International Business. Globalization - the shift toward a more integrated and interdependent world economy

Size: px
Start display at page:

Download "International Business. Globalization - the shift toward a more integrated and interdependent world economy"

Transcription

1 International Business Globalization - the shift toward a more integrated and interdependent world economy International Monetary Fund: maintains order in international monetary system; lender of last resort World Bank: promotes economic development via low interest rate loans Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country Greenfield investments: the establishment of a wholly new operation in a foreign country (in developing countries = 2/3 of FDI) Licensing: granting a foreign entity the right to produce and sell the firm s product in return for a royalty fee on every unit the foreign entity sells How has FDI changed over time FDI inflows multinational enterprise is any business that has productive activities in two or more countries Gross National Income (GNI): measures the total annual income received by residents of a nation, does not consider differences in cost of living Human Development Index (HDI) to measure the quality of human life in different nations The risks of doing business in a country are a function of Political risk - the likelihood that political forces will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise Economic risk - the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise

2 Legal risk - the likelihood that a trading partner will opportunistically break a contract or expropriate property rights Country attractiveness Mercantilism: it is in a country s best interest to maintain a trade surplus (EX > IM); trade is a zero-sum game Adam Smith argued that a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it Without trade Ghana would produce 10 tons of cocoa and 5 tons of rice South Korea would produce 10 tons of rice and 2.5 tons of cocoa With specialization and trade Ghana would produce 20 tons of cocoa South Korea would produce 20 tons of rice Ghana could trade 6 tons of cocoa to South Korea for 6 tons of rice Comparative advantage: countries should specialize in the production of those goods they produce most efficiently and buy goods that they produce less efficiently from other countries Heckscher-Ohlin Theory: comparative advantage arises from differences in national factor endowments; export goods that make intensive use of locally abundant resources, import goods that make intensive use of locally scarce factors Leontief Paradox: US exports were less capital intensive than US imports, which is at variance with the Heckscher-Ohlin Theory. product life-cycle theory - as products mature both the location of sales and the optimal production location will change affecting the flow and direction of trade globalization and integration of the world economy has made this theory less valid today

3 New trade theory suggests that the ability of firms to gain economies of scale (unit cost reductions associated with a large scale of output) can have important implications for international trade first-mover advantages - the economic and strategic advantages that accrue to early entrants into an industry Porter s Diamond of Competitive Advantage Source: Reprinted by permission of Harvard Business Review. Exhibit from The Competitive Advantage of Nations, by Michael E. Porter, March-April 1990, p. 77. Copyright 1990 by the Harvard Business School Publishing Corporation; all rights reserved. Free Trade occurs when governments do not attempt to restrict what citizens can buy from another country or what they can sell to another country. Governments intervene in markets: Tariffs Subsidies Import Quotas Voluntary Export Restraints Local Content Requirements demand some fraction be produced domestically Administrative Policies bureaucratic rules Antidumping Policies Infant industry argument: an industry should be protected until it can develop and be viable and competitive internationally Levels of economic integration

4 law of one price states that in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency Strategic Positioning on the efficiency frontier Pressures for Cost Reductions and Local Responsiveness Environmental Analysis (PEST-CEL) Political Economic Social Technological Culture Ethical Legal

5 The link between strategy and architecture First-mover advantages include the ability to preempt rivals by establishing a strong brand name the ability to build up sales volume and ride down the experience curve ahead of rivals and gain a cost advantage over later entrants the ability to create switching costs that tie customers into products or services making it difficult for later entrants to win business How firms can enter foreign markets: Exporting Turnkey projects Licensing: licensor grants the rights to intangible property to the licensee for a specified time period, and in return, receives a royalty fee from the licensee Franchising: specialized form of licensing in which the franchisor not only sells intangible property to the franchisee, but also insists that the franchisee agree to abide by strict rules as to how it does Joint venture: jointly owned by two or more independent firms Wholly-owned subsidiary: firm owns 100% of stock Greenfield strategy: build a subsidiary from the ground up a greenfield venture may be better when the firm needs to transfer organizationally embedded competencies, skills, routines, and culture Acquisition strategy: acquire an existing company May be better when there are well-established competitors Strategic Alliance: cooperative agreements between potential or actual competitors Attribution: All information obtained from course notes and slides, as adapted from Hill, C.W. (2014). International Business: Competing in the Global Marketplace, 10 th Edition. McGraw-Hill/Irwin.

