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CONTEMPORARY WORLD > CHAPTER 2- THE STRUCTURE OF GLOBALIZATION- The Global Economy > Flashcards

CHAPTER 2- THE STRUCTURE OF GLOBALIZATION- The Global Economy Flashcards

1
Q

Refers to the increasing interdependence of world
economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.

A

Economic globalization

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2
Q

It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the turn of the millennium (17).

A

Economic globalization

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3
Q

According to International Monetary Fund (IMF) it is a historical process, the result of human innovation and technological progress.

A

Economic globalization

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4
Q

It refers to the increasing integration of economies around the world, particularly through the movement of _________ , _________ and ______________ across boarder

A

goods, services, and capital

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5
Q

T OR F

In economic terms, technology is nothing but a process making the world
economy an organic system by extending transnational economic processes and economic relations to more and more countries and by deepening the economic interdependencies among them (19).

A

FALSE - globalization is

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5
Q

It also refers to the movement of _______________(______________) and _____________(____________) across international borde

A

people (labor) and knowledge (technology)

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6
Q

Two Major Driving Forces for Economic Globalization

A
  1. The rapid growing of information in all types of productive activities
  2. Marketization
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7
Q

A restructuring process that enables state enterprises to
operate as market-oriented firms by changing the legal environment in which
they operate (20) and can be achieved through reduction of state subsidies, organizational restructuring of management such as corporatization, decentralization, and privatizati

A

Marketization

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8
Q

Dimensions of Economic Globalization

A
  1. The globalization of trade of goods and services
  2. The globalization of financial and capital markets
  3. The globalization of technology and communication
  4. The globalization of production
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9
Q

It is a functional integration between internationally
dispersed activities which means that it is a qualitative transformation rather than a quantitative change

A

Economic globalization

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10
Q

Economic globalization produces its own major players in the form of _________________

A

transnational corporations (TNCs),

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10
Q

It is an extension of economic activities
between internationally dispersed activities

A

internationalization

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11
Q

T OR F

Transnational Corporation is the main driving forces of economic globalization to the last 100 years or roughly two-thirds of world export
(23).

A

True

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12
Q

It is otherwise known as multi -national corporation is a corporation that has a home base, but is registered, operates and has assets or other facilities in at least one other country at one time

A

Transnational corporation

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13
Q

Examples are the US-based General Electric (GE), the Coca-Cola
Company of Atlanta, Georgia, US Nike and others

A

other info

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14
Q

Origin of Economic Globalization

In this period the world system analysts identify the origin of modernity and
globalization through long distance trade.

This best known example of archaic globalization is the Silk Road, which started in western China, reached the boundaries of the Parthian empire, and continued onwards towards Rome . It also connected Asia, Africa, and Europe

A

16th Century

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15
Q

Origin of Economic Globalization

In this period the Global economy grew by an average of nearly 4 percent per annum, which is roughly twice as high as growth in the national incomes of the developed economies since the late 19th century

A

in the 19 th and 20th centuries

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15
Q

Origin of Economic Globalization

In this period the global economy exists only in trade and exchange
rather than production as the world export to World GDP did not reached 1 to 2 percent.

A

17 th and 18th century

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16
Q

Origin of Economic Globalization

In this period the advent of globalization approaching its modern form is
witnessed. A short period before World War I is referred to as golden age of
globalization characterized by relative peace, free trade, financial and economic stability

A

19th century

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17
Q

Origin of Economic Globalization

In this period the Growth in international exchange of goods accelerated

A

second quarter of the 19th century

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18
Q

It is the global network of the government and financial institutions that determine the exchange rate of different currencies for international trade.

It is a governing body that sets rules and regulations by which different nations exchange currencies with each other.

A

International monetary system (IMS)

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18
Q

refers to a system that forms rules and
standards for facilitating international trade among the nations. It helps in reallocating the capital and investment from one nation to another.

