BUSN 3001 Final Exam Questions with
Complete Answers
Government Policy Instruments and FDI Host and Home Country: Restrictions
Host and Home Country: Promotion
Host Countries: Promotion Financial incentives
-Low or waived taxes
-Low-interest loans
Infrastructure improvements
-Better seaports, roads, and telecom networks
Host Countries: Restriction ownership restrictions ( typically apply to businesses in
cultural industries and companies vital to national security), performance demands ( influence
how companies operate in the host nation)
Home Countries: Promotion offer insurance, grant loans, offer tax breaks, and apply
political pressure
Home Countries: Restriction -Higher taxes on foreign income
-Sanctions that prohibit investing in certain nations
,regional economic integration (regionalism) process whereby countries in a geographic
region cooperate to reduce or eliminate barriers to the international flow of products, people, or
capital
-Regional Trading Blocs
Free Trade Area economic integration whereby countries seek to remove all barriers to
trade among themselves but where each country determines its own barriers against nonmembers
Customs Union economic integration whereby countries remove all barriers to trade
among themselves and set a common trade policy against nonmembers
Common Market economic integration whereby countries remove all barriers to trade and
to the movement of labor and capital among themselves and set a common trade policy against
nonmembers
Economic Union economic integration whereby countries remove barriers to trade and
the movement of labor and capital among members, set a common trade policy against
nonmembers, and coordinate their economic policies
Political Union economic and political integration whereby countries coordinate aspects
of their economic and political systems
The Case for Regional Integration Benefits Trade Creation (more choices/competition)
Demand increases
, Greater Consensus (easier than with larger groups)
Political Cooperation (more power; war less likely)
Employment Opportunities
Corporate Savings
Less/no tariffs
Regional facilities, rather than national facilities
Trade Creation increase in the level of trade between nations that results from regional
economic integration
Case Against Regional Integration trade diversion, shifts in employment, loss of national
sovereignty
Trade Diversion diversion of trade away from nations not belonging to a trading bloc and
toward member nations
Integration in Europe European Coal and Steel Community (1951)
European Economic Community (EEC) 1957 Treaty of Rome.
Complete Answers
Government Policy Instruments and FDI Host and Home Country: Restrictions
Host and Home Country: Promotion
Host Countries: Promotion Financial incentives
-Low or waived taxes
-Low-interest loans
Infrastructure improvements
-Better seaports, roads, and telecom networks
Host Countries: Restriction ownership restrictions ( typically apply to businesses in
cultural industries and companies vital to national security), performance demands ( influence
how companies operate in the host nation)
Home Countries: Promotion offer insurance, grant loans, offer tax breaks, and apply
political pressure
Home Countries: Restriction -Higher taxes on foreign income
-Sanctions that prohibit investing in certain nations
,regional economic integration (regionalism) process whereby countries in a geographic
region cooperate to reduce or eliminate barriers to the international flow of products, people, or
capital
-Regional Trading Blocs
Free Trade Area economic integration whereby countries seek to remove all barriers to
trade among themselves but where each country determines its own barriers against nonmembers
Customs Union economic integration whereby countries remove all barriers to trade
among themselves and set a common trade policy against nonmembers
Common Market economic integration whereby countries remove all barriers to trade and
to the movement of labor and capital among themselves and set a common trade policy against
nonmembers
Economic Union economic integration whereby countries remove barriers to trade and
the movement of labor and capital among members, set a common trade policy against
nonmembers, and coordinate their economic policies
Political Union economic and political integration whereby countries coordinate aspects
of their economic and political systems
The Case for Regional Integration Benefits Trade Creation (more choices/competition)
Demand increases
, Greater Consensus (easier than with larger groups)
Political Cooperation (more power; war less likely)
Employment Opportunities
Corporate Savings
Less/no tariffs
Regional facilities, rather than national facilities
Trade Creation increase in the level of trade between nations that results from regional
economic integration
Case Against Regional Integration trade diversion, shifts in employment, loss of national
sovereignty
Trade Diversion diversion of trade away from nations not belonging to a trading bloc and
toward member nations
Integration in Europe European Coal and Steel Community (1951)
European Economic Community (EEC) 1957 Treaty of Rome.