INTERNATIONAL BUSINESS ENVIRONMENT

INTERNATIONAL BUSINESS ENVIRONMENT INTERNATIONAL BUSINESS ENVIRONMENT SESSION 2 International Exchange Theories CAUTION! SLIDES ARE NOT ENOUGH TO FULLY GRASP THE CLASS CONTENTS YOU ARE ADVISED TO: Take notes and participate during the class

More information

International Business

International Business International Business 10e By Charles W.L. Hill Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter

More information

International Business Global Edition

International Business Global Edition International Business Global Edition By Charles W.L. Hill (adapted for LIUC2014 by R.Helg) Chapter 6 International Trade Theory Why Is Free Trade Beneficial? Free trade - a situation where a government

More information

International Business. Chapter Fourteen Direct Investment and Collaborative Strategies

International Business. Chapter Fourteen Direct Investment and Collaborative Strategies International Business Chapter Fourteen Direct Investment and Collaborative Strategies 2 Alternative Types of Foreign Operations Foreign-owned operations (FDI) may be established either as start-ups (greenfield

More information

International Business: Common Body of Knowledge Review. Review Outline

International Business: Common Body of Knowledge Review. Review Outline International Business: Common Body of Knowledge Review Review Outline 1. Globalization 2. Differences in Culture and Impact on Business 3. International Trade Theory and the Political Economy of International

More information

International Business 8e

International Business 8e International Business 8e By Charles W.L. Hill (adapted for LIUC 2010 by R.Helg) Chapter 7 Foreign Direct Investment McGraw-Hill/Irwin Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

More information

tariff global business nontariff barriers multinational corporation quota direct foreign investment trade barriers voluntary export restraints

tariff global business nontariff barriers multinational corporation quota direct foreign investment trade barriers voluntary export restraints global business tariff multinational corporation nontariff barriers direct foreign investment quota trade barriers voluntary export restraints protectionism government import standard A direct tax on imported

More information

International Trade Glossary of terms

International Trade Glossary of terms International Trade Glossary of terms Luc Hens Vrije Universiteit Brussel These are the key concepts from Krugman et al. (2015), chapter by chapter. In question 1 of the exam, I ll ask you to briefly define

More information

International Business 7e

International Business 7e International Business 7e by Charles W.L. Hill adapted by R.Helg for LIUC09 McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Foreign Direct Investment

More information

The World Economy from a Distance

The World Economy from a Distance The World Economy from a Distance It would be difficult for any country today to completely isolate itself. Even tribal populations may find the trials of isolation a challenge. Most features of any economy

More information

Contents. List of Figures / xi. Acknowledgements / xxi. 1. International Trade: Theory and Application / 1

Contents. List of Figures / xi. Acknowledgements / xxi. 1. International Trade: Theory and Application / 1 List of Figures / xi List of Tables / xvii Acknowledgements / xxi 1. International Trade: Theory and Application / 1 1.0 An Overview of the Global Economy / 1 1.1 World Trade by Region / 3 1.2 What Is

More information

GLOSSARY OF TERMS: INTERNATIONAL BUSINESS

GLOSSARY OF TERMS: INTERNATIONAL BUSINESS GLOSSARY OF TERMS: INTERNATIONAL BUSINESS Absolute Advantage A country has an absolute advantage when it is more efficient than any other country at producing a product. Balance of Payments Accounts National

More information

International Economics Econ 4401 Midterm Exam Key

International Economics Econ 4401 Midterm Exam Key International Economics Econ 4401 Midterm Exam Key Tim Uy Name: Student Number: 1 Short Answer Questions (30 Points) 1. [5] Give five reasons (or five theories that explain) why countries trade. Acceptable

More information

Chapter 4. global analysis. Section 4.1 International Trade. Section 4.2 The Global Marketplace

Chapter 4. global analysis. Section 4.1 International Trade. Section 4.2 The Global Marketplace Chapter 4 global analysis Section 4.1 Section 4.2 Section 4.1 CONNECT What international products do you consume? Section 4.1 Describe the benefits of international trade. Discuss the balance of trade.

More information

Econ 355: International Economics. Econ 355: International Economics. Econ 355: International Economics

Econ 355: International Economics. Econ 355: International Economics. Econ 355: International Economics Nisha Malhotra Office: Buchanan Tower 1005, Office Hours: Wednesday 330-500 Web Address: http://wwweconubcca/nmalhotra/homepagehtm Teaching Assistant Kang Shi, Office: ANSO 153, Email address: kangshi@interchangeubcca

More information

Chapter 15. Entry Strategy and Strategic Alliances

Chapter 15. Entry Strategy and Strategic Alliances Chapter 15 Entry Strategy and Strategic Alliances Decisions Decisions... 1.Which market(s) to enter 2.When to enter and on what scale 3.Entry mode to use (1) Which Market(s) to Enter? Depends on long-term

More information

Chapter 3 International business: theory and practice

Chapter 3 International business: theory and practice Slide 3.1 Chapter 3 International business: theory and practice Slide 3.2 Gains from trade This is often said to occur where a country can be shown to be better off by specialisation and trade than by

More information

The Final Exam is Tuesday May 4 th at 1:00 in the normal Todd classroom

The Final Exam is Tuesday May 4 th at 1:00 in the normal Todd classroom The Final Exam is Tuesday May 4 th at 1:00 in the normal Todd classroom The final exam is comprehensive. The best way to prepare is to review tests 1 and 2, the reviews for Test 1 and Test 2, and the Aplia

