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, relationships with key stakeholders such as governments. What are the tree pillars? - answer-Cognitive (Logic), Normative (Emotional), Regulatory (Written) Compare formal and informal institutions - answer-Formal- Laws, regulations and rules. Informal-based on values, rules are not formalized. What are the core differences between common, civil and theocratic law - answer-Common Law is shapes by precedents and traditions from previous judicial decisions (Most English Speaking countries) Civil Law uses comprehensive statues and codes as a primary meeans to form legal judgements (Most countries) Theocratic Law- based on religious teaching. What is a property right? - answer-The legal right to use an economic property (resource) and to derive income and benefits from it. This insures that the property can lead to an invidible parallel life along its material existence. What is an intellectual property right - answer-Associated with the ownership of intellectual property such as patents, copyrights and trademarks. (Intangible) How is marginal cost derived? - answer-Change in TC/Change in Q Total cost is made up of what two costs? - answer-Fixed Costs and Variable Cost How does a firm determine to shut down - answer-When Price is less than Average total