WEEK 1 Flashcards
(66 cards)
Globalization
the shift toward a more integrated and interdependent world economy
globalization has two facets
globalization of markets and globalization of production
Are global markets more common for consumer products or industrial goods?
Industrial goods and materials
Give examples of products that are part of the most global markets
Commodities like aluminum and oil, industrial products like microprocessors, computer software, and financial assets.
What is the globalization of production?
It is sourcing goods and services from around the globe to take advantage of national differences in cost and quality of production factors
What factors of production do companies consider in globalization of production?
Labor, energy, land, and capital
What are the goals of globalization of production?
To lower overall cost structures or improve product quality
What were the first outsourcing efforts focused on?
Primarily on manufacturing activities.
How has outsourcing changed over time?
At first, companies only sent MANUFACTURING (like making products) to other countries. Now, they also send ADMINISTRATIVE (accounting, customer service, and data entry) to be done in other countries too
What was the goal of GATT (General Agreement on Tariffs and Trade)?
To make global trade easier by lowering taxes on imports and removing trade barriers
Why are global institutions important?
They MANAGE the global market, help international COOPERATION, and keep the global business environment STABLE and FAIR.
What does the WTO (World Trade Organization) do?
Enforces global trade rules, makes sure countries follow trade agreements, and helps create new trade deals
What is the role of the IMF (International Monetary Fund)?
Keeps order in the global financial system and gives emergency loans to countries in financial trouble.
What does the World Bank do?
Helps developing countries grow by giving low-interest loans for things like roads, schools, and infrastructure.
What is the main goal of the United Nations (UN)?
To keep peace
help countries get along
Solve global problems together
support human rights.
What is the G20?
A group of leaders from the world’s 19 largest economies + the EU and European Central Bank.
What are the two main reasons globalization is increasing?
1) Lower trade and investment barriers
2) Technological change
What does “lower trade and investment barriers” mean?
It’s easier to move goods, services, and money between countries because taxes and restrictions (like tariffs) have been reduced
What are tariffs?
Taxes on imported goods that used to make international trade more difficult and expensive
How has technology helped globalization?
Better communication, information sharing, and transportation make it easier for countries and businesses to connect and work together
What is Foreign Direct Investment (FDI)?
When a company spends money to run a business in another country — like opening a factory or office there.
Why did countries use high tariffs in the past?
To protect their local businesses from foreign competition
What was the “beggar thy neighbor” approach?
A trade war-like strategy where countries kept raising tariffs against each other, hurting global trade
What effect did “beggar thy neighbor” policies have in the 1930s?
They reduced global demand and helped cause the Great Depression