A

International monetary system (IMS)

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19
Q

Evolution of the International Monetary System

In this period, with the help of gold and silver, trade was carried without any
institutional support. Monetary system during that time was decentralized while market based and money played a minor role in international trade in contrast to gold

A

1870 to 1914

20
Q

Evolution of the International Monetary System

In this period the Gold was believed to guarantee a non-inflationary, stable economic environment, a means for accelerating international trade
(34) and the gold standard functioned as a fixed exchange rate regime, with gold as the only international reserve

A

1870 to 1914

21
Q

It is a system of backing a country’s currency with its gold reserves. Such currencies are freely convertible into gold at a fixed price, and the country settles all its international trade transactions in gold

A

Gold Standard

22
Q

Evolution of the International Monetary System

in this period, the use of gold declined due to increased expenditure and
inflation which were caused by war

A

After World War I,

23
Q

Evolution of the International Monetary System

in this period, the Major economic powers were on gold standards but could not maintain it and failed because of the Great depression

A

. in 1931.

24
Q

Evolution of the International Monetary System

in this period, 730 representatives of 44 nations met at Bretton Woods, New
Hampshire, United States to create a new international monetary system called as the Bretton Woods system, the aim of which is to create a stabilized international currency system and ensure a monetary stability for all the nations

A

1944

25
Q

Evolution of the International Monetary System

in this period, the floating exchange rate system, also known as flexible exchange rate system was developed that was market based

A

In 1973

25
Q

Evolution of the International Monetary System

in this period, The Bretton Woods system ended in _____ as the trade deficit and growing
inflation undermined the value of dollar in the whole world

A

1971

26
Q

To assess whether the gold standard was successful, the following roles of a
properly designed IMS must be considered

A

: to lend order and stability to foreign exchange markets,
to encourage the elimination of balance-of-payments problems,
and
to provide access to international credits in the event of disruptive shocks

27
Q

refers to a 30-year long process that began at the end of the 1960s as a form of monetary cooperation intended to reduce the excessive influence of the US dollar on domestic exchange rates, and led, throughvarious attempts, to the creation of a Monetary Union and a common currency.

This Union brings many benefits to Member States

A

European monetary integration

28
Q

On the other hand it is a 1979 arrangement between several European countries which links their currencies in an attempt to stabilize the exchange rate. This system was succeeded by the European Economic and Monetary Union (EMU), an institution of the European Union (EU), which established a common currency called the euro.

A

European Monetary System (EMS)

29
Q

it is a permanent fund created by the European Union (EU) to provide emergency assistance to membercstates within the Union. It raises money through the financial markets, and iscguaranteed by the European Commission.

A

The European Financial Stability Mechanism (EFSM)

30
Q

on the other hand, It is an organization created by the European Union to
provide assistance to member states with unstable economies.

A

. The European Financial Stability Facility (EFSF)

31
Q

It is a special purpose vehicle (SPV) managed by the European Investment Bank, a lending institution. The fund raises money by issuing debt, and distributes the funds to eurozone countries whose lending institutions need to be recapitalized who need help managing their sovereign debt or who need financial stabilization

A

The European Financial Stability Facility (EFSF)

32
Q

IT is the exchange of goods, services and capital across
national borders. It is a multi-million dollar activity, central to the Gross Domestic Product (GDP) of many countries, and it is the only way for many people in manycountries to acquire resources

A

International trade

33
Q

T OR F

International trade allows for a greater competition and more competitive pricing in the market

A

TRUE

34
Q

two key concepts in the economics of international trade

A

specialization and comparative advantage

35
Q

comes in; so long as the two countries have different relative efficiencies, the two countries can benefit from trade – the country with absolute advantage will still benefit by directing its resources to those goods where it is most productive and trading for the other

A

COMPARATIVE ADVANTAGE

36
Q

on the other hand refer to the regulations and agreement of
foreign countries.

