WGU C211 GLOBAL ECONOMICS STUDY
GUIDE COMPLETE QUESTIONS AND
VERIFIED ANSWERS FOR SUCCESS
●● New view of Globalization
Answer: A new force sweeping through the world in recent times that it
is a new phenomenon beginning in the late 20th century, driven by
recent technological innovations and a Western ideology focused on
exploiting and dominating the world through a Multinational enterprises.
●● Evolutionary view of globalization
Answer: A long run historical evolution since the down of human
history. Historians are debating whether globalization started 2,000 or
8,000 years ago. Earliest traces of globalization goes back to the
Assyrian, Phoenician, and Roman times.
●● Pendulum view of globalization
Answer: A pendulum that swings from one extreme to another from time
to time. Globalization is neither recent or one-directional. Risk
management and scenario planning is needed.
●● What is Foreign Direct Investment (FDI)?
Answer: Investment in, controlling and managing value-added activities
in other countries. In other words, investment made by a firm or
,individual in one country into business interest located in another
country. Most discussed foreign entrance is MNE.
●● MNE: Multinational Enterprise
Answer: Is a firm that engages in FDI when doing business abroad. FDI
sets apart MNEs and non-MNEs.
●● What different political views exists on FDI?
Answer: -in developed economies, backlash against inbound FDI from
certain countries is not unusual. Example, in the 1980s, Americans were
alarmed by the significant Japanese inroads into the United States.
-in some parts of the developing world, tension over foreign ownership
can heat up. There were numerous incidents of nationalization and
expropriation against MNE assets throughout the developing world.
●● What 4 benefits exist to a country receiving FDI?
Answer: 1. Capital inflow improve the host country balance of payment.
More technology, management, and more jobs in their countries.
2. Technology, especially more advanced technology from abroad, can
create technology spillovers that benefits domestic firms and industries.
Local rivals can learn and imitate such technology resulting in what's
called demonstration effect (contagion effect).
3. Advanced management know how may be highly valued. It's often
difficult for indigenous development of management to know how to
reach a world-class level in absence of FDI.
,4. FDI creates jobs, both directly and indirectly. Direct benefits arise
when MNEs employ individuals locally.
●● What costs exist to a country receiving FDI?
Answer: 1. Loss of sovereignty
2. Adverse effects on competition
3. capital outlfow
●● How do resources and capabilities influence the competitive
dynamics of a business?
Answer: Firm resources must create value when engaging rivals. The
ability to respond rapidly to challenges also adds value.
●● Competitive Dynamics
Answer: Actions and responses undertaken by competing firms.
●● What is resource similarity?
Answer: Extent to which a given competitor possesses strategic
endowment comparable in terms of both type and amount to those of the
local firm. In order words, extent to which firm's tangible/intangible
resources are comparable to competitors in type and amount.
●● How does resource similarity impact competitive dynamics?
, Answer: Firms with a high degree of resources similarity are likely to
have similar competitive actions. For example, Apple and IBM used to
have a lot of resource similarity in the 1990s that they fought a lot.
●● Classical theory of international trade.
Answer: 1. Mercantilism
2. Absolute advantage
3. Comparative advantage
●● Mercantilism
Answer: Theory that suggests that the wealth of the world is fixed and
that a nation that exports more and imports less will be richer. On the
other hand, a nation experiencing a trade deficit would see its gold and
silver flowing out and, consequently, would become poorer.
International trade is a zero-sum game.
●● Absolute advantage
Answer: Theory that suggests that under free trade, a nation gains by
specializing in economic activities in which it has an absolute advantage
with free trade market forces are determined with little to no government
intervention. The economic advantage one nation enjoys that is
absolutely superior to other nations. International trade is a win-win
game. There are net gains from trade.
●● Comparative advantage
GUIDE COMPLETE QUESTIONS AND
VERIFIED ANSWERS FOR SUCCESS
●● New view of Globalization
Answer: A new force sweeping through the world in recent times that it
is a new phenomenon beginning in the late 20th century, driven by
recent technological innovations and a Western ideology focused on
exploiting and dominating the world through a Multinational enterprises.
●● Evolutionary view of globalization
Answer: A long run historical evolution since the down of human
history. Historians are debating whether globalization started 2,000 or
8,000 years ago. Earliest traces of globalization goes back to the
Assyrian, Phoenician, and Roman times.
●● Pendulum view of globalization
Answer: A pendulum that swings from one extreme to another from time
to time. Globalization is neither recent or one-directional. Risk
management and scenario planning is needed.
●● What is Foreign Direct Investment (FDI)?
Answer: Investment in, controlling and managing value-added activities
in other countries. In other words, investment made by a firm or
,individual in one country into business interest located in another
country. Most discussed foreign entrance is MNE.
●● MNE: Multinational Enterprise
Answer: Is a firm that engages in FDI when doing business abroad. FDI
sets apart MNEs and non-MNEs.
●● What different political views exists on FDI?
Answer: -in developed economies, backlash against inbound FDI from
certain countries is not unusual. Example, in the 1980s, Americans were
alarmed by the significant Japanese inroads into the United States.
-in some parts of the developing world, tension over foreign ownership
can heat up. There were numerous incidents of nationalization and
expropriation against MNE assets throughout the developing world.
●● What 4 benefits exist to a country receiving FDI?
Answer: 1. Capital inflow improve the host country balance of payment.
More technology, management, and more jobs in their countries.
2. Technology, especially more advanced technology from abroad, can
create technology spillovers that benefits domestic firms and industries.
Local rivals can learn and imitate such technology resulting in what's
called demonstration effect (contagion effect).
3. Advanced management know how may be highly valued. It's often
difficult for indigenous development of management to know how to
reach a world-class level in absence of FDI.
,4. FDI creates jobs, both directly and indirectly. Direct benefits arise
when MNEs employ individuals locally.
●● What costs exist to a country receiving FDI?
Answer: 1. Loss of sovereignty
2. Adverse effects on competition
3. capital outlfow
●● How do resources and capabilities influence the competitive
dynamics of a business?
Answer: Firm resources must create value when engaging rivals. The
ability to respond rapidly to challenges also adds value.
●● Competitive Dynamics
Answer: Actions and responses undertaken by competing firms.
●● What is resource similarity?
Answer: Extent to which a given competitor possesses strategic
endowment comparable in terms of both type and amount to those of the
local firm. In order words, extent to which firm's tangible/intangible
resources are comparable to competitors in type and amount.
●● How does resource similarity impact competitive dynamics?
, Answer: Firms with a high degree of resources similarity are likely to
have similar competitive actions. For example, Apple and IBM used to
have a lot of resource similarity in the 1990s that they fought a lot.
●● Classical theory of international trade.
Answer: 1. Mercantilism
2. Absolute advantage
3. Comparative advantage
●● Mercantilism
Answer: Theory that suggests that the wealth of the world is fixed and
that a nation that exports more and imports less will be richer. On the
other hand, a nation experiencing a trade deficit would see its gold and
silver flowing out and, consequently, would become poorer.
International trade is a zero-sum game.
●● Absolute advantage
Answer: Theory that suggests that under free trade, a nation gains by
specializing in economic activities in which it has an absolute advantage
with free trade market forces are determined with little to no government
intervention. The economic advantage one nation enjoys that is
absolutely superior to other nations. International trade is a win-win
game. There are net gains from trade.
●● Comparative advantage
