Final Flashcards
(127 cards)
1
Q
Why might markets fail
A
- Lack of capital
- Reduced information flow
- High transaction costs
- Meet property rights
2
Q
What influences endogenous trade protection
A
- Industry size
- Industry concentration
- Existence of unions or other industry associations that may assist in collective action
3
Q
Types of groups
A
Privileged
Intermediate
Latent
4
Q
Mitigating expropriations risk
A
- Leasing
- Form coalitions
- Diversify
- Create long term relationships
- This is all affected by the planning horizon of the government in question
5
Q
Looking make a country more stable
A
- Productive growing and diversified economy
- Legal system
- , low debt to GDP, high savings, history of debt repayment, stable/low inflation
- History of fiscal prudence, absences strong entitlement
- Large stock of foreign reserves
6
Q
Evolutionary ethics
A
Grounded in evolutionary psychology
7
Q
When is trade policy likely to be effective
A
- Small number of firms compete for marketshare rather than profit
- Degree with which country can capture spillover benefits
8
Q
Market failure
A
- no longer allocating resources in a manner that maximizes The total welfare of those involved
- Not providing the most benefit at the lowest cost
9
Q
Dealing with risk
A
- Transfer
- Mitigate
- Assume
- Scenario development
10
Q
Risks
A
- Geopolitical
- Capital market
- State failure
- Corruption
- Regulatory change
- Expropriation
11
Q
o Realism
A
♣ States attempt to gain security by
• Developing military capabilities and alliances
• Acquiring/developing resources
• Developing ability to put citizenry’s resources to the state’s use
♣ If states want something under this view, they take just take it
12
Q
What makes the big 3 (WTO, World bank and IMF so easy to “target”
A
- undemocratic/ don’t vote for it
- doesn’t feel like it represents you
- massive influence
- complicated
All of these lead to conspiracy thoughts
13
Q
justice
A
- e.g. Rawls
* Economic inequality should be arranged to benefit the least well-off members of society
14
Q
WTO
A
- most favoured nation stattes
- Must offer deal to all member states
- Components
- TRIPS
- trade in intellectual property
- GATS
- trade in services
- TRIMS
- regulation of foreign investment
- TRIPS
- Crticism
- Haven’t seen increase in trade as a result of WTF
- Time limit increases resolution of disputes
- eg. to think about, ethics of aid drugs
15
Q
state
A
- synonymous w/ country,
* or referring to collection of insituritons of authority
16
Q
Why poor markets are attractive
A
- Untapped potential
- Business growth
- reduced costs
- innovation (test market)
17
Q
What are 3 sources of legitimate regulation
A
- enact broadly accepted social objectives
- address market failure
- limit abuse of market power
18
Q
Non-market failure can be broken down into
A
Demand and supply side problems
19
Q
Geopolitical worldviews
A
- Realism: rational actors acting in self interest, value national security and survival, problem is the military for defense looks like a military for attack
- Liberalism: many forms, trade reduces national conflict, Long supply chains can be risky
- marxism: division between capitalists and workers, conflict will demise
20
Q
Where is expropriation common
A
Resource rich cash poor states where cost of development is high
21
Q
political corruption
A
- Illegal use of political power for a private gain
22
Q
Noam Chomsky’s 5 factors that shape media
A
- Scale of media in concentration of ownership
- Use of ads as the source of revenue
- Reference to business and government sources of information
- Flack, censure media for unfavorable stories
- Anti-communism as a national religion
23
Q
Nature of nonmarket intervention
A
- Regulation
- Provide goods or services directly or indirectly
- Redistribute wealth and transfers
- Think about in terms of supply and demand terms
24
Q
Non-market factors of the business environment
A
- legal structures
- political environment
- actives
- organized
- shape public opinion
- influence regulators
- manage media
- work with activities
- build coalitions
25
Criticism of the IMF
* lack of social impact,
* focus on financial elements, debt repayment
* creates moral hazard
26
Criticism of IMF
* Conditionality in loans
* Failure to understand local issues
* Excessive focus on debt repayment
* Overly restrictive obligations for debtors
* Particular burden on developing economies
* Lack of concern for social impact of economic policy
27
Marxism
♣ Globalization is an exploitative system where the rich capitalist nations define the international trading regime to exploit the poorer ones
28
how to think about interests
what they want and what they bring to the table
29
Middle out regulation
* Agencies and acting legislation
| * eg. EPA
30
To consider about regulatory change
* Whether it is internally or externally motivated
| * changes focused on foreigners more likely result of collective action of one or more domestic constituents
31
General classification of ethical systems
Teleological ethical systems
Deontological ehtical systems
Virtue Ethics
Justice
32
IMF
* Oversight and international monetary system
* Administration of loans to countries needing financial assistance
* Technical and financial expertise
33
stabilizing factors for state failure
♣ Political support
♣ Functioning civil society
♣ Rule of law
♣ Economic prosperity & diversity
34
Bottom of the pyramid
* underserved
| * not homogenous
35
Deontological
rule based,
* religion: internally consistent? non-adherence? how do you know theres are right?
