greater mobility of capital flows globally.This induces floors of foreign direct import follow investments and foreign exchange between different countries and regions
77
Disadvantages of globalization
Increase economic integrations between countries and regions has also increase the risk of financial contagion from one country or region to others
Widening the gap in the distribution of income and wealth within and between advanced countries and emerging and developing countries
78
Four major factors underpinning the process of globalization
The increase of customization of products and services has led to the development of a network of production and distribution facility around the world by TNCs
Rapid liberalization a financial environment is marked by the signing of trade agreements
Improve levels of technology communications transport and information technology has reduce the cost in conducting global business
The financial and Trade linkages between countries have been strengthened by globalization
79
Globalization has lead to higher growth in world output, trade and foreign investment
Major global merchandise exports are food agricultural materials fuse and metals
Major service experts in the global economy include commercial, transport, travel, insurance and financial services
80
World trade in services has grown with the rise incomes and demand for specialized services as well as lower cost for global technology transport and communications
11
81
The growth in service exports from emerging and developing countries is mainly due to the increase
Use of Outsourcing and offshoring
82
Globalization and foreign investment companies establish or buy a controlling interest in the foreign subsidiary
11
83
Foreign direct investment
Foreign direct investment is where companies establish or buy a controlling interest in a foreign subsidiary
84
Foreign portfolio investment
Foreign portfolio investment is where equity and debt securities are acquired
85
The general growth in foreign direct and Portfolio investment has mainly be due to
The eating of capital controllers between countries as the process of financial deregulation has spread widely.
Countries have floated the exchange rates
Central banks has removed landing controls allow you a greater access for individuals.
They have also increase the turnover by providing greater access for individuals, companies and governments to raise funds and companies to engage in merger activity
86
There is a decline in FDI inflows in periods of economic recession because of the uncertainty created by the trade tensions between the USA and China
11
87
Multinational transnational corporations
Multinational transnational corporations are enterprises to manage production or deliver services in more than one country.
Transnational corporations are responsible for much of the worlds foreign direct investment things they set up subsidiary other countries to gain access to the global market
They also play a major role in world trade investment and have influenced the pace and spread of globalization of economic activities
88
Foreign direct investment involves the acquisition of 10% or more of the voting power of shareholders of an enterprise in another countries this can be done by the following methods
By incorporating a wholly owned subsidiary or company
By acquiring shares and associated enterprise
Through a merger or acquisition of unrelated enterprise
By participating equity joint ventures with other investors
89
Disadvantages of transnational corporations
Transnational corporations can assert undue market power over labor and environmental legislations.
They can also remit profits and dividends to their parent companies which causes that outflow of funds in the host country’s balance of payments
90
The benefits of transnational corporations
Include a transfer of technological know-how, the creation of export and employment opportunities and the generation of additional tax revenue for the government.
91
One of the key features in the globalization process
Is the emergence of global value added supplies has established and managed by transnational corporations in special economic zones
92
The major factor driving the global and regional value add a change is the minimization of cost to achieve economies of scale
11
93
Manufacturing plants are allocated in countries with the labor cost and favorable government policies like tax concessions, cheap power and export incentives
11
94
Manufactured and assembly, these components and final products are distributed by transnational corporations to major high income markets
High technology products Are customize and modified to made the preferences and needs of consumers in various markets throughout the world
95
Transnational corporations utilize global and regional supply chain
So they can source the cheapest inputs of raw materials, labor and capitals for their operations
96
Technology innovation
Has led to the global market in information communications. Technology good such a smart phones, resulting in structural changes to the production and distribution of goods and services to consumers
97
Major means of conducting domestic and global businesses
Electronic commerce and social media marketing
98
Business can access and use information throughout the Internet more efficiently to
Increase the output, reduce cost and expand production
99
Examples of technological innovation
The ordering of stocks and inputs can be done instantaneously
Firms can use information technology systems to maintain the accounts
New products and services can be customized
100
The growth of Internet usage
Has led to the development of electronic-commerce what is driven by the broadband Internet technology
101
Innovative technologies in the countries are exported to the rest of the world and the rate or extent at which they are adopted is known as technology diffusion
👌🏻
102
These technologies have become essential tools for economic development helping to contribute to the global integration of countries
11
103
A division of labor
The division of labor is closely linked to the operations of transnational corporations in establishing Subsidiaries in foreign countries and minimize costs andIncrease profits by selling products to the large global market
104
Division of labor can increase output per person as people become proficient through constant repetition of work
At international market for special list labor skills has emerged and the increased mobility of many skilled and professional people leads them to work in foreign countries to earn a higher income
105
Examples of international division of labor
The establishment of manufacturing plants by transnational corporations in special economic zones to utilize the abundant supply of low-paid labors
The outsourcing of telecommunications, computing, accounting and insurance to offshore locations where there is a abundant supply of cheap skilled labor
The migration of unskilled labor from emerging and developing economies to work in primary, manufacturing and service industries in advanced economies
106
Disadvantages of migration
Workers from developing countries are exploited by their employers in foreign countries because they are not protected by minimum standards for working conditions
black market for immigrant workers
Growing need for advanced countries to increase their labor supply because of population aging
Illegal refugees
107
Globalization has lead to higher growth in world output, trade and foreign investment
Major global merchandise exports are food agricultural materials fuse and metals
Major service experts in the global economy include commercial, transport, travel, insurance and financial services
108
World trade in services has grown with the rise incomes and demand for specialized services as well as lower cost for global technology transport and communications
11
109
The growth in service exports from emerging and developing countries is mainly due to the increase
Use of Outsourcing and offshoring
110
Globalization and foreign investment companies establish or buy a controlling interest in the foreign subsidiary
11
111
Foreign direct investment
Foreign direct investment is where companies establish or buy a controlling interest in a foreign subsidiary
112
Foreign portfolio investment
Foreign portfolio investment is where equity and debt securities are acquired
113
The general growth in foreign direct and Portfolio investment has mainly be due to
The eating of capital controllers between countries as the process of financial deregulation has spread widely.
