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What significant event in 1938 marked a shift in national control over natural resources in Mexico?
What significant event in 1938 marked a shift in national control over natural resources in Mexico?
Which tariff act significantly increased US tariffs in the early 1920s?
Which tariff act significantly increased US tariffs in the early 1920s?
What was the general global economic trend following World War I?
What was the general global economic trend following World War I?
What pattern was observed in countries' responses to the Smoot-Hawley Act?
What pattern was observed in countries' responses to the Smoot-Hawley Act?
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What action regarding immigration did the United States take in 1921?
What action regarding immigration did the United States take in 1921?
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What was a significant factor in the flow of knowledge across borders within firms?
What was a significant factor in the flow of knowledge across borders within firms?
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By 1914, which region was the dominant source of world Foreign Direct Investment (FDI)?
By 1914, which region was the dominant source of world Foreign Direct Investment (FDI)?
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Which sector received the largest proportion of world FDI according to the content?
Which sector received the largest proportion of world FDI according to the content?
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Which of the following firms is mentioned as having expanded abroad after establishing value-added activities in their home market?
Which of the following firms is mentioned as having expanded abroad after establishing value-added activities in their home market?
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What was a major focus of firms in the globalizing economy according to entrepreneurs?
What was a major focus of firms in the globalizing economy according to entrepreneurs?
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What type of activities did many ventures undertake when they crossed borders?
What type of activities did many ventures undertake when they crossed borders?
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Which industries were primarily involved in multinational manufacturing by 1914?
Which industries were primarily involved in multinational manufacturing by 1914?
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Which of the following was NOT a major area of investment for world FDI in 1914?
Which of the following was NOT a major area of investment for world FDI in 1914?
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What was one of the major factors that stimulated international trade in the 19th century?
What was one of the major factors that stimulated international trade in the 19th century?
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How did the Gold Standard affect international trade during the 19th century?
How did the Gold Standard affect international trade during the 19th century?
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What was the status of transport costs towards the late 19th century?
What was the status of transport costs towards the late 19th century?
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How significant was the emigration of Europeans to the Americas in the 19th century?
How significant was the emigration of Europeans to the Americas in the 19th century?
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Which statement about labor mobility in the 19th century is true?
Which statement about labor mobility in the 19th century is true?
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Which city functioned as the global international financial center during the 19th century?
Which city functioned as the global international financial center during the 19th century?
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What percentage of the U.S. population was foreign-born by 1900?
What percentage of the U.S. population was foreign-born by 1900?
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What was a consequence of the end of prolonged warfare in Europe around 1815?
What was a consequence of the end of prolonged warfare in Europe around 1815?
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Which year marked the first successful trans-Atlantic cable connection?
Which year marked the first successful trans-Atlantic cable connection?
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What was a significant outcome of the legal reforms in the 19th century in the United States?
What was a significant outcome of the legal reforms in the 19th century in the United States?
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What was a key requirement of the automobile industry in the early twentieth century?
What was a key requirement of the automobile industry in the early twentieth century?
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Which of the following was a crucial variable explaining the shift to modern corporations?
Which of the following was a crucial variable explaining the shift to modern corporations?
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Which mineral was NOT mentioned as being consumed for production during the Industrial Revolution?
Which mineral was NOT mentioned as being consumed for production during the Industrial Revolution?
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What communication advancement linked London and Paris in 1852?
What communication advancement linked London and Paris in 1852?
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In which year did the cable from Europe reach Australia?
In which year did the cable from Europe reach Australia?
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What major economic policy shift occurred from mid-century that affected trade?
What major economic policy shift occurred from mid-century that affected trade?
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Which act raised U.S. tariffs to an average of 50 percent on protected commodities?
Which act raised U.S. tariffs to an average of 50 percent on protected commodities?
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What significant change occurred in Britain regarding limited liability?
What significant change occurred in Britain regarding limited liability?
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What was the primary use of petroleum before it started being used as fuel for automobiles?
What was the primary use of petroleum before it started being used as fuel for automobiles?
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Which countries remained as free-trading nations by 1914?
Which countries remained as free-trading nations by 1914?
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What significant improvement in communication was notable during the nineteenth century?
What significant improvement in communication was notable during the nineteenth century?
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What was a consequence of World War I on the global economy?
What was a consequence of World War I on the global economy?
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How did the opening of the Suez Canal impact trade?
How did the opening of the Suez Canal impact trade?
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What development combined with ship technology led to a significant reduction in ocean freight rates in the early 19th century?
What development combined with ship technology led to a significant reduction in ocean freight rates in the early 19th century?
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What significant impact did the Industrial Revolution have on global trade?
What significant impact did the Industrial Revolution have on global trade?
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Which of the following was a direct consequence of Britain's textile exports during the Industrial Revolution?
Which of the following was a direct consequence of Britain's textile exports during the Industrial Revolution?
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How did newly industrialized regions respond to their production capabilities during the Industrial Revolution?