It defines standards, goals, rules, and regulations that pertain to trade relation between countries Each country has specific policies formulated by its
officials. Boosting the nation’s international trade is the aim of each country. Taxes imposes on import and export, inspection, regulations, tariffs and quotas are all part of country’s trade policy.

A

Trade policies

37
Q

refers to this process; countries as well as individual businesses can maximize their welfare by specializing in the production of those goods where they are most efficient and enjoy the largest advantages over rivals

A

specialization

38
Q

Focuses of Trade Policy

These are taxes or duties paid for a particular class of imports or exports.
Imposing taxes on imported and exported goods is a right of every country. Heavy tariffs on imported goods are levied by some nations for the protection of their local industries. The prices of imported goods in local markets are inflated due to high imported taxes to ensure demand of local products.

A

TARIFFS

39
Q

Focuses of Trade Policy

Theses are measures that governments or public authorities introduce to
make imported goods or services less competitive than locally produced goods
and services . They are state-imposed restrictions on trading a particular
product or with a specific nation. It can be linked to the product, service like
technical requirement and it can also be administrative in nature such as rules
and procedures of transactions. Tariffs, duties, subsidies, embargoes and quotas are the most common trade barriers.

A

Trade barriers

40
Q

Types of Trade Policies

This safeguards the best interest of its trade and citizen

A

National Trade Policy

41
Q

Focuses of Trade Policy

This ensures that imported products in the country are of high quality.
Inspection regulations laid down by public officials ensure the safety and qualitystandards of imported products.

A

Safety

42
Q

Types of Trade Policies

This defines the international trade policy under their charter like the
International economic organizations, such as Organization for Economic Co- operation and Development (OECD), World Trade Organization (WTO) and
International Monetary Fund (IMF).The best interests of both developed and
developing nations are

A

International Trade Policy

42
Q

Types of Trade Policies

To regulate the trade and business relations between two nations, this
policy is formed. Under the trade agreement the national trade policies of both
the nations and their negotiations are considered while bilateral trade policy is
being formulated.

A

Bilateral Trade Policy

43
Q

In most developed countries where open market economy prevails, the
international economic organizations support free trade policies. In the case of
developing nations partially-shielded trade practices are preferred to protect their local trade industries.

A

Trade Policy and International Economy

44
Q

The following are dependent on globalization:

A

sound trade policies for market changes, establishment of free and fair trade practices and expansion of possibilities for booming international trade.

45
Q

deals with the global rules of trade between nations with the main function of ensuring that trade flows smoothly, predictably and freely.

It is the only global international organization dealing with the
rules of trade between nations with WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments at its heart

It is viewed as the means by which industrialized countries can gain access to the markets of developing countries

A

World Trade Organization (WTO)

46
Q

It is an activity that requires search for a partner and relation-specific
investments that are governed by incomplete contracts and the extent of international outsourcing depends on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs and the nature of the contracting environment in each country

A

Outsourcing

47
Q

It is a central element of the new economy

It is the practice of assigning part of the
obligations and tasks under a contract to another party known as a subcontract especially prevalent in areas where complex projects are the norm like construction and information technology

A

Subcontracting

48
Q

Possible Determinants of the Location of Outsourcing

A
  1. Size of the country can affect the “thickness” of its markets.
  2. The technology for search affects the cost and likelihood of finding a suitable
    partner.
  3. The technology for specializing components determines the willingness of a
    partner to undertake the needed investment in a prototype.
  4. The contracting environments can impinge on a firm’s ability to induce a
    partner to invest in the relationship
49
Q

three essential features of a modern outsourcing strategy

A
  1. Firms must search for partners with the expertise that allows them to perform the particular activities that are required.
  2. They must convince the potential suppliers to customize products for their
    own specific needs.
  3. They must induce the necessary relationship-specific investments in an
    environment with incomplete contracting

CONTEMPORARY WORLD (5 decks)

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