Globalization Insights Quiz
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Questions and Answers

What are the two key facets of globalization?

  • Globalization of Trade and Globalization of Services
  • Globalization of Markets and Globalization of Production (correct)
  • Globalization of Workforce and Globalization of Investments
  • Globalization of Resources and Globalization of Capital

Which institution is primarily focused on overseeing trade agreements?

  • World Trade Organization (correct)
  • United Nations
  • World Bank
  • International Monetary Fund

Which of the following is a criticism of globalization related to environmental concerns?

  • Job Creation
  • Economic Growth
  • Increased Pollution (correct)
  • Cultural Exchange

Which factor is NOT typically associated with driving globalization?

<p>Increase in National Regulations (A)</p> Signup and view all the answers

What is a primary outcome of the globalization of production?

<p>Sourcing goods globally for cost efficiency (D)</p> Signup and view all the answers

What has been a significant effect of declining trade barriers since World War II?

<p>Increased foreign direct investment (FDI) (A)</p> Signup and view all the answers

Which of the following is NOT a force driving globalization?

<p>Economic Isolationism (D)</p> Signup and view all the answers

What is a major concern associated with globalization regarding income?

<p>Widening income inequality (A)</p> Signup and view all the answers

What is the primary purpose of a mission statement in an MNE?

<p>To communicate objectives and approaches to achieve the vision (C)</p> Signup and view all the answers

Which of the following correctly describes the concept of cost leadership?

<p>Achieving lower operational costs than competitors (B)</p> Signup and view all the answers

In which strategy does an MNE aim to balance global integration and local responsiveness?

<p>Transnational Strategy (C)</p> Signup and view all the answers

What is NOT a step in the strategic planning process?

<p>Assign budgets (A)</p> Signup and view all the answers

Which resource type is defined as tangible and intangible assets?

<p>Resources (D)</p> Signup and view all the answers

What strategy focuses on customizing products for local markets?

<p>Localization Strategy (A)</p> Signup and view all the answers

Which of the following best describes the integration-responsiveness grid?

<p>A framework illustrating decision-making in global operations (D)</p> Signup and view all the answers

Which example illustrates a company using an International Strategy?

<p>Google leveraging its home-country capabilities in foreign markets (C)</p> Signup and view all the answers

Which of the following best defines 'core competencies'?

<p>Unique strengths that provide a competitive advantage (A)</p> Signup and view all the answers

What is the primary consideration of a differentiation strategy?

<p>Offering unique products or services (C)</p> Signup and view all the answers

What is the term for a situation where differing cultural practices clash, causing misunderstandings?

<p>Cultural Collision (B)</p> Signup and view all the answers

Which stage is NOT part of the culture shock process?

<p>Enjoyment (A)</p> Signup and view all the answers

What should companies prioritize according to guidelines for cultural adjustment?

<p>Assessing cultural differences (B)</p> Signup and view all the answers

What is a key characteristic of totalitarian regimes?

<p>Censorship and suppression of opposition (B)</p> Signup and view all the answers

Which legal system is primarily based on written codes?

<p>Civil Law (D)</p> Signup and view all the answers

What impacts foreign investment and trade according to the concept of corruption?

<p>Reduces foreign investment (D)</p> Signup and view all the answers

Which political system is defined by government by the people, directly or through elected representatives?

<p>Democracy (A)</p> Signup and view all the answers

What is a common characteristic of collectivist states?

<p>Prioritization of collective goals (D)</p> Signup and view all the answers

Which type of political risk involves the seizure of assets by the government?

<p>Expropriation (D)</p> Signup and view all the answers

What is the philosophy behind individualism?

<p>Freedom to pursue self-interests (B)</p> Signup and view all the answers

Which type of totalitarianism is characterized by religious rule?

<p>Theocratic Totalitarianism (C)</p> Signup and view all the answers

What aspect of legal systems differs significantly between common law and civil law?

<p>Complexity of contracts (B)</p> Signup and view all the answers

What should businesses develop among employees to manage cultural diversity effectively?

<p>Cultural Intelligence (CQ) (D)</p> Signup and view all the answers

What are the three components of the Human Development Index (HDI)?

<p>Health, Education, Income (D)</p> Signup and view all the answers

Which type of economic system is characterized by centralized control, often leading to inefficiencies?

<p>Command Economy (C)</p> Signup and view all the answers

What is the primary role of patents in intellectual property protection?

<p>Granting exclusive rights for inventions (A)</p> Signup and view all the answers

Which agreement requires WTO members to enforce intellectual property protection?

<p>TRIPS Agreement (C)</p> Signup and view all the answers

How does Purchasing Power Parity (PPP) improve comparisons of living standards between countries?

<p>Adjusts GDP for cost of living differences (D)</p> Signup and view all the answers

What is the shadow economy known for?

<p>Reducing official GDP figures (C)</p> Signup and view all the answers

Which of the following is a significant factor affecting the economic development of a country?

