MHR 612- Chapter 11 Globalization
Exam Study Guide
Foreign Direct Investment - ANSWER -Cross-border flow of multinational corporation
investment; purchasing or establishing foreign subsidiaries and joint ventures
International Investment Portfolios - ANSWER -Cross-border flow of investment
securities; investing in foreign stocks and bonds (but no control over the foreign
enterprise)
Globalization: The Good - ANSWER -Economic growth and income through the more
efficient use of scarce resources and opportunities for increasing returns to scale
-lowers prices and increases choices through competition
-FDI boosts technology, infrastructure, and productivity, create new jobs
-FPI provides capital for entrepreneurs and financing for government debt
-Improve risk sharing across borders
-Improving property rights, reducing subsidies, and increasing wealth can lead to
practices that conserve the environment
Globalization: The Bad - ANSWER -Low-cost competition from countries that violate
labor rights causes DOMESTIC JOB LOSSES and erosion of income and working
conditions
-Foreign multinational companies EXPLOIT WORKERS AND THE ENVIRONMENT in poor
countries that are desperate for any investment and income
-Threaten domestic workers with plant closings unless concessions are made
-Volatile flows of foreign portfolio investment destabilize fragile developing country
banking system and economies
-With an exceptionally short-term focus, international financing transactions can be
extremely volatile and negatively affect economics, wages, and living standards
-Economic integration with concentrated economic power UNDERMINES democracy,
sovereignty, and INDIGENOUS CULTURES
-40% of the world's population has to live on less than $2.50 a day
Globalization: The Unequal - ANSWER -The richest 1% receive nearly 15% of the world
income
, -The world's largest corporations are bigger than the economies of many countries
-Developed countries have policies to attract skilled immigrants while limiting unskilled
immigrants
-More than 50 million primary school-age children do not attend school
-Child mortality rates in the least developed countries are 10 times higher than in
high-income developed countries
International trade: negative - ANSWER -SOCIAL DUMPING: occurs when a foreign
competitor is able to unfairly sell goods or services at a lower price because of lower
labor or environmental standards
Immigration- Good - ANSWER -Provides an avenue for people to escape persecution
and find a better life in a new country
-Unskilled and skilled immigrants can benefit the destination country if labor demand
exceeds supply (by taking jobs that no one else wants or is qualified for)
Immigration- Challenges for unions - ANSWER -Language barriers
-Lack of recourse under the law
-Fears of reprisal
-Cultural differences
World Trade Organization (WTO) - ANSWER -The dominant institution for reducing trade
barriers and pursuing free trade on a global scale
-Provides a forum for negotiating and enforcing global trade agreements
-Descended from the General Agreement on Tariffs and Trade (GATT)
-Promotes free trade through the REDUCTION OF TARIFFS
Non-tariff trade barriers include: - ANSWER -Quotas
-Domestic subsidies
-Discriminatory government procurement policies
-Regulations such as import licensing and product standards
Fair Trade - ANSWER -Incorporation of labor, environmental, public health, and other
standards into trade agreements
International Labor Organization (ILO) - ANSWER -Chief International authority on labor
standards
-A specialized agency of the United Nations focused on promoting social justice and
Exam Study Guide
Foreign Direct Investment - ANSWER -Cross-border flow of multinational corporation
investment; purchasing or establishing foreign subsidiaries and joint ventures
International Investment Portfolios - ANSWER -Cross-border flow of investment
securities; investing in foreign stocks and bonds (but no control over the foreign
enterprise)
Globalization: The Good - ANSWER -Economic growth and income through the more
efficient use of scarce resources and opportunities for increasing returns to scale
-lowers prices and increases choices through competition
-FDI boosts technology, infrastructure, and productivity, create new jobs
-FPI provides capital for entrepreneurs and financing for government debt
-Improve risk sharing across borders
-Improving property rights, reducing subsidies, and increasing wealth can lead to
practices that conserve the environment
Globalization: The Bad - ANSWER -Low-cost competition from countries that violate
labor rights causes DOMESTIC JOB LOSSES and erosion of income and working
conditions
-Foreign multinational companies EXPLOIT WORKERS AND THE ENVIRONMENT in poor
countries that are desperate for any investment and income
-Threaten domestic workers with plant closings unless concessions are made
-Volatile flows of foreign portfolio investment destabilize fragile developing country
banking system and economies
-With an exceptionally short-term focus, international financing transactions can be
extremely volatile and negatively affect economics, wages, and living standards
-Economic integration with concentrated economic power UNDERMINES democracy,
sovereignty, and INDIGENOUS CULTURES
-40% of the world's population has to live on less than $2.50 a day
Globalization: The Unequal - ANSWER -The richest 1% receive nearly 15% of the world
income
, -The world's largest corporations are bigger than the economies of many countries
-Developed countries have policies to attract skilled immigrants while limiting unskilled
immigrants
-More than 50 million primary school-age children do not attend school
-Child mortality rates in the least developed countries are 10 times higher than in
high-income developed countries
International trade: negative - ANSWER -SOCIAL DUMPING: occurs when a foreign
competitor is able to unfairly sell goods or services at a lower price because of lower
labor or environmental standards
Immigration- Good - ANSWER -Provides an avenue for people to escape persecution
and find a better life in a new country
-Unskilled and skilled immigrants can benefit the destination country if labor demand
exceeds supply (by taking jobs that no one else wants or is qualified for)
Immigration- Challenges for unions - ANSWER -Language barriers
-Lack of recourse under the law
-Fears of reprisal
-Cultural differences
World Trade Organization (WTO) - ANSWER -The dominant institution for reducing trade
barriers and pursuing free trade on a global scale
-Provides a forum for negotiating and enforcing global trade agreements
-Descended from the General Agreement on Tariffs and Trade (GATT)
-Promotes free trade through the REDUCTION OF TARIFFS
Non-tariff trade barriers include: - ANSWER -Quotas
-Domestic subsidies
-Discriminatory government procurement policies
-Regulations such as import licensing and product standards
Fair Trade - ANSWER -Incorporation of labor, environmental, public health, and other
standards into trade agreements
International Labor Organization (ILO) - ANSWER -Chief International authority on labor
standards
-A specialized agency of the United Nations focused on promoting social justice and
