Geo 331 Institutions Quiz

Question 1

TNC

Trans-National Corporation

Answer 1

Firm that has the power to coordinate and control operations in more than one country

1) coordinate and control
2) take advantage of geographical differences in the distribution of the factors of production
3) its potential geographical flexibility

Question 2

Merger and Acquisition

Answer 2

The purchase of a company in another country or the merging of two firms across state lines
=one of the easiest ways to diversify product/service and enter into new geographical markets

Question 3

Transnational Index

Answer 3

Calculated as the AVG of three ratios:

1) foreign assets to total assets
2) foreign sales to total sales
3) foreign employment to total employment

Question 4

Tariffs

Answer 4

Tax on imports

Question 5

Non-tariff barriers

Answer 5

Codes or regulations designed to protect domestic markets from foreign competition without taxing them

Question 6

Preferential Trading Arrangement (PTAs)

Answer 6

Simply giving preferential market access to a trading partner, primarily through reduction in tariffs

Question 7

Free Trade Area

Answer 7

Restrictions on the trade between group members are removed and each individual country maintains its own trade preferences with non-members (NAFTA)

Question 8

Customs Union

Answer 8

Same as Free Trade Area but everyone agrees on common external trade policy (SACU)

Question 9

Common Market

Answer 9

Added to FTA, CU is the free movement of the factors of production between members (Mercosur)

Question 10

Economic Union

Answer 10

Includes all FTA, CU, CM conditions but also includes a harmonization of broader economic policies and supranational control (EU)

Question 11

Private and Public Goods

Answer 11

Private = excludable and rivalrous
Public = non-excludable and non-rival (free-rider program)

Question 12

Extra-Territorial Trade

Answer 12

Application of US trade law and regulations to TNCs who do business in US or to US based TNCs whose subsidiaries violate US trade law
=an economic mechanism used to achieve political ends

Question 13

Import-substituting Industrialization

Answer 13

Promoting internal companies/markets through tariffs or NTBs and providing subsidies to home based firms in order to increase internal industrialization

Question 14

Export-oriented Industrialization

Answer 14

Focus on creating products/services for exports through the use of export processing zones
=want to obtain access to knowledge, skills of external firms in order to increase competitive standards of home market firms
(Home market is underserved)

Question 15

Export Processing Zones

Answer 15

Explicitly geographical locations that allow non-taxed inputs to be imported and assembled for export

Question 16

Regulatory Arbitrage

Answer 16

Process whereby TNCs take advantage of regulatory differences between states by shifting activities between locations according to differentials in regulatory practices that vary across states

Question 17

Locational Tournaments

Answer 17

Process of playing off states against one another in order to get the highest return on their investments
(Usually includes subsidies, tax breaks, infrastructure, possibly training schemes)

Question 18

Transfer Pricing

Answer 18

Movement of materials, products, services across international borders at prices set inside the TNC in order to take advantage in cross-border differences in tax policies

Question 19

Active Embeddedness

Answer 19

TNC seeks out localized assets and incorporates them as a matter of choice within its organization
(If the localized assets/resources are widely available, then the TNC has greater bargaining power)

Question 20

Obligated Embeddedness

Answer 20

If the assets/resources are less available, the TNC is forced to comply with state criteria in order to gain access to assets; two criteria:

1) TNC must need the asset
2) State must have control over asset

Question 21

Territorial Asymmetry

Answer 21

Intersection of states with continuous territories and TNCs with discontinuous territories that translates into complex bargaining processes in which there is no unambiguous and totally predictable outcome

Question 22

State, Nation, Nation-state

Answer 22

State = political entity
Nation = cultural entity (greater internal consistency and external diversity)
Nation-state = where these overlap