Global Competitiveness Overview
24 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the definition of global competitiveness according to the World Economic Forum?

  • The rate at which a country can create new industries.
  • The extent to which a nation can reduce unemployment rates.
  • The ability of a country to achieve sustained high rates of growth in GDP per capita. (correct)
  • The overall market value of a nation's assets over time.

    • Which country ranked first in the Global Competitiveness Report for the 2018-2019 period?

  • Hong Kong
  • Singapore (correct)
  • United States
  • China

    • What is NOT one of the factors affecting global competitiveness?

  • Total factor productivity
  • Physical infrastructure
  • Social media presence (correct)
  • Coordination among public-sector agencies

    • How many pillars of global competitiveness are identified in the Global Competitiveness Report?

    <p>12</p> Signup and view all the answers

    Which of the following statements is true about the dimensions within the pillars of global competitiveness?

    <p>Dimensions can be considered competitive advantages or disadvantages.</p> Signup and view all the answers

    What best describes the process of globalization?

    <p>An increase in economic interdependence among countries.</p> Signup and view all the answers

    Which of the following is NOT a type of commodity observed in globalization?

    <p>Labor</p> Signup and view all the answers

    What role does innovation play in the pillars of global competitiveness?

    <p>Innovation is tied to education and affects competitiveness.</p> Signup and view all the answers

    What does globalization of production primarily aim to achieve?

    <p>Sourcing goods and services globally for advantages</p> Signup and view all the answers

    Which of the following is a consequence of the falling barriers to trade?

    <p>Integration of world markets</p> Signup and view all the answers

    What is one key factor that influences the ability to build global companies?

    <p>Relevant technological advancements</p> Signup and view all the answers

    What was a significant change in the market scenario post-liberalization?

    <p>The emergence of severe competition</p> Signup and view all the answers

    Which political factor can significantly affect international business operations?

    <p>The type of government in host countries</p> Signup and view all the answers

    Which economic indicator reflects the overall economic health of a country?

    <p>Standard of living</p> Signup and view all the answers

    Which factor is likely to create competitive advantages in global markets?

    <p>Differentiation strategy</p> Signup and view all the answers

    What does liberalization of trade commonly lead to in an economy?

    <p>Reduction in direct and indirect tariffs</p> Signup and view all the answers

    What defines absolute advantage in international trade?

    <p>A country can produce at a lower cost than any other country.</p> Signup and view all the answers

    Which of the following would contribute to a balance of payments surplus?

    <p>Higher exports than imports.</p> Signup and view all the answers

    Which best characterizes comparative advantage?

    <p>A country can produce a product at a lower cost than others can produce alternative products.</p> Signup and view all the answers

    What is NOT a factor in social and cultural differences that can affect international trade?

    <p>Economic conditions.</p> Signup and view all the answers

    How can currency conversion and shifts impact international trade?

    <p>It can distort pricing and affect market desirability.</p> Signup and view all the answers

    Which statement about political and legal differences in international trade is accurate?

    <p>Corruption can significantly influence trade agreements.</p> Signup and view all the answers

    What is the primary objective of the Foreign Corrupt Practices Act?

    <p>To prohibit bribery of foreign officials by U.S. companies.</p> Signup and view all the answers

    Which scenario might indicate a country's absolute advantage?

    <p>The country has exclusive rights to a valuable resource.</p> Signup and view all the answers

    Study Notes

    Global Competitiveness

    • Competitiveness is the ability of a nation to create and maintain an environment that supports value creation for businesses and prosperity for people.
    • Global competitiveness is a country's ability to achieve sustainable high growth rates in GDP per capita.
    • The Global Competitiveness Report (GCR) annually ranks the ability of countries to provide high levels of prosperity to their citizens. It measures institutions, policies, and factors determining levels of economic prosperity.
    • Singapore, the United States, and Hong Kong were ranked the top three competitive economies in 2018-2019.
    • India ranked 68th and China 28th in 2019.

    Factors Affecting Global Competitiveness

    • Physical Infrastructure
    • Coordination among Public-Sector Agencies
    • High Total Factor Productivity (TFP)
    • Capacity Building for Small and Medium Enterprises (SMEs)
    • Productivity Campaigns
    • Intensified Research & Development (R&D) Activities

    12 Pillars of Global Competitiveness

    • These categories are not independent and are interconnected; for example, innovation is linked to education.
    • The pillars are further divided into 133 dimensions, each assessed as a competitive advantage or disadvantage.

    Globalization

    • Globalization is the process of increasing interconnectedness in the world, making geographical, social, cultural, political, and economic interactions easier.
    • Global markets are merging into one global marketplace.
    • Globalization of production involves sourcing goods and services from different locations to leverage cost and quality differences in factors of production.

    Elements of Globalization

    • Globalization of Markets: Merging of national markets into one global marketplace.
    • Globalization of Production: Sourcing goods and services from different locations to take advantage of cost and quality differences in factors of production.
    • Falling Barriers to Trade and Investment: Reduction in barriers allowing firms to see the world as their market.
    • Technological Innovation: Advancements in communication, information processing, and transportation technology, including the internet and World Wide Web.