<p>Political systems (D)</p> Signup and view all the answers

In which type of economy is entrepreneurial success typically highest?

<p>Market Economy (D)</p> Signup and view all the answers

What impact does strong property rights have on a country's economy?

<p>Protects investments and fosters economic activity (C)</p> Signup and view all the answers

Which country exemplifies the impact of the shadow economy on GDP?

<p>India (A)</p> Signup and view all the answers

Which of the following is NOT a consideration in assessing international business risks?

<p>Home country taxes (D)</p> Signup and view all the answers

What role does education play in economic development?

<p>Improves productivity and fosters growth (B)</p> Signup and view all the answers

What is a common outcome of operating in countries with corruption or human rights violations?

<p>Lower ethical standards (B)</p> Signup and view all the answers

Which country’s legal framework supports property rights, significantly impacting its economic growth?

<p>China (B)</p> Signup and view all the answers

What is the percentage of Greece's shadow economy relative to its GDP?

<p>23% (A)</p> Signup and view all the answers

Which country is predicted to surpass the U.S. economy within a decade?

<p>China (A)</p> Signup and view all the answers

What does Amartya Sen's framework for development emphasize?

<p>Political participation and citizens' rights (B)</p> Signup and view all the answers

Which economic theory advocates for unrestricted trade without government intervention?

<p>Free Trade Theories (D)</p> Signup and view all the answers

According to the Product Life Cycle Theory, what typically happens during the 'maturity' stage?

<p>Production moves to lower-cost countries (B)</p> Signup and view all the answers

What is the main focus of the Human Development Index (HDI)?

<p>Health, education, and income (A)</p> Signup and view all the answers

What does the term 'brain drain' refer to?

<p>Loss of skilled workers from developing countries (A)</p> Signup and view all the answers

Countries that trade with each other typically have similar what, according to country-similarity theory?

<p>Per capita incomes and preferences (B)</p> Signup and view all the answers

What role does innovation play in national competitive advantage?

<p>Enhances efficiency and productivity (C)</p> Signup and view all the answers

Which theory suggests that large countries rely less on trade due to diverse resources?

<p>Theory of Country Size (B)</p> Signup and view all the answers

What economic system focuses on government intervention and trade surpluses?

<p>Neomercantilism (D)</p> Signup and view all the answers

What is the primary reason for labor mobility between countries?

<p>Seeking higher wages and better opportunities (C)</p> Signup and view all the answers

What does the term 'factor mobility' refer to?

<p>The movement of production factors like labor and capital (A)</p> Signup and view all the answers

Which of the following is NOT a measure used to evaluate economic development?

<p>Market Isolation Index (MII) (A)</p> Signup and view all the answers

Which trade theory emphasizes the role of a nation's wealth and exports?

<p>Mercantilism (A)</p> Signup and view all the answers

What is a key challenge in international business related to cultural differences?

<p>Cultural Distance (A)</p> Signup and view all the answers

Which approach to ethical behavior states that actions are inherently right or wrong regardless of their consequences?

<p>Deontological ethics (C)</p> Signup and view all the answers

What is a concern regarding multinational enterprises (MNEs) and local businesses?

<p>Displacing jobs in the host country (D)</p> Signup and view all the answers

Which ethical framework argues that ethical behavior is determined by the cultural context?

<p>Relativism (D)</p> Signup and view all the answers

What does the term 'Shared Value' refer to in business ethics?

<p>Balancing employee welfare and profitability (B)</p> Signup and view all the answers

What is one impact of corruption in international business?

<p>Higher operational costs (D)</p> Signup and view all the answers

What do corporate codes of ethics primarily provide for a company?

<p>Framework for ethical behavior (B)</p> Signup and view all the answers

What is a primary motivation for implementing Corporate Social Responsibility (CSR) initiatives?

<p>Protect brand reputation (A)</p> Signup and view all the answers

What concept refers to the obligation of businesses to contribute positively to society?

<p>Corporate Social Responsibility (D)</p> Signup and view all the answers

Which example illustrates the application of sustainability in business practices?

<p>GE’s Ecomagination initiative (A)</p> Signup and view all the answers

What is a disadvantage associated with labor conditions as discussed in international business ethics?

<p>Exploitative working conditions (C)</p> Signup and view all the answers

Which legal framework in the U.S. prohibits bribing foreign officials?

<p>Foreign Corrupt Practices Act (A)</p> Signup and view all the answers

Which of the following describes the 'Preconventional' level of moral development?

<p>Choices driven by punishment or rewards (B)</p> Signup and view all the answers

What is one of the primary reasons companies engage in international business?

<p>Access to larger markets (A)</p> Signup and view all the answers

Which mode of international business operations involves the ownership of operations in other countries?

<p>Foreign direct investment (C)</p> Signup and view all the answers

What factor does NOT typically affect international business?

<p>Weather patterns (C)</p> Signup and view all the answers

What is the impact of language as a cultural factor in international business?