More information

INTERNATIONAL BUSINESS STRATEGY AND THE MULTINATIONAL COMPANY

INTERNATIONAL BUSINESS STRATEGY AND THE MULTINATIONAL COMPANY INTERNATIONAL BUSINESS STRATEGY AND THE MULTINATIONAL COMPANY JOHN B. CULLEN Professor in the Department of Management, Washington State University AND K. PRAVEEN PARBOTEEAH Associate Professor in the

More information

brief FOUR Global Money System 280 Ten The Foreign Exchange Market 281 Chapter Eleven The International Monetary System 307

brief FOUR Global Money System 280 Ten The Foreign Exchange Market 281 Chapter Eleven The International Monetary System 307 brief PREFACE xiii ONE Introduction and Overview 2 Chapter One Globalization 3 TWO Country Differences 36 Two National Differences in Political Economy 37 Three Political Economy and Economic Development

More information

Contents. 1 Introduction. The Globalization of the World Economy 1 1.1A We Live in a Global Economy 1

Contents. 1 Introduction. The Globalization of the World Economy 1 1.1A We Live in a Global Economy 1 1 Introduction The Globalization of the World Economy 1 1.1A We Live in a Global Economy 1 The Globalization Challenge 3 The Dell PCs, iphones, and ipads Sold in the United States Are Anything but American!

More information

International Business Global Edition

International Business Global Edition International Business Global Edition By Charles W.L. Hill (adapted for LIUC2012 by R.Helg) Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Foreign Direct Investment Introduction

More information

K e y T e r m Ricardian Model

K e y T e r m Ricardian Model Ricardian Model 1. A country has comparative advantage in producing a good when the country s opportunity cost of producing the good is lower than the opportunity cost of producing the good in another

More information

International Economics Econ 4401 Midterm Exam

International Economics Econ 4401 Midterm Exam International Economics Econ 4401 Midterm Exam Tim Uy Name: Student Number: 1 Short Answer Questions (30 Points) 1. [5] Give five reasons (or five theories that explain) why countries trade. 1 2. [6] Name

More information

International Business

International Business International Business Global Edition By Charles W.L. Hill (adapted for ISPI2016 by R.Helg) Chapter 6 International Trade Theory Why Is Free Trade Beneficial? Free trade - a situation where a government

More information

Global Business Today

Global Business Today sixth edition r Global Business Today Charles W. L. Hill University of Washington McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur

More information

3. Organizational Participants

3. Organizational Participants BUSA 3000 3. Organizational Participants Asst. Prof. Dr. Ilke Kardes Spring 2016 1 Agenda Organizational Participants in IB Foreign Market Entry Strategies Exporting Contractual Arrangements Collaborative

More information

ECO320 International Economics FACULTY OF COMMERCE. Study Guide

ECO320 International Economics FACULTY OF COMMERCE. Study Guide ECO320 International Economics FACULTY OF COMMERCE Study Guide International Economics ECO320 Study Guide Faculty of Commerce Written and compiled by Kishor Sharma Produced by Learning Materials Centre,

More information

FINAL VERSION A Friday, March 24, 2006 Multiple choice - each worth 5 points

FINAL VERSION A Friday, March 24, 2006 Multiple choice - each worth 5 points ECN 481/581, Winter 2006 NAME: Prof. Bruce Blonigen ID#: FINAL VERSION A Friday, March 24, 2006 Multiple choice - each worth 5 points 1) Which of the following statements about a safeguard trade action

More information

CHAPTER 3: INTERNATIONAL TRADE & INVESTMENT THEORY

CHAPTER 3: INTERNATIONAL TRADE & INVESTMENT THEORY CHAPTER 3: INTERNATIONAL TRADE & INVESTMENT THEORY JANUARY 2011 INTERNATIONAL TRADE & INVESTMENT THEORY CLASSICAL COUNTRY- BASED TRADE THEORIES MODERN FIRM- BASED TRADE THEORY INTERNATIONA L INVESTMENT

More information

Trade- Practice and Theory

Trade- Practice and Theory Trade- Practice and Theory Show Trade relationships Despite Theory and Ideologies that are suspicious of trade. Something s going on, and perhaps surprisingly most trade is between wealthy nations. European

More information

International Business Global Edition

International Business Global Edition International Business Global Edition By Charles W.L. Hill (adapted for LIUC2016 by R.Helg) Chapter 6 International Trade Theory Why Is Free Trade Beneficial? Free trade - a situation where a government

More information

Lec 1: Introduction. Copyright 2000, South-Western College Publishing

Lec 1: Introduction. Copyright 2000, South-Western College Publishing Lec 1: Introduction Copyright 2, South-Western College Publishing Subject Outline Trade Theory Finance International Economics Trade Policy Heckscher-Ohlin Stolper-Samuelson Comparative Advantage Factor

