FVC1-Global Business (WGU) Study Guide Graded A+

Globalization - the process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies How do major international institutions facilitate globalization? - help transmit information, enforce contracts/property rights, promote market competition Why is it important for political leaders and institutions to be transparent in responding to global competition? - social unrest leading to political instability, ineffective and inconsistent economic policies will wreck havoc on markets and stall the globalization process key policy measures for sustainable globalization - foreign & domestic investments, good governance, competitive markets, property rights, transparency and accountability; macroeconomic goals What are the reasons for supporting individuals negatively affected by globalization? - put policies in place to negate the negative aspects without detriment to the open system; provides political stability and reduce uncertainity benefits of foreign investment - increases total investment in a country, creates jobs and economic growth, facilitates technological transfers benefits of trade - greater choice, lower prices, technological transfers and higher living standards major international trade theories - Mercantilism Absolute Advantage Comparative Advantage Heckscher-Ohlin Factor Price EqualizationWhat is the impact of trade policy on various stakeholders? - tariffs/custom duties, export subsidies, import quotas, voluntary export restraints (VER), domestic content provisions What is the rationale for managing trade? - socio-economics (attempts to mitigate real or perceived negative impacts on society or economy) & geo-political (attempts to achieve political objectives) What are the costs of regional economic integration? - loss of sovereignty loss of control over policy possible unemployment loss of trade with non-members What are the benefits of Regional Integration? - create a larger pool of consumers encourage economies of scale increase cooperation, peace & security enhance level of social welfare regional integration stages - free-trade area customs union common or single market economic & monetary unit economic geography - the study of principles that govern the efficient spatial allocation of economic resources and the resulting consequences aspects of economic geography - market size location openness to tradeWhat are the reasons why countries pursue regional integration? - promote trade and investment; economic gain; raise employment, skills and quality of life for citizens; promote peace & prosperity; address issues of mutual interests regional integration blocs - NAFTA MERCOSUR (Mercado Comon del Sur) ASEAN (Association of Southeast Asian Nations) EU (European Union) NAFTA - North American Free Trade Agreement Key Aspects of NAFTA - free trade union abolition of tariffs/quotas between members What are the 3 objectives of NAFTA? - expand trade through elimination of barriers protection of intellectual property rights creates institution to address potential possible issues **additional agreement with Mexico to protect labor rights & environmental quality ASEAN - Association of South East Asia Nations Name members of ASEAN. - Myanmar, Laos, Philippines, Cambodia Key Aspects of ASEAN. - custom union common external tariff and quota system Main concern of ASEAN -economic ascendancy of China Main objectives of ASEAN. - accelerate economic growth