    Liberalization/Globalization: Critical Components

    • Delicensing and Deregulation: Reducing restrictions on businesses.
    • Liberalization of Trade: Reducing barriers to international trade.
    • Reduction in Direct and Indirect Tariffs: Lowering taxes on imports and exports.
    • PSU Disinvestment and Privatization: Transferring ownership of state-owned enterprises to private entities.
    • Inflow of Foreign Direct Investment (FDI)/Foreign Institutional Investment (FII): Attracting capital from foreign investors.

    Consequences of Liberalization/Globalization

    • Integration of World Markets: Connecting different markets globally.
    • Free Movement of Capital, Labor, Goods, and Services: Allowing resources to flow freely across borders.
    • Promotion of Trade and Investment: Encouraging economic activity between countries.
    • Reduced Entry and Trade Barriers: Making it easier for businesses to operate internationally.
    • Vulnerability to Social, Political, and Economic Shocks: Increased interconnectedness can amplify the impact of global events.
    • Aggravated Competition: Increased competition among businesses from different countries.

    Factors Determining Building Global Companies

    • Political Factors:
      • Stability of Government: A stable political environment is crucial for businesses.
      • Type of Government: Different government systems have different levels of influence on businesses.
      • Control Structure: Centralized or decentralized government structures can impact business operations.
      • Government Takeover of Assets: The risk of government seizing assets with or without permission.
      • Operational Restrictions: Restrictions placed on business activities by the government.
      • Remittance/Repatriation Restrictions: Restrictions on transferring profits and capital out of the country.
      • Government Policies: Laws and regulations that impact businesses.
      • Opposition Parties, Pressure Groups, and External Linkages: The influence of these groups on government policy.
    • Economic Factors:
      • Economic System: Open or mixed economies differ in their level of government intervention.
      • Economic Development: The level of economic development in a country impacts its attractiveness for investment.
      • Standard of Living: Per capita income reflects the purchasing power of individuals in a country.
      • Sectorial Share in GDP: The contribution of different sectors to a country's GDP.
      • Foreign Exchange Reserves: The amount of foreign currency held by a country.
      • Economic Indicators: Key indicators like inflation rate and balance of payments.
    • Technological Factors:
      • Differentiation Strategy: Using technology to create unique products or services.
      • Competitive Advantage: Using technology to gain an advantage over competitors.
    • Legal Factors:
      • Home Country Laws: Laws of the country where the company is headquartered.
      • Host Country Laws: Laws of the country where the company operates.
      • International Laws: International agreements, regulations, and conventions such as UN resolutions, patent and trademark protection laws, GATT, and codes of conduct.

    Strategic Management: Relevance Pre-Liberalization vs. Post-Liberalization

    • Pre-Liberalization Scenario:
      • Protected Market: Limited competition due to government protection.
      • High Restrictions: Strict regulations and barriers to entry.
      • High Tariffs/Regulation: High taxes and restrictions on imports.
      • Competition Limited: Few businesses competing in the market.
    • Post-Liberalization Scenario:
      • Liberalized Market: Reduced restrictions on businesses.
      • Reduced Restrictions: Fewer government regulations on businesses.
      • Reduced Tariffs: Lower taxes on imports.
      • Low Entry Barriers: Easier for businesses to enter the market.
      • Severe Competition: Increased number of businesses competing in the market.

    3 Things to Remember for Post-Liberalization Strategy

    • Strategies to Survive: Adapt to the more competitive environment.
    • Strategies to Grow and Excel: Develop strategies to expand market share and profitability.
    • Strategies to Sustain: Maintain a competitive edge and long-term success.

    Absolute and Comparative Advantage

    • Absolute Advantage: A country can maintain a monopoly or produce at a lower cost than any competitor.
    • Comparative Advantage: A country can supply a product more efficiently and at a lower cost than other goods, compared with other countries.

    Measuring Trade Between Nations

    • Balance of Trade: The difference between a nation's imports and exports.
    • Balance of Payments: Overall flow of money into or out of a country.

    Effects of Trade

    • Overseas Loans and Borrowing: Countries borrow money from other nations.
    • International Investments and Profits: Countries invest in businesses and assets in other countries.
    • Foreign Aid Payments: Countries provide financial assistance to other nations.
    • Balance of Payments Surplus: More money flowing into a country than out.
    • Balance of Payments Deficit: More money flowing out of a country than in.

    Use of SDR (Special Drawing Right) from IMF

    • The International Monetary Fund (IMF) uses SDRs for international financial transactions.

    Barriers to International Trade

    • Social and Cultural Differences:
      • Language: Translation issues, culturally inappropriate messaging, and lack of understanding of local customs.
      • Values and Religious Attitudes: Differences in business practices, employment, regional preferences, and religious holidays and practices.
    • Economic Differences:
      • Infrastructure: Basic communication, transportation, energy, and financial systems.
      • Currency Conversion and Shifts: Fluctuating currency values can complicate pricing and affect market desirability and investment.
    • Political and Legal Differences:
      • Political Climate: Stability is a crucial factor for investment.
      • Legal Environment: Differences in legal frameworks, international regulations, and corruption levels.
      • Foreign Corrupt Practices Act: Forbids U.S. companies from bribing foreign officials.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Global Competitiveness Report 2018-2019 PDF

    Description

    This quiz explores the concept of global competitiveness, including its definition, key factors affecting it, and insights from the Global Competitiveness Report. Learn about the rankings of various countries and what contributes to a nation's ability to sustain economic growth.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser