Chapter 2 Flashcards
(38 cards)
The ? denotes the worldwide interconnectedness of economic activities that occur between various countries which can either have a positive or negative effect on the countries engaged in it.
global economy
process by which national and regional economies have combined to create a
global network of trade, communication and transportation
Globalization
exchange of goods and services between different states and aided countries to focus in their leading products
International trade
is a principal feature of a global economy involving currency, exchange rates, and monetary policy where money can be moved at quicker speeds between countries than good, services, and people
International finance
Venture scheme not controlled by national borders through foreign direct investment. Global economy can be understood by looking at its importance in relation to emerging markets from the smallest level or micro to the expanded macro level studying how people make decisions, how these decisions affect price, demand, and supply of goods in the market. Rich individuals often do not come from emerging markets but they have helped to bring higher of income to these countries still afflicted by poverty and something must be done to help the poor
Global investment
talks about the way people, goods, and services are able to move around the globe
Economic globalization
a policy of where government intervenes in foreign trade to encourage local production in the form of quotas and tariffs or fees on imports/exports
Protectionism
free trade where goods and services move more easily. However, free trade does not mean it is actually free since some inequalities tend to develop. Those who control much of trading are stronger nations. To lessen inequalities in the global world, the concept of “fair trade” is raised where there is concern for social, economic, and environmental welfare of small producers
Trade liberalization
the global exchange of goods and services, there are the so-called actors that participate to make economic globalization possible. These actors of economic globalization are as follows:
(1) Transnational corporations or TNCs; (2) State; (3) Labor; (4) Consumers; and (5) Social groups
economic growth is stopped when people fail to change certain beliefs
Modernization theory
introduced by Hans Singer and Raul Prebisch placed fault on colonialism and capitalist system as reasons for countries being left poor for being exploited
Dependency theory
sociologist Immanuel Wallerstein implied about a country’s place in the world economy.
World Systems theory
have the advantage of obtaining labor and natural resources from periphery or poor nations who are colonies first then continued work relations with
those wealthy countries in multinational corporations under the concept of neocolonialism.
Core or wealthy countries
societies organized around small communities where people produce only for their family or community with inadequate resources and technology forming stringent social hierarchy where tradition rules how a society functions e.g. feudal Europe
Traditional stage
new markets were formed and people began to use their abilities to produce things outside their family to exchange goods with and status in society became associated with how much wealth you have
Take off stage
stage where industrial development started to prosper with increased population, lesser number of people in extreme poverty, and more opportunities for leading to social
and economic change
Technological maturity
whatever is produced is more on wants than needs and having social support systems arranged to ensure citizens have access to basic needs.
High mass consumption
made things worse making them much poorer by relying on labor and export of raw materials to wealthy countries that later sell them at a higher price
free trade
it is a place where people buy or sell products or services
market
is a situation in which separate markets for the same product become one single market
Market integration
a competitive scheme raising marketability over distributors and suppliers, intensifies product differentiation, and help companies expand their market which can be through an acquisition by buying a smaller company or merging with rivals in a certain industry to lessen competition and gain more profit. One example is Disney as a large company fused with two smaller companies, Miramax in 1993 and Pixar in 2006
Horizontal integration
a company becomes engaged in other parts on the value chain of the industry. It becomes necessary when suppliers or buyers get more at the cost of the company so the company purchases the buyer or supplier to remove their leverage and produce more profit. For instance, Apple have their own Apple stores or eBay bought PayPal
Vertical Integration
company going back or up the value chain by becoming a
supplier to its own production to escape higher supply prices or substandard materials to the company’s product. One example is a motor company creating subsidiaries
Backward Vertical Integration
refers to a company moving down the value chain of the business to become a buyer. One example is a company attempting retailing by means of automated vending machines at selected malls and airports to make more profit than selling its products to a retail store
Forward Vertical Integration