More information

Near East University. Rana Serdaroglu Source:Malhotra and Birks, et al. Chp 6

Near East University. Rana Serdaroglu Source:Malhotra and Birks, et al. Chp 6 Near East University INTERNATIONAL MARKETING MARK 402 402 Licensing, Strategic Alliances, FDI SESSION 6 Rana Serdaroglu Source:Malhotra and Birks, et al. Chp 6 Three modes of entry Home country Host Country

More information

1. A Japanese car manufacturer acquires an Italian producer of car tires. This is an

1. A Japanese car manufacturer acquires an Italian producer of car tires. This is an Chapter 08 Foreign Direct Investment True / False Questions 1. A Japanese car manufacturer acquires an Italian producer of car tires. This is an example of a greenfield investment. True False 2. The amount

More information

Module 02 International Trade and Investment

Module 02 International Trade and Investment Module 02 International Trade and Investment True / False Questions 1. Record levels of American outward foreign direct investment from 2010 to 2013, totaling more than $1.4 trillion, caused U.S. exports

More information

Economics 340 International Economics First Midterm Exam. Form (KEY) 0. February 20, 2017

Economics 340 International Economics First Midterm Exam. Form (KEY) 0. February 20, 2017 Page 1 of 14 NAME: Student ID No.: Economics 340 International Economics Exam Form (KEY) 0 February 20, 2017 INSTRUCTIONS: READ CAREFULLY!!! 1. Please do not open the exam until you are told to do so.

More information

International Economics

International Economics International Economics Theories of international trade Tariff analysis Balance of Payments Lecturer Zoltán Bartha: zolib@hu.inter.net Andrea Gubik: getgubik@uni-miskolc.hu Main building (A4), 4th floor,

More information

Prepared by Iordanis Petsas To Accompany. by Paul R. Krugman and Maurice Obstfeld

Prepared by Iordanis Petsas To Accompany. by Paul R. Krugman and Maurice Obstfeld Chapter 4 Resources and Trade: The Heckscher-Ohlin Model Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Chapter

More information

1. Record levels of American outward foreign direct investment from 2000 to 2009,

1. Record levels of American outward foreign direct investment from 2000 to 2009, Chapter 02 International Trade and Foreign Direct Investment True / False Questions 1. Record levels of American outward foreign direct investment from 2000 to 2009, totaling more than $2 trillion, caused

More information

Multiple-Choice Questions for International Economics

Multiple-Choice Questions for International Economics Multiple-Choice Questions for International Economics by Dr. Bob Carbaugh Department of Economics Central Washington University Chapter 1: The International Economy and Globalization A primary reason why

More information

Economics 0500 INTRODUCTION TO INTERNATIONAL TRADE

Economics 0500 INTRODUCTION TO INTERNATIONAL TRADE Economics 0500 INTRODUCTION TO INTERNATIONAL TRADE Instructor: Professor Steven Husted Office: 4508 W.W. Posvar Hall Office Hours: To be announced Phone: 412-648-1757 E-Mail: husted1@pitt.edu TEXT: th

More information

Essential Standard1.00. Understand the role of business in the global economy.

Essential Standard1.00. Understand the role of business in the global economy. Essential Standard1.00 Understand the role of business in the global economy. 1 Objective 1.03 Understand business in the global marketplace. 2 Topics Factors and regulations companies have to consider

More information

Chapter 8. Preview. Instruments of trade policy. The Instruments of Trade Policy

Chapter 8. Preview. Instruments of trade policy. The Instruments of Trade Policy Chapter 8 The Instruments of Trade Policy Slides prepared by Thomas Bishop Preview Partial equilibrium analysis of tariffs: supply, demand and trade in a single industry Costs and benefits of tariffs Export

More information

Assignment 1. Multiple-Choice Questions. To answer each question correctly, you have to choose the best answer from the given four choices.

Assignment 1. Multiple-Choice Questions. To answer each question correctly, you have to choose the best answer from the given four choices. ECON 3473 Economics of Free Trade Areas Instructor: Sharif F. Khan Department of Economics Atkinson College York University Winter 2007 Assignment 1 Part A Multiple-Choice Questions To answer each question

More information

Chapter 19. International Trade and Interdependence. Copyright 2011 Pearson Addison-Wesley. All rights reserved.

