International Finance And Buisness Flashcards
Why do MNCs matter?
These private actors carry out most transactions worldwide, which makes them important in IR and the currency exchange.
What are MNCs?
Multinational Cooperations. Companies based in one state with affiliated branches or subsidiaries in other states
What is the race to the bottom?
a socio-economic phenomenon in which governments deregulate the business environment or taxes in order to attract or retain economic activity in their jurisdictions, resulting in lower wages, worse working conditions and fewer environmental protections.
When does the race to the bottom occur?
An outcome of globalization and free trade, the phenomenon may occur when competition increases between geographic areas over a particular sector of trade and production.
What is the California effect?
The shift of consumer, environmental and other regulations in the direction of political jurisdictions with stricter regulatory standards.
Why does the California effect matter to MNCs?
Could cripple business for large scale MNCs, leading to corruption. Can be manipulated depending on the relationship with the government.
What is a managed float system?
Rates are determined by global currency markets in which private investors and governments buy and sell currencies, but the government makes sure it stays within a certain range.
Why is their a managed float system?
Used by most governments that had a fixed exchange rate but would like a floating exchange rate in the future (awkward middle stage).
What is the Breton woods system?
established the rules for commercial and financial relations among the world’s major industrial states in the mid-20th century.
What did the Breton woods system do?
established the International Bank for Reconstruction and Development (IBRD), and was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
