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International Trade - Summary - ALL Questions + Answers
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Thomas More International Business & Trade International Trade Exam Questions Peter Wielockx
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International TradeQuestions & Answers
Rania El Ghalbzouri 1
IBT 3 2024-2025
,Chapter 1: Introduction to International Trade
1. What is International Business ? (Provide a definition)
International business involves any activity where the production or distribution of goods,
services, or resources crosses national borders. It reflects a globalized economy where
trade barriers are decreasing, and companies source or sell internationally.
2. What are key aspects of International Business?
Globalization:
➢ Globalization fosters interdependence between nations.
➢ Creates opportunities in markets (changing buyer preferences, reduced trade
barriers) and production (easier access to goods/services worldwide).
Broad Scope:
➢ Beyond physical goods: includes people, intellectual property (e.g., patents,
copyrights), and contracts (e.g., licensing, financial agreements).
➢ Covers both financial motives (profit) and non-financial motives (social responsibility,
political objectives).
Entities Involved:
➢ Ranges from large multinationals to small, single-person import/export firms.
3. What forms do International Businesses take and describe?
Importer: A business that sells products or services sourced from other countries.
Example: A retail company importing electronics from Asia to sell domestically.
Exporter: A business that sells products or services to foreign countries, sourcing them
from its home country.
Example: A wine producer shipping its products abroad.
Foreign Direct Investment (FDI): A business invests assets directly in another country’s
operations, such as buildings, equipment, or organizations.
Types of Foreign Operations:
➢ Replicas of Parent Company: Full value creation and support activities in the foreign
country.
➢ Specialized Activities: Focused on local market needs or specific operational tasks.
Location Outside the Home Market: Setting up operations in foreign countries to enhance
global efficiency or local responsiveness.
Examples:
➢ Google locates server farms near hydroelectric power sources for cheap energy.
➢ Factories close to raw material sources to reduce costs.
Rania El Ghalbzouri 2
IBT 3 2024-2025
,4. What are the four waves of globalization and describe?
➢ Globalization 1.0: Began in the 19th century with innovations like railways,
steamships, and the telegraph, enabling the first major wave of global trade and
economic integration.
➢ Globalization 2.0: Post-World War II era marked by international cooperation,
reduced protectionism, and policies boosting global trade, laying the foundation for
modern globalization.
➢ Globalization 3.0: Fuelled by technological advances and free trade, this phase saw
increased global connectivity, entrepreneurship, and collaboration across borders.
➢ Globalization 4.0: Defined by the Fourth Industrial Revolution, this phase focuses on
digital transformation, with technologies like AI, IoT, and blockchain reshaping global
trade and services.
5. What are the pros and cons of FDI?
Pros Cons
Diversifies investor portfolios Not suitable for strategically important
industries
Promotes stable long-term lending Investors may have less moral attachment
Provides Financing to developing Unethical access to local markets
countries
Provides technology to developing
countries
6. Name 5 advantages and 5 disadvantages of the globalization.
Advantages of Globalization:
1. Increased Market Access: Businesses can expand into new markets, increasing their
customer base and opportunities for growth.
2. Lower Costs of Production: Companies can outsource production to countries with
lower labor and manufacturing costs, resulting in cheaper goods.
3. Cultural Exchange: Globalization encourages cultural exchange, bringing diverse
ideas, food, and entertainment to different countries.
4. Improved Access to Resources: Companies can access a broader range of raw
materials, technology, and expertise, improving productivity and innovation.
5. Enhanced Economic Growth: By promoting trade and investment, globalization can
stimulate economic growth, create jobs, and improve standards of living.
Rania El Ghalbzouri 3
IBT 3 2024-2025
, Disadvantages of Globalization:
1. Job Losses: Companies might relocate production to countries with cheaper labor,
leading to job losses in the home country.
2. Widening Inequality: While some benefit from globalization, others—particularly in
lower-income areas—may experience increased inequality as wealth becomes
concentrated in certain sectors.
3. Cultural Homogenization: The spread of global brands and media can threaten local
cultures, traditions, and languages, reducing cultural diversity.
4. Environmental Degradation: Increased production, transportation, and resource
extraction can lead to environmental damage, including pollution and depletion of
natural resources.
5. Exploitation of Workers: In some countries, workers in industries involved in
globalization may face poor working conditions, low wages, and exploitation,
particularly in developing nations.
Chapter 2: International trade and FDI
1. What are different pollical systems discussed in class and describe?
There are more than 13 major types of government, each with their own variations, but
the most popular ones are:
➢ Anarchism: Advocates for minimal or no government, emphasizing individual control
over political activities.
➢ Authoritarianism: Centralizes power in a leader or group without democratic
accountability, relying on fear and corruption rather than ideology.
➢ Democracy: Power derives from the people, through direct voting (direct democracy)
or elected representatives (representative democracy). Variations exist, with differing
levels of citizen freedoms and representation. → the most common form of
government today.
➢ Pluralism: Most modern systems, balancing public and private interests, though
leaning toward either anarchism or totalitarianism depending on culture and history.
➢ Totalitarianism: Argues for complete government control over all aspects of life,
guided by a specific ideology like communism.
Rania El Ghalbzouri 4
IBT 3 2024-2025
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