How did newly industrialized regions respond to their production capabilities during the Industrial Revolution?
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What role did imperialism play in shaping the global economy during the Industrial Revolution?
What role did imperialism play in shaping the global economy during the Industrial Revolution?
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What primary factor caused the mobility of labor during the Industrial Revolution?
What primary factor caused the mobility of labor during the Industrial Revolution?
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What was a major characteristic of the global economy created during the Industrial Revolution?
What was a major characteristic of the global economy created during the Industrial Revolution?
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Which group was predominantly affected by the dislocation of industries due to British exports during the Industrial Revolution?
Which group was predominantly affected by the dislocation of industries due to British exports during the Industrial Revolution?
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What was a significant effect of the Industrial Revolution on population dynamics in newly industrialized regions?
What was a significant effect of the Industrial Revolution on population dynamics in newly industrialized regions?
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Study Notes
Chapter 2: Multinational and Globalization
- This chapter examines multinational and globalization, focusing on its creation and drivers.
- The Industrial Revolution, marked by external circumstances favoring increased trade, was a pivotal point in creating the first global economy.
- Imperialism played a key role in this process, involving the forced movement of people as slaves and unprecedented labor mobility.
- British exports of manufactured goods disrupted traditional industries in China and India, which were formerly major manufacturing hubs.
- Newly industrialized regions sought markets and raw materials for their growing populations.
- External factors like the end of prolonged warfare, and shifts in economic policies (liberalization, decline of monopolies) further fueled the growth of international trade.
- Transport costs decreased significantly, facilitating global exchange.
- There was a rapid increase in cross-border capital flows.
- The Gold Standard had a significant impact, reducing foreign exchange risks by stabilizing national currencies relative to the price of gold.
- The Bank of England played a central role in overseeing the functioning of the Gold Standard.
- Unprecedented labor mobility occurred, with 60 million Europeans emigrating to the Americas by 1900.
- This was facilitated by declining travel costs, and a lack of significant restrictions on movement.
- Forced movement of people as slaves continued, primarily in the USA (until 1860s) and elsewhere.
- The 19th century saw the global spread of large international firms.
- Firms initially made investments in their home market before exporting internationally.
- These firms were often family-managed, but were increasingly employing professional managers and undertaking extensive international cross-border activity.
- Firms expanded and were often involved in raw materials, food surpluses, and manufacturing products.
- The growth of multinational enterprises helped shape the nature of globalization during the 19th century.
- Foreign investment increased significantly during this period.
- The biggest sources of FDI in 1914 were Western Europe as a region, and Britain as a country.
- Investment was often directed towards natural resources, though also into services and manufacturing.
Diversification of Organizational Forms:
- The 18th century saw multinational enterprises emerge, though the form of enterprise was smaller and less diversified than in later periods.
- Firms began pursuing greater value-added activities within their home country before expanding abroad.
- Entrepreneurs sought to leverage new global market opportunities.
- The growth of managerial and technological expertise within firms contributed to their sustainability.
- Multinational companies emerged as businesses expanded across borders; these firms were also increasingly employing a diverse range of organizational forms.
- The principle of limited liability facilitated capital raising.
Emergence of the Modern Industrial Enterprise:
- The shift from personally managed businesses to modern corporations mirrored changes in technology and market demands.
- Technological advancements in transport and communications (railroads, steamships, telegraphs, cables), led to mass production and mass marketing.
Globalization challenged and reversed (1914-1950):
- The start of WWI marked a turning point, signaling the end of the first global economy.
- The worldwide shift towards protectionism and backlash against immigration created barriers and limits on the international economy.
- Protectionist measures such as tariffs, import restrictions, and immigration policies significantly decreased trade and migration.
- The subsequent Great Depression severely disrupted the world economy, marked by a recession, unemployment, falling prices of commodities, and the collapse of the international financial system.
- The international monetary system also experienced a significant change due to suspension and change in the roles of the Gold Standard.
- Nationalistic movements and policies led to the increased restriction of foreign firms' activities.
Policy Environment:
- The reduction in major international wars significantly reduced the risks posed by cross-border business.
- International law and property rights were increasingly important; virtually all countries supported international property law.
Drivers of Multinational Growth:
- The acceleration of economic growth spurred by the Industrial Revolution led to a greater need for raw materials & markets.
- The development and application of new technologies (including transportation and communication), allowed for greater efficiency of production and facilitated greater interconnectedness between countries.
- Emerging capital-intensive industries (chemicals, machinery, packaged food products), further increased the scale and scope of multinational activities.
- The widespread introduction of new fuels such as petroleum for lighting and heating, and transportation, also shifted the landscape impacting multinational growth.
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Description
This quiz explores Chapter 2, focusing on the dynamics of multinational enterprises and the forces driving globalization. You will learn about the historical influences of the Industrial Revolution, imperialism, and significant changes in international trade and capital flows. Test your understanding of how these factors shaped the modern global economy.