Chapter 19. International Trade and Interdependence. Copyright 2011 Pearson Addison-Wesley. All rights reserved. Chapter 19 International Trade and Interdependence Basic principle of Comparative Advantage A country should produce and specialize in those goods which it can produce for a lower opportunity cost than

More information

INTERNATIONAL TRADE AND TRADE POLICY Microeconomics in Context (Goodwin, et al.), 4 th Edition

INTERNATIONAL TRADE AND TRADE POLICY Microeconomics in Context (Goodwin, et al.), 4 th Edition Chapter 6 INTERNATIONAL TRADE AND TRADE POLICY Microeconomics in Context (Goodwin, et al.), 4 th Edition Chapter Overview This chapter presents different perspectives on the important subject of international

More information

Introduction to Economics. MACROECONOMICS Chapter 6 International Economics

Introduction to Economics. MACROECONOMICS Chapter 6 International Economics Introduction to Economics MACROECONOMICS Chapter 6 International Economics contents 6.1 6.2 6.3 6.4 6.5 6.6 Theory of Comparative Advantage Gains from International Trade Trade Barriers Balance of Payments

More information

3. Trade and Development

3. Trade and Development Trade and Development Table of Contents a) Absolute cost advantage (Adam Smith) b) Comparative cost advantage (David Ricardo) c) Different factor endowments (Heckscher Ohlin) d) Distribution of gains from

More information

CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE

CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE CHAPTER OVERVIEW This chapter introduces students to the foundations of modern trade theory which seeks to answer three questions: (1)

More information

CHAPTER 17 International Trade

CHAPTER 17 International Trade Part Four: Microeconomics of Government and International Economics CHAPTER 17 International Trade 2010 McGraw-Hill Ryerson Ltd. Slides prepared by Bruno Fullone, George Brown College 1 In this chapter

More information

Critically differentiate between Charismatic, Transaction and transformational leadership

Critically differentiate between Charismatic, Transaction and transformational leadership Critically differentiate between Charismatic, Transaction and transformational leadership Charismatic Leaders are: v Dominant and self- confident v Convinced of their moral righteousness of their belief

More information

GLOBAL MARKET ENTRY MODES

GLOBAL MARKET ENTRY MODES GLOBAL MARKET ENTRY MODES INTERNATIONAL MARKETING WONKWANG UNIVERSITY Professor In Woo Jun / Bcom, MBA, Ph.D. 2015 1 CONTENTS I. GLOBAL MARKET ENTRY MODES 1. Modes of Global Market Entry II. EXPORTING

More information

2. Specific tariffs are levied as a proportion of the value of the imported good.

2. Specific tariffs are levied as a proportion of the value of the imported good. Chapter 07 The Political Economy of International Trade True / False Questions 1. Tariffs are unambiguously pro-consumer and anti-producer. True False 2. Specific tariffs are levied as a proportion of

More information

WJEC (Wales) Economics A-level Trade Development

WJEC (Wales) Economics A-level Trade Development WJEC (Wales) Economics A-level Trade Development Topic 1: Global Economics 1.1 International trade Notes International trade This is the exchange of goods and services across international borders. The

More information

Chapter 16 International Trade and Globalization

Chapter 16 International Trade and Globalization Chapter 16 International Trade and Globalization Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. David Ricardo demonstrated that (a) weak

More information

Trade Theories. Manajemen International Bisnis Semester Genap 2016 Universitas Pembangunan Jaya

Trade Theories. Manajemen International Bisnis Semester Genap 2016 Universitas Pembangunan Jaya Trade Theories Manajemen International Bisnis Semester Genap 2016 Universitas Pembangunan Jaya Introduction Exchange programs allow a university to trade without imposing significant risks and to avoid

More information

Steven Husted and Michael Melvin, International Economics, 9 ed. Addison-Wesley Publishers, 2013 (cited below as "HM"). 1

Steven Husted and Michael Melvin, International Economics, 9 ed. Addison-Wesley Publishers, 2013 (cited below as HM). 1 Fall 2012 Economics 0500 INTRODUCTION TO INTERNATIONAL TRADE Instructor: Professor Steven Husted Office: 4508 W.W. Posvar Hall Office Hours: To be announced Phone: 412-648-1757 E-Mail: husted1@pitt.edu

More information

160A: International Microeconomics Midterm 1: Professor Swenson October 17, Points VERSION A

160A: International Microeconomics Midterm 1: Professor Swenson October 17, Points VERSION A Name: SS#: 160A: International Microeconomics Midterm 1: Professor Swenson October 17, 2002 -- 140 Points VERSION A Multiple Choice: The first 20 questions are multiple choice. Each is worth 5 points.

