AGB 302 UPDATED FINAL ANSWERS AND
QUESTIONS SET A+
✔✔quota rent - ✔✔extra profit producers make when supply is artificially limited by an
import quota
✔✔why is government intervention good? - ✔✔-protecting jobs
-protecting national security
-retaliation by keeping others in check
-sanctions
✔✔strategic trade policy - ✔✔first mover advantages
✔✔why was gatt created - ✔✔smoot hawley act fuuuucked
-liberalized trade
-economic growh
-believed in protectionism but also free trade
✔✔WTO - ✔✔encompassed GATT and intellectual property
-global police
-antidumping
-wants to decrease tariffs
✔✔flow of fdi - ✔✔the amount of FDI undertaken over a given time period
✔✔stock of fdi - ✔✔the total accumulated value of foreign-owned assets at a given time
✔✔has fdi increased or decreased - ✔✔increased
✔✔why has FDI grown so rapidly - ✔✔-circumventing trade barriers
-changes to democracies
-globalization
✔✔fdi targeted: - ✔✔developing countries and the US
, ✔✔internalization theory - ✔✔why firms prefer fdi to licencing
✔✔Why do firms shy away from licensing? - ✔✔-gives away valueable knowledge
-doesn't provide tight control
✔✔forms of FDI - ✔✔-A greenfield investment - the establishment of a wholly new
operation in a foreign country
-Acquisition or merging with an existing firm in the foreign country
✔✔when exporting profit decreases what happens to FDI - ✔✔increases as an alternate
to exporting
✔✔Multipoint Competition - ✔✔arises when two or more enterprises encounter each
other in different markets and imitate each other
✔✔location-specific advantages - ✔✔arise from using resource endowments or assets
that are tied to a particular location and that a firm combines with its assets (human and
natural resources) (Dunning)
✔✔silicon valley is an example of: - ✔✔location-specific advantages (tech business)
✔✔radical view - ✔✔-marxism
-imperialist domination
-home countries abuse host
✔✔free market view - ✔✔-adam smith and ricardo
-THEORY OF COMPETITIVE ADVANTAGE
-increased world efficiency
-lower cost
✔✔pragmatic nationalism - ✔✔-ups and downs to fdi
-profits go back to foreign country
-its ok if costs outweigh the benefits
✔✔host-country benefits of fdi (4) - ✔✔1. Resource Transfer Effects (ease of
manufacturing)
2. Employment Effects
3. Balance-of-Payments Effects (a desire to stay in a surplus of exports)
4. Effect on Competition and Economic Growth
✔✔host country costs of fdi (3) - ✔✔-adverse effects on competition
-adverse effects on the balance of payments
-national sovereignty and autonomy risks
QUESTIONS SET A+
✔✔quota rent - ✔✔extra profit producers make when supply is artificially limited by an
import quota
✔✔why is government intervention good? - ✔✔-protecting jobs
-protecting national security
-retaliation by keeping others in check
-sanctions
✔✔strategic trade policy - ✔✔first mover advantages
✔✔why was gatt created - ✔✔smoot hawley act fuuuucked
-liberalized trade
-economic growh
-believed in protectionism but also free trade
✔✔WTO - ✔✔encompassed GATT and intellectual property
-global police
-antidumping
-wants to decrease tariffs
✔✔flow of fdi - ✔✔the amount of FDI undertaken over a given time period
✔✔stock of fdi - ✔✔the total accumulated value of foreign-owned assets at a given time
✔✔has fdi increased or decreased - ✔✔increased
✔✔why has FDI grown so rapidly - ✔✔-circumventing trade barriers
-changes to democracies
-globalization
✔✔fdi targeted: - ✔✔developing countries and the US
, ✔✔internalization theory - ✔✔why firms prefer fdi to licencing
✔✔Why do firms shy away from licensing? - ✔✔-gives away valueable knowledge
-doesn't provide tight control
✔✔forms of FDI - ✔✔-A greenfield investment - the establishment of a wholly new
operation in a foreign country
-Acquisition or merging with an existing firm in the foreign country
✔✔when exporting profit decreases what happens to FDI - ✔✔increases as an alternate
to exporting
✔✔Multipoint Competition - ✔✔arises when two or more enterprises encounter each
other in different markets and imitate each other
✔✔location-specific advantages - ✔✔arise from using resource endowments or assets
that are tied to a particular location and that a firm combines with its assets (human and
natural resources) (Dunning)
✔✔silicon valley is an example of: - ✔✔location-specific advantages (tech business)
✔✔radical view - ✔✔-marxism
-imperialist domination
-home countries abuse host
✔✔free market view - ✔✔-adam smith and ricardo
-THEORY OF COMPETITIVE ADVANTAGE
-increased world efficiency
-lower cost
✔✔pragmatic nationalism - ✔✔-ups and downs to fdi
-profits go back to foreign country
-its ok if costs outweigh the benefits
✔✔host-country benefits of fdi (4) - ✔✔1. Resource Transfer Effects (ease of
manufacturing)
2. Employment Effects
3. Balance-of-Payments Effects (a desire to stay in a surplus of exports)
4. Effect on Competition and Economic Growth
✔✔host country costs of fdi (3) - ✔✔-adverse effects on competition
-adverse effects on the balance of payments
-national sovereignty and autonomy risks