Countries have floated the exchange rates
Central banks has removed landing controls allow you a greater access for individuals.
They have also increase the turnover by providing greater access for individuals, companies and governments to raise funds and companies to engage in merger activity
114
There is a decline in FDI inflows in periods of economic recession because of the uncertainty created by the trade tensions between the USA and China
11
115
Multinational transnational corporations
Multinational transnational corporations are enterprises to manage production or deliver services in more than one country.
Transnational corporations are responsible for much of the worlds foreign direct investment things they set up subsidiary other countries to gain access to the global market
They also play a major role in world trade investment and have influenced the pace and spread of globalization of economic activities
116
Foreign direct investment involves the acquisition of 10% or more of the voting power of shareholders of an enterprise in another countries this can be done by the following methods
By incorporating a wholly owned subsidiary or company
By acquiring shares and associated enterprise
Through a merger or acquisition of unrelated enterprise
By participating equity joint ventures with other investors
117
Disadvantages of transnational corporations
Transnational corporations can assert undue market power over labor and environmental legislations.
They can also remit profits and dividends to their parent companies which causes that outflow of funds in the host country’s balance of payments
118
The benefits of transnational corporations
Include a transfer of technological know-how, the creation of export and employment opportunities and the generation of additional tax revenue for the government.
119
One of the key features in the globalization process
Is the emergence of global value added supplies has established and managed by transnational corporations in special economic zones
120
The major factor driving the global and regional value add a change is the minimization of cost to achieve economies of scale
11
121
Manufacturing plants are allocated in countries with the labor cost and favorable government policies like tax concessions, cheap power and export incentives
11
122
Manufactured and assembly, these components and final products are distributed by transnational corporations to major high income markets
High technology products Are customize and modified to made the preferences and needs of consumers in various markets throughout the world
123
Transnational corporations utilize global and regional supply chain
So they can source the cheapest inputs of raw materials, labor and capitals for their operations
124
Technology innovation
Has led to the global market in information communications. Technology good such a smart phones, resulting in structural changes to the production and distribution of goods and services to consumers
125
Major means of conducting domestic and global businesses
Electronic commerce and social media marketing
126
Business can access and use information throughout the Internet more efficiently to
Increase the output, reduce cost and expand production
127
Examples of technological innovation
The ordering of stocks and inputs can be done instantaneously
Firms can use information technology systems to maintain the accounts
New products and services can be customized
128
The growth of Internet usage
Has led to the development of electronic-commerce what is driven by the broadband Internet technology
129
Innovative technologies in the countries are exported to the rest of the world and the rate or extent at which they are adopted is known as technology diffusion
👌🏻
130
These technologies have become essential tools for economic development helping to contribute to the global integration of countries
11
131
A division of labor
The division of labor is closely linked to the operations of transnational corporations in establishing Subsidiaries in foreign countries and minimize costs andIncrease profits by selling products to the large global market
132
Division of labor can increase output per person as people become proficient through constant repetition of work
At international market for special list labor skills has emerged and the increased mobility of many skilled and professional people leads them to work in foreign countries to earn a higher income
133
Examples of international division of labor
The establishment of manufacturing plants by transnational corporations in special economic zones to utilize the abundant supply of low-paid labors
The outsourcing of telecommunications, computing, accounting and insurance to offshore locations where there is a abundant supply of cheap skilled labor
The migration of unskilled labor from emerging and developing economies to work in primary, manufacturing and service industries in advanced economies
134
Disadvantages of migration
Workers from developing countries are exploited by their employers in foreign countries because they are not protected by minimum standards for working conditions
black market for immigrant workers
Growing need for advanced countries to increase their labor supply because of population aging
Illegal refugees