More information

WHAT S AHEAD 17.1 The Nature of International Trade 17.2 U.S. Economy and World Trade 17.3 Government and the Economy 17.4 It s a Global Economy

WHAT S AHEAD 17.1 The Nature of International Trade 17.2 U.S. Economy and World Trade 17.3 Government and the Economy 17.4 It s a Global Economy WHAT S AHEAD 17.1 The Nature of International Trade 17.2 U.S. Economy and World Trade 17.3 Government and the Economy 17.4 It s a Global Economy LESSON 17.1 The Nature of International Trade GOALS Discuss

More information

Running Head: INTERNATIONAL TRADE PROBLEM 2 1

Running Head: INTERNATIONAL TRADE PROBLEM 2 1 Running Head: INTERNATIONAL TRADE PROBLEM 2 1 International Trade Student s Name University INTERNATIONAL TRADE PROBLEM 2 2 1. The Heckscher-Ohlin Theory of Trade: The H-O theory of trade states that,

More information

COMMERCE BUSINESS- II. PAPER No.11: INTERNATIONAL BUSINESS MODULE No.3 : MODES OF ENTRY IN INTERNATIONAL

COMMERCE BUSINESS- II. PAPER No.11: INTERNATIONAL BUSINESS MODULE No.3 : MODES OF ENTRY IN INTERNATIONAL Paper No and Title Module No and Title Module Tag 11: INTERNATIONAL BUSINESS 3: MODES OF ENTRY IN INTERNATIONAL COM_P11_M3 TABLE OF CONTENTS 1. Learning outcomes 2. Basic decision regarding entry of a

More information

Economics 340 International Economics First Midterm Exam. Form (KEY) 0. February 20, 2017

Economics 340 International Economics First Midterm Exam. Form (KEY) 0. February 20, 2017 Page 1 of 14 (16) NAME: Student ID No.: Economics 340 International Economics First Midterm Exam Form (KEY) 0 February 20, 2017 INSTRUCTIONS: READ CAREFULLY!!! 1. Please do not open the exam until you

More information

What is international economics about? International trade topics

What is international economics about? International trade topics Chapter 1 Introduction Preview What is international economics about? International trade topics Gains from trade, explaining patterns of trade, effects of government policies on trade International finance

More information

对外经济贸易大学 学年第一学期 国际企业管理 期末考试试卷(A 卷 )

对外经济贸易大学 学年第一学期 国际企业管理 期末考试试卷(A 卷 ) 对外经济贸易大学 2005 2006 学年第一学期(A 卷 ) 课程代码及课序号 :MGT301-0 学号 : 姓名 : 成绩 : 班级 : 课序号 : 任课教师 : 题号一二三四五六七合计 分值 一 True / False Questions (10 ) 得分 1. International trade occurs when a firm invests resources in business

More information

CASE FAIR OSTER PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N. PEARSON 2014 Pearson Education, Inc.

CASE FAIR OSTER PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N. PEARSON 2014 Pearson Education, Inc. PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER PEARSON Prepared by: Fernando Quijano w/shelly 1 of Tefft 31 2 of 31 PART IV THE WORLD ECONOMY International Trade, Comparative

More information

Pre-Classical Theory of International Trade. Adam Smith s Theory of Absolute Cost Difference. David Ricardo s Theory of Comparative Cost Advantage.

Pre-Classical Theory of International Trade. Adam Smith s Theory of Absolute Cost Difference. David Ricardo s Theory of Comparative Cost Advantage. Learning Objectives International Economics Pre-Classical Theory of International Trade. Adam Smith s Theory of Absolute Cost Difference. David Ricardo s Theory of Comparative Cost Advantage. JS Mill s

More information

University of Karachi

University of Karachi International Economics INTERNATOINAL ECONOMICS (PAPER - II) M.A (FINAL) EXTERNAL ANNUAL EXAMINATION 1997 University of Karachi Time: 3 Hours Maximum Marks: 100 1) Attempt any five questions. 2) All questions

More information

EMBA Chapters 7&8 FDI Global Trading Blocks Competitiveness

EMBA Chapters 7&8 FDI Global Trading Blocks Competitiveness EMBA 716 2008 Chapters 7&8 FDI Global Trading Blocks Competitiveness Outline What is FDI? Government policy and FDI FDI inflow and outflow Capital inflow to US Regional economic integration (Global Trading

More information

Heckscher-Ohlin Theory

Heckscher-Ohlin Theory Heckscher-Ohlin Theory International Trade Prof. Harris Dellas Lecture Slides March 5, 2017 Prof. Harris Dellas (Uni Bern) Heckscher-Ohlin Theory March 5, 2017 Slide 1 Outline 1 Overview 2 Important propositions

More information

International Trade. Comparative Advantage and Gains from Trade: Tom and Hank. The Importance of International Trade

International Trade. Comparative Advantage and Gains from Trade: Tom and Hank. The Importance of International Trade International Trade The Importance of International Trade Lecture 6 outline Announcements International Trade Comparative advantage and trade. Sources of comparative advantage. Winners and losers from

More information

Chapter 20 International Trade, Comparative Advantage, and Protectionism. Kazu Matsuda IBEC 203 Macroeconomics

Chapter 20 International Trade, Comparative Advantage, and Protectionism. Kazu Matsuda IBEC 203 Macroeconomics Chapter 20 International Trade, Comparative Advantage, and Protectionism Kazu Matsuda IBEC 203 Macroeconomics INTERNATIONAL TRADE, COMPARATIVE ADVANTAGE, AND PROTECTIONISM The internationalization or globalization

