C211 Global Economics Study Guide

What are the three views of globalization? - answer-New, Evolutionary and Pendulum What is foreign direct investment (FDI) - answer-FDI is direct investment in, control, and management of value-added activieies in other countries. FDI=Stocks/Bonds What different political vies exist on FDI? - answer-Radical, Free Market, and Pragramatic Nationalism What benefits exist to a country receiving FDI - answer-Capital inflow, Technology, management, job creation What costs exist to a country receiving FDI? - answer-Loss of sovereignty, adverse effects on competiotion, and capital outflow How to do resources influence competitive dynamics of a business - answer-Value, rarity,imitibility, and organization (VRIO) How to capabilities impact the competitive dynamics of a firm? - answer-Competitive dynamics are the actions and responses undertaken by competing firms. Counterattacks are driven by awareness, motivation and capability. What is resource similarity and how does this impact competitive dynamics - answer-Resource similarity is the extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm. How do firms create value when engaging rivals? - answer-Launch products in multiple markets, hold a dominant position in key markets, and secure patents on key products. What is the budget constraint - answer-The maximum amount of income the consumer can spend. What are the major theories of international trade that were advanced before the 20th century? - answer-Mecantilism, absolute advantage, comparative advantage How does the modern theory compare to the classical theory - answer-Modern theories account for the changes in pattern over time whereas classical theories are static. What are the modern theories - answer-Product life cycle,strategic trade, diamond What is mercantilism - answer-Classical trade theory that viewed international trade as a zero-sum game. (A nation becomes ricker by exporting more than it imports) What are the critical features of the product life cycle - answer-Production, Maturing age, Standardization Which theory game first? Mercantilism or Modern day protectionism - answer-Mercantilism What advantages exist with first mover - answer-Proprietary, technological leadership, pre-exemption of scarce resources, establishment of entry barriers for late entrants, avoidance of clash with dominant firms at home,