* rules can be anything : eg. do the first thing that comes to mind
36
How to think about strategy
planning involved in anything that can be changed
37
Examples of demand side problems in non-market failure
* govt selects which problems get addressed and the solution
* media magnifies certain problems and solutions at the expense of others
* application of political power and collective action shapes policy
38
Issue evaluation framework
* screening
* analysis
* choice
39
Goal of monopoly
restrict output by increasing price
40
Implementation of regulation is conducted on three levels
* Political level
* Administrative level and private actors
* Enforcement
41
o Canada-U.S. border significantly reduces trade
| o Why?
1.Home country bias
2.Regulations (e.g. French labeling)
3.Protectionism
4/Currency
5. Laws
6. Tariffs
42
Why do countries give aid
* self serving: make people want to be like you
* immediate payoff: soft power
* tide aid: eg. buy cdn goods
43
What does a state want
1. continued existence
2. territorial integrity
3. resources
44
virtue ethics
* recommendation of personality traits
* focus on the individual
* Since it's internal hard to evaluate consequences from an external perspective
45
Private governance
* A trend towards self-regulation
| * Be seen increasing trade trend since the end of WW2
46
Types of goodes
1. private
2. club
3. common
4. public
47
World bank
* Poverty reduction in capacity development
* Sponsored by contributions ofm nations, us provides 50%
* critiques
* Ignores environmental and social factors
* Soft budget, continues to disburse funds to achieve objectives
48
Teleological ethical systems
* based on consequences
* most known is utilitarianism
* rule based
* act based
49
Political risk from private actors
* Terrorism
| * Organized crime
50
Haidt and Graham 5 psychological foundations
1. Harm/care
2. Preference for fairness
3. In group loyalty
4. Respect for authority
5. Purity/sanctity
51
Stolper-Schumpter Theorem(SST)
* derived in context of HO
* Countries will export goods relying on factors with which it has abundance
* Enough extra production so those who gain transfer resources to those who lose
* Creates net benefit in terms of consumption demand
52
Strategic trade policy
* Linkage: supply chain relationships
| * Spill over: Inability to capture value created
53
Jeffery sachs thesis
* we don’t do enough aid
* target to get out of traps
* get on the bottom rung
54
advocacy science
interest produce information selectively and in a manner to support their cause
55
Monopoly regulation
* Regulation for monopolies 10 to target horizontal rather than vertical integration
* Per se violations
* Price-fixing
* Horizontal or customer division
* Concerted refusal to deal
* Tying arrangements
* Rule of reign ?