More information

Université Paris I Panthéon-Sorbonne Cours de Commerce International L3 Exercise booklet

Université Paris I Panthéon-Sorbonne Cours de Commerce International L3 Exercise booklet Université Paris I Panthéon-Sorbonne Cours de Commerce International L3 Exercise booklet Course by Lionel Fontagné and Maria Bas Academic year 2017-2018 1 Differences Exercise 1.1 1. According to the traditional

More information

International Trade. Heckscher-Ohlin Model and Political Economy of Trade

International Trade. Heckscher-Ohlin Model and Political Economy of Trade International Trade Heckscher-Ohlin Model and Political Economy of Trade International Economic Policy Finance and Development (LM-81), a.a. 2016-2017 Prof. Emanuele Ragusi Presentation taken from Reinert,

More information

CASE FAIR OSTER. International Trade, Comparative Advantage, and Protectionism. Trade Surpluses and Deficits

CASE FAIR OSTER. International Trade, Comparative Advantage, and Protectionism. Trade Surpluses and Deficits PEARSON PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER Prepared by: Fernando Quijano w/shelly Tefft 2of 49 PART IV THE WORLD ECONOMY International Trade, Comparative Advantage,

More information

CHAPTER 16 International Trade

CHAPTER 16 International Trade PART 6: INTERNATIONAL ECONOMICS CHAPTER 16 International Trade Slides prepared by Bruno Fullone, George Brown College Copyright 2010 McGraw-Hill Ryerson Limited. 1 In This Chapter You Will Learn Learning

More information

GLOBAL BUSINESS ENVIRONMENT MNI 301-J. Aregbeshola R Adewale

GLOBAL BUSINESS ENVIRONMENT MNI 301-J. Aregbeshola R Adewale GLOBAL BUSINESS ENVIRONMENT MNI 301-J Aregbeshola R Adewale aregbra@unisa.ac.za 012 429 8505 1 Introduction Purpose of group discussions Your study material - Tutorial letters 501 and 502 - the new edition

More information

The WTO: Economic Underpinnings

The WTO: Economic Underpinnings W T O l e a r n i n g m o d u l e s The WTO: Economic Underpinnings Roberta Piermartini Economic Research and Statistics Division WTO (Version 1 st March 2007) Copyright WTO 2005-2006 1 List of slides

More information

Doing Business in Global Markets

Doing Business in Global Markets Chapter 03 Doing Business in Global Markets McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Three LEARNING GOALS 1. Discuss the importance of the global

More information

Название теста: Международная торговля(international trade) Предназначено для студентов специальности: Международные отношения, (3 курс 4 го), очное

Название теста: Международная торговля(international trade) Предназначено для студентов специальности: Международные отношения, (3 курс 4 го), очное Название теста: Международная торговля(international trade) Предназначено для студентов специальности: Международные отношения, (3 курс 4 го), очное Текст вопроса 1 Which trade theory holds that nations

More information

International Economic Law

International Economic Law International Economic Law Prof. Christine Kaufmann Spring Term Aims of the course Gaining insights into various issues of International Economic Law Understand the interactions between different fields

More information

NEW YORK UNIVERSITY Stern School of Business - Undergraduate Division. C Richard Levich Economics of International Business Fall 1999

NEW YORK UNIVERSITY Stern School of Business - Undergraduate Division. C Richard Levich Economics of International Business Fall 1999 NEW YORK UNIVERSITY Stern School of Business - Undergraduate Division C45.0001 Richard Levich Economics of International Business Fall 1999 Overview: Understanding the global economy is key to success

More information

IBUS2101 INTERNATIONAL BUSINESS STRATEGY

IBUS2101 INTERNATIONAL BUSINESS STRATEGY IBUS2101 INTERNATIONAL BUSINESS STRATEGY WEEK 1 WHAT IS INTERNATIONAL BUSINESS? International business: business activities that involve the transfer of resources, goods, services, knowledge, skills or

More information

International Economics for: International Business Program

International Economics for: International Business Program International Economics for: International Business Program Introduction What is International Economics About? The Gains from Trade Many people are skeptical about importing goods that a country could

More information

United Nations Conference on Trade and Development. World Investment Prospects Survey United Nations

United Nations Conference on Trade and Development. World Investment Prospects Survey United Nations United Nations Conference on Trade and Development World Investment Prospects Survey 2011-2013 United Nations World Investment Prospects Survey 2011 2013 Please return this survey by mail using the enclosed

More information

Course Economics and Business Management Prof. Dr. Marius Dannenberg. Chapter 3 Markets and Government in the Global Economy

Course Economics and Business Management Prof. Dr. Marius Dannenberg. Chapter 3 Markets and Government in the Global Economy Course Economics and Business Management Prof. Dr. Marius Dannenberg Chapter 3 Markets and Government in the Global Economy Syllabus: Economics and Business Management Chapter 1 Introduction Understanding

