Lecture 4: Government and the MNC

Question 1

Adam Smith’s core roles of government

Answer 1

1. The protection of the nation from other nations
2. The protection of citizens from other citizens
3. The provision of public goods which would otherwise not be available

Question 2

Other common modern government economic functions

Answer 2

1. Establish a monetary system
2. Provide public goods
3. Control externalities
4. Stop monopolies
5. Ensure public information
6. Establish social security

Question 3

OECD

Answer 3

Organisation for Economic Co-operation and Development

-Club of rich countries and some middle class

Question 4

Government and Business

Answer 4

Government - needs business to drive growth

Business - needs government to establish an effective economic system

Question 5

What factors of globalisation are controlled by the government?

Answer 5

• Import restrictions
• Capital flow regulation
• immigration
• membership of multilateral institutions
• regional trade agreements

Question 6

Trade Policy

Answer 6

• Any government policy affecting international trade and investment including tariffs and non-tariff barriers, WTO negotiations, regional trade agreements, rules for FDI etc.
• Unilateral
• Bilateral
• Regional
• Multilateral

Question 7

MNC

Answer 7

A firm that is engaged in foreign direct investment and owns or controls values adding activities in more than one country