56
Deontological ethical systems
* moral character of an act Independent of consequences
* Different and rule-based, based on axioms
Eg. Kant, maxims (universal truth)
* Universality
* Rational beings treated as ends in themselves
57
rent seeking
interest invest resources to get the government to achieve their interest
58
Political risk defined
* Business risk that arises from the possibility that a politically initiated change in the nonmarket environment Will hinder an organization's ability to achieve its goals
* If Political change is known to becoming is not at risk
59
Provision related problems with regulatory “goods”
* selection and use of mgmt targets (internatilites)
* regulatory capture
* minimize significant of cost-benefit analysis
* expansion of provision
* reliance on conceptual frames for solutions
60
Two criteria of a public good
* Non-rival rest consumption
| * Non-exculdability
61
Top-down regulation
* Money doesn't buy regulation but buys access to provide information
* Elected officials around the experts in the bills that they must
* Primary interest is seeking reelection our higher office
62
Why do countries fail
1. poverty trap (most of $ goes to consumption)
2. physical geography
3. fiscal trap
4. government failure
5. cultural barriers (eg. not educating women)
6. lack of innovation
7. demographic trap (population> GDP)
63
Global problem of antitrust regulation
What might be illegal in parts of North America might not be on the global stage
64
Critisicms of the WTO
* complex
* retaliation based
* choice of area to negotiate
* systemic benefit to founding members
65
Ricardo Viner
* Factors are sticky
* More short-term
* tend to win or lose with the industry
66
100 mile diet criticism
o A myth
10% of energy in food production process is from transport;
80% from actual production better off using comparative advantage
67
Strategies for the political entrepreneur
* Reduced cost of monitoring
* Organized by Federated structure
* Change legal structures
* Coalition building
68
Problems with coase
* only applies to situations with low transaction costs
* may not work with many parties
* may indie free-rider problems
* information is often not available
* negotiation games might frustrate achieving results
* does not address distribution of costs/benefits
* allocation of property rights does not remove incentive to seek regulation
69
Types of protection industries can receive
* Implicit
- Product standards
- Inspections
- Licensing
* Explicit
- Subsidies
- Tax help
- Quotas
- Tarrifs
70
NGO
* Developing nations have no power at the bargaining table
| * Can't manage process of implementation
71
Downsides of regulation
1. Government failure
* Not altruistic in actions,endogenous protection theory
2. Moral hazard
* eg. unemployment insurance
3. Rent seeking
* increases cost to regulate
4. Capture
* gain control over regulatory body
72
Economic Kuznets Curve
1. economic development initially leads to a deterioration of the environment
2. after a certain level of economic growth, a society begins to improve its relationship with the environment and levels environment degradation reduces
73
Vaccines as public good
* Based on private value but increases the marginal social benefit
74
Examples of supply side problems in non-market failure
* determining which solution
* measuring the quantity supplied
* determine the quality of the solution
* monopoly supplier
* soft budgets
* no process to stop supply when no longer required
* shift to political arena dilutes legitimate concern
75
Different ways to respondi to issues
1. only when forced
2. respond to limit damage once it becomes apparent
3. anticipate issues and get the jump on them
4. anticipate issues and shape which ones come to the surface
76
Arrow’s impossibility theorem:
Failure of transitivity
77
Disputes with media
Fair comment
Absolute privilege
Qualified privilege
78
Brent Spar case highlights
* Demonstrates challenge of media management
| * viewers did not understand the complexity and studies done
79
Observations of poverty
* world poverty levels are improving
* mostly india and china
* not universal
80
`Will C02 follow the EKC trend?
o No evidence yet
o No detectable effect of pollution
o Everyone does it
81
Trade/ shift towards emerging media
result of the ubiquity of recording ability
82
Principles of statehood
* Self determination
* Legal equal? states??
* Nonintervention
83
Regulation related ideas
* moral hazard
* advocacy science
* rent seeking
* capture
84
Media can be swayed by the type
bandwidth of print is higher, can go into more detail
85
o Liberalism
♣ Trade leads to global integration which stabilizes
♣ Reduces need for imperialistic expansion to claim resources
♣ Trade increases cost of war, decreases benefit of conflict and improves security
86
3 reasons for poor GDP growth in Africa
1. institutional (colonization)
2. geographic (proximity to ports, routes etc)
3. disease
87
6 types of capital according to Jeffrey Sachs
1. human
2. buisness
3. infrastructure
4. public instituions
5. knowledge
6. natural
88
o What causes instability
```
♣ Political dissonance
♣ Structural problems
♣ Marginalized underclass
♣ Threatening neighbours
♣ Terrorism
```
89
risk:
thinking of in terms of uncertainty and probability
90
Schools of thought on monopoly power
1. Chicago
* Sustain collision unlikely given the incentives to cheat
* Best regulation is now regulation
2. New industrial organization
* NEW IO
* Relates network economies
* Differentiate games between dynamic and static systems
3. Schumpeter
* Firms need market power to invest in R&D
91
Views of strategy
* industry focued (Porters)
* firm focused(Resources base view)
* Baron’s: integrated market and non-market strategy
92
♣ Methods of environmental regulation
1. Command and control
- requiring specific tech
- set specific limits, rules
- outright ban on practices
2. Economic regulation
- force polluters to bear costs
- let economic forces drive reduciton
- penalize those that break the law
93
History of control of growth of monoploies
* US sherman act
* Clayton Act
* FTC
94
Lobbying
demonstrate sunk costs
95
What the most common form of political risk to organizations
regulatory change
96
Issue lifecycle:
* shape issue developemnet
* adapt to change
* compliance and damage control
*
* as you get farther along, impact to firm increases as well as level of commitment
97
The legitimate role of media
* Provide information regarding nonmarket issues
98
Information economics
Information economics
* Characterized byhigh fixed costs low marginal cost
* Result in natural monopoly
* Network benefits, marginal benefit increases with quantity consumed
99
Heckshire Ohlin (HO)
* factors of production are flexible
* Long-term view
* Tend to win or lose with factor type
100
What to know to play a game
* rules (not really)
* goals
* players
* how to win
* moves
* consequences
101
Expropriation:
nationalization of private property
* Creeping form: value of asset transferred, increase in taxes, licensing fees, etc.