More information

05/12/2011. Preview. Chapter 9. The Instruments of Trade Policy

05/12/2011. Preview. Chapter 9. The Instruments of Trade Policy Chapter 9 The Instruments of Trade Policy Preview Partial equilibrium analysis of tariffs in a single industry: supply, demand, and trade Costs and benefits of tariffs Export subsidies Import quotas Voluntary

More information

Macro Chapter 18 study guide questions

Macro Chapter 18 study guide questions Macro Chapter 18 study guide questions Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A tariff or quota that limits the entry of foreign goods to the

More information

ECON CHAPTER. McEachern Micro. International Trade. Designed by Amy McGuire, B-books, Ltd.

ECON CHAPTER. McEachern Micro. International Trade. Designed by Amy McGuire, B-books, Ltd. Designed by Amy McGuire, B-books, Ltd. Micro ECON McEachern 2010-2011 19 CHAPTER International Trade Chapter 19 Copyright 2010 by South-Western, a division of Cengage Learning. All rights reserved 1 The

More information

Chapter 5. The Standard Trade Model. Slides prepared by Thomas Bishop

Chapter 5. The Standard Trade Model. Slides prepared by Thomas Bishop Chapter 5 The Standard Trade Model Slides prepared by Thomas Bishop Preview Measuring the values of production and consumption Welfare and terms of trade Effects of economic growth Effects of international

More information

ECON 442: Quantitative Trade Models. Jack Rossbach

ECON 442: Quantitative Trade Models. Jack Rossbach ECON 442: Quantitative Trade Models Jack Rossbach Previous Lectures: Ricardian Framework Countries have single factor of production (labor) Countries differ in their labor productivities for producing

More information

Preview. Chapter 9. The Instruments of Trade Policy

Preview. Chapter 9. The Instruments of Trade Policy Chapter 9 The Instruments of Trade Policy Copyright 2012 Pearson Addison-Wesley. All rights reserved. Preview Partial equilibrium analysis of tariffs in a single industry: supply, demand, and trade Costs

More information

Corporate Strategy: Foreign Direct Investment and Political Risk

Corporate Strategy: Foreign Direct Investment and Political Risk Corporate Strategy: Foreign Direct Investment and Political Risk 1 Foreign Direct Investment This chapter analyses the decision whether, where and how to undertake foreign direct investment (FDI). This

More information

Chapter 5. Resources and Trade: The Heckscher- Ohlin Model

Chapter 5. Resources and Trade: The Heckscher- Ohlin Model Chapter 5 Resources and Trade: The Heckscher- Ohlin Model Introduction So far we learned that: Free trade leads to higher average real income per capita But not everyone within the country is better off

More information

Lesson 12: Hecksher-Ohlin Model

Lesson 12: Hecksher-Ohlin Model International trade in the global economy 60 hours II Semester Luca Salvatici luca.salvatici@uniroma3.it Lesson 12: Hecksher-Ohlin Model 1 7 Heckscher-Ohlin Model Free-Trade Equilibrium Home Equilibrium

More information

INTERNATIONAL ECONOMICS

INTERNATIONAL ECONOMICS Ninth Edition INTERNATIONAL ECONOMICS Steven Husted University of Pittsburgh Michael Melvin Arizona State University and BlackRock International Edition contributions by Atanu Rakshit Washington and Lee

More information

Chapter 2 The Multinational enterprise (MNE)

Chapter 2 The Multinational enterprise (MNE) Slide 2.1 Chapter 2 The Multinational enterprise (MNE) Slide 2.2 The Multinational enterprise (MNE) Objectives The nature of multinational enterprises Strategic management and multinational enterprises

More information

Foreign Direct Investment

Foreign Direct Investment Foreign Direct Investment Eiteman et al., Chapter 15 Winter 2004 Foreign Direct Investment This chapter analyzes the decisions whether, where and how to undertake foreign direct investment (FDI). FDI is

More information

Protectionism aka Trade Barriers 3.1b. Every year there is some version of this on the test

Protectionism aka Trade Barriers 3.1b. Every year there is some version of this on the test Protectionism aka Trade Barriers 3.1b Every year there is some version of this on the test FREE TRAE or PROTECTIONISM? Free trade = no trade barriers Trade is allowed to be conducted w/o any restrictions

More information

14.54 International Trade Lecture 15: Heckscher-Ohlin Model of Trade (III)

14.54 International Trade Lecture 15: Heckscher-Ohlin Model of Trade (III) 14.54 International Trade Lecture 15: Heckscher-Ohlin Model of Trade (III) 14.54 Week 10 Fall 2016 14.54 (Week 10) Heckscher-Ohlin Model (III) Fall 2016 1 / 23 Today s Plan 1 Long Run Effects of Factor

More information