chapter 1

Question 1

globalisation

Answer 1

refers to the shift towards a more integrated and interdependent world economy. it has several facets; the globalisation of markets and production.

Question 2

globalisation of market

Answer 2

refers to the merging of historically distinct and separate national markets into one huge global marketplace. falling barriers to cross-border trade and investment have made it easier to sell internationally. tasted and preferences of consumers have converged into some global norm.

Question 3

globalisation of production

Answer 3

refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production, eg. labour, energy, land. companies hope to lower their overall cost structural or improve quality to compete more effectively.

Question 4

World Trade Organisation (WTO)

Answer 4

primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties. it is also responsible for facilitating the establishment of additional multinational agreements among WTO member states.

Question 5

International Monetary Fund (IMF)

Answer 5

established to maintain order in the international monetary system and function as the lender of last resort. the IMF and World Bank were created in 1944 by 44 nations. in return for loans, it requires nation-states to adopt specific economic policies aimed at returning their economies to stability and growth.

Question 6

World Bank

Answer 6

set up to promote economic development. it has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments.

Question 7

United Nations (UN)

Answer 7

established October 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security. today, 193 countries are member.

Question 8

Group of Twenty (G20)

Answer 8

comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the EU and the ECB. collectively, they represent 90% of global GDP and 80% of international global trade.

Question 9

international trade

Answer 9

occurs when a firm exports goods or services to consumers in another country.

Question 10

foreign direct investment (FDI)

Answer 10

occurs when a firm invests resources in business activities outside its home country.

Question 11

“beggar thy neighbour” retaliatory trade policies

Answer 11

consequence of high tariffs on imports of manufactured goods with the aim to protect domestic industries from foreign competition. countries progressively raised trade barriers against each other. this depressed world demand and contributed to the Great Depression of the 1930s.

Question 12

microprocessor

Answer 12

enabled the explosive growth of high-power, low-cost computing, increasing the amount of information that can be processed by people. global communication has been revolutionised with developments that rely on it to encode, transmit, and decode vast amounts of information.

Question 13

Moore’s law

Answer 13

predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.

Question 14

containerisation

Answer 14

simplies transshipment from one mode of transport to another.

Question 15

outward stock of foreign direct investment

Answer 15

refers to the total cumulative value of foreign investments as a percentage of the country’s GDP. today, we invest more outside of our own country today than in 1995.

Question 16

multinational enterprise (MNE)

Answer 16

any business that has productive activities in two or more countries.

Question 17

mini-multinationals

Answer 17

small and medium-sized multinationals.

Question 18

international business

Answer 18

any firm that engages in international trade or investment. a firm does not have to be come a MNE to engage in international business, although MNE are international businesses. a firm must export or import products from other countries.