102
Models of trade
HO
Ricardo
SST
103
Problems with aid
* if we have spent so much time and money, why hasn’t the problem been sovled
* ultimate soft budget
* brain drain
104
Cost-benefit analysis of expropriation
* Seize assets
* Gain increase in money or power
* Decreased in FDI
105
Hegelian triad
thesis, antithesis, synthesis
106
Media depends on companies for two purposes
* Ad revenue
| * Source of information
107
Andrew Muwenda on why trade sucks
* media portrayal of Africa: pity, not trade and development
* foreign aid large portion of GDP, fund mass bureaucracy
* poverty reduction vs. wealth creation
* increase investment in productive growth, R&D
* aid mutes incentive to work
* “whoever pays the piper, calls the tune”
108
Why does the Kuznet curve exist
1. Economic growth = disposable income ability to pay for better environmental standards
2. Improved technology
3. Improved reguaiton
4. deindustrilizaiton
5. shifting preferences for enviornment vs. consumption
-
109
principles of the WTO
* Negotiated results
* Most favoured nation
* National treatment
* Dispute settlement
110
Managing exposure
1. Maximize flexibility
* Examples negotiate contract terms changes in quantity in needed an investment
2. Minimize exposure
* Political insurance
* Minimize upfront investment
* Consider how insurance might increase specific risks such as kidnapping
* Ensure diversification is based on adding negative correlated assets
111
Problems with public goods
Difficult to scale, example National military in a small country
112
Critisicms of WTO
1. Not democratic
2. does not protect labour/ enivornment/ social policy
3. promotes race to the bottom
4. unfair to developing economies
113
Capture
* legitimate regulation changes over time to illegitimate regulation under couture pressure from the regulated industry
* erodes value of regulation but not cost
114
Watkin's perspective
Game metaphor
- types of games:
1. games played by rules
2. games to shape the rules
3. value net v. public interest games
115
Bottom of the pyramid
1. There is untapped purchasing power at the BOP; private companies can make significant profits by selling to the poor
2. Instead of focusing on the poor as consumers, focus on the poor as producers and emphasize buying from the poor
116
Economic theories of trade
* Factors of production, whatever is used under process to make it good or service
117
Media bias and reputation
* different interests have different beliefs
| * media selectively reinforces these beliefs
118
Strategies for serving BOP markets
* Reconfigure your assumptions i.e. corruption etc
* Invest
* Find external partners in the country
* Create a consortium of large company looking to invest in the region and split development costs
* Use tech
119
Ethics
* positive
* How things are or are not, testable hypothesis
* normative
* what should be
* value judgement
120
Theories of collective action
Explains why some collective goods come about what others do not
121
What characteristics determine how a story will be covered
* Social significance
* Audience interest
* Cost of coverage
* News worthiness
* perception of duty
122
nation
* group of people, common language and culture
123
Levels of coverage in the media
1. Presentation of facts
2. Interpretation of facts
3. Explore significance of facts
4. advocate course of action
124
Creating alliances to decrease political risk
* Reduce cost of monitoring
* Share expertise strategies and risk
* Consider whether risks target industries rather than firms
* Have contingency plans to manage risk and implement decisions more quickly
125
Signs of state failure
* Disease
* Rule of law failed
* Self-governing ability lost
126
How to enforce agreements
1. Relational
2. reputational
3. Legal
127
Moral hazard
insuring interest from risk encourages greater risk taking, resulting in greater social cost
