Terms
What does NAFTA stand for?
North American Free Trade Agreement
Globalization of ____________ refers to the sourcing of goods and services from locations around the globe (especially to take advantage of national differences in cost and quality)
Production
Name one goal of globalization of production as described in the text.
1. Lower overall costs of production
2. Improve the quality of the product to gain competitive advantage
Define international trade
When a firm exports goods or services to consumers in another country
What are the three factors of production within globalization?
Labor
Land
Capital
What does WTO stand for?
World Trade Organization
The globalization of ____________ refers to the merging of historically distinct and separate national sales into one global marketplace.
Markets
Name 3 goals of the United Nations (UN).
1. Maintain international peace and security
2. Develop relations between various countries
3. Cooperate in solving international problems
4. Promote human rights
5. Establish a center for the harmonizing of actions of nations
Define Foreign Direct Investment (FDI)
When a firm invests resources in business activities outside its home country
Which country receives the most Foreign Direct Investment?
China
(Followed by Brazil, then Mexico)
What does GATT stand for?
General Agreement on Tariffs and Trade
Name three of the five largest globalized businesses in the world
McDonalds
Apple
Citigroup Credit Cards
Coca Cola
Ikea Furniture
What is the main goal/purpose of the World Bank?
Promote economic development by using low-interest loans
Define Multinational Enterprise
Any business that has productive activities in two or more countries
Name three pros of globalization:
1. More integrated global economy
2. New opportunities for firms
3. Access to less expensive goods
4. Support of free trade
5. Infusion of capital into poorer countries
6. Reduction of prices because of competition
What does IMF stand for?
International Monetary Fund
Which initiative helped remove trade and investment barriers after WWII?
GATT
Name two goals of the World Trade Organization
2. Enforce trade laws
3. Cut tariffs on industrial goods and services
4. Reduce barriers to cross-border investment
Define capitalism
An economic system in which the means of production are privately or publicly owned. Goods, services and capital are exchanged in a free market.
List three cons of globalization
1. Loss of jobs to low-wage nations
2. Increase in labor and health violations
3. Shift of economic power from governments to large organizations
4. Increase in the gap between the rich and poor
5. Increase in environmental concerns
What is a MNE?
Multinational Enterprise
Name 3 of the five countries with the highest average tariff rates in 2018:
1. France
2. Germany
3. Italy
4. Japan
5. Holland
What is the goal of the International Monetary Fund?
The maintain order in the international monetary system
Define free market economy:
An economy where the government imposes few or no restrictions and regulations on buyers and sellers
Name two of the three largest supernational organizations that hold almost as much power as the governments in the countries they operate in:
World Trade Organization
European Union
United Nations