<p>Facilitates trade and preserves national identity (B)</p> Signup and view all the answers

What term describes cultural changes that occur by adopting new practices voluntarily?

<p>Cultural Change by Choice (C)</p> Signup and view all the answers

Which of Hofstede's dimensions includes the acceptance of unequal power distribution?

<p>Power Distance (B)</p> Signup and view all the answers

How do anti-globalization protests primarily highlight their concerns?

<p>Focus on labor rights and environmental issues (B)</p> Signup and view all the answers

Which of the following best describes the concept of cultural diffusion?

<p>Exchange of cultural elements between societies (B)</p> Signup and view all the answers

Which cultural dimension indicates a preference for achievement and success over quality of life?

<p>Masculinity vs. Femininity (A)</p> Signup and view all the answers

What is a key characteristic of high-context cultures?

<p>Implicit understanding and non-verbal cues (D)</p> Signup and view all the answers

Which of the following best reflects religion's role in business practices?

<p>Influences consumption habits and work ethics (A)</p> Signup and view all the answers

What does the term 'cultural collision' refer to?

<p>A situation where differing cultural values clash (B)</p> Signup and view all the answers

Which of the following is considered a challenge posed by multiple languages in business?

<p>Translation errors and misinterpretations (D)</p> Signup and view all the answers

Which of the following statements about multinational enterprises (MNEs) is true?

<p>They manage production or services in multiple countries. (D)</p> Signup and view all the answers

Flashcards

Globalization

The process of integrating national economies into a global marketplace, driven by trade, investment, and technology.

Globalization of Markets

Merging of national markets into a single global marketplace, led by consumer demand for standardized products.

Globalization of Production

Sourcing goods and services from various countries to leverage cost and quality advantages.

International Business (IB)

All commercial transactions between two or more countries, including sales, investments, and transportation.

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Factors Driving Globalization

The forces accelerating the integration of economies, including technological advancements, reduced trade barriers, global institutions, and the rise of MNEs.

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World Trade Organization (WTO)

An international organization overseeing trade agreements and resolving disputes to promote free trade.

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Threats to National Sovereignty

Concerns about the loss of control by governments over their economic policies due to international agreements.

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Environmental Stress

Increased pollution and resource depletion due to global industrial activities.

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What are strategic goals?

Strategic goals identify the products a company will create, the markets it will enter, and how it will compete while remaining profitable.

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What is the difference between vision and mission?

Vision is a future-oriented declaration of an organization's purpose and aspirations, while a mission outlines the objectives and approaches to achieve that vision.

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What are strategic planning steps?

Strategic planning involves identifying potential markets, assessing opportunities and threats, analyzing internal strengths and weaknesses, formulating strategies, setting clear objectives, implementing programs and policies, allocating resources, and monitoring performance.

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What's a core competency?

A core competency is a unique strength that provides a competitive advantage, like a company's brand reputation or advanced technology.

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What's cost leadership strategy?

Cost leadership focuses on achieving lower costs than competitors, often by streamlining operations and maximizing efficiency.

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Cultural Erosion

The weakening or loss of local cultures and traditions due to the influence of global cultural norms.

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Anti-Globalization Protests

Demonstrations against the negative effects of globalization, such as labor exploitation, environmental damage, and the loss of local cultures.

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What's differentiation strategy?

Differentiation focuses on offering unique products or services that stand out from competitors, often through features or quality.

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What is the value chain?

A value chain is the sequence of activities that add value to a product or service as it moves from raw materials to a finished item delivered to the customer.

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Sales Expansion

Companies seeking to increase revenue and profits by entering new markets.

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Resource Acquisition

Companies obtaining materials, labor, or technology that aren't available in their home country.

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What's global integration?

Global integration focuses on standardizing products and services across multiple markets to achieve economies of scale.

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Risk Reduction

Companies diversifying their operations to minimize economic or political risks.

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What is a transnational strategy?

A transnational strategy seeks to balance global integration (standardization) and local responsiveness (adaptation) to meet both global and local needs.

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What is a localization strategy?

Localization strategy involves adapting products and services to meet the specific needs and preferences of local markets.

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Merchandise Exports and Imports

Trade of tangible goods (products) between countries.

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Service Exports and Imports

Trade of services (intangible) between countries, like banking, consulting, or tourism.

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Foreign Direct Investment (FDI)

A company investing in and owning operations in another country.

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Portfolio Investment

Investing in foreign securities (like stocks and bonds) without owning operations.

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Multinational Enterprises (MNEs)

Companies with operations in multiple countries.

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Geography

The natural features of a region that influence business decisions.

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Culture

The shared values, beliefs, rules, and customs of a group of people.

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Political Systems

How a country is governed, affecting business stability and regulations.

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Legal Systems

The laws and regulations in a country, affecting business operations.

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Hofstede's Dimensions

Cultural dimensions that describe differences between countries: Power Distance, Individualism vs.Collectivism, Masculinity vs.Femininity, Uncertainty Avoidance, Long-term vs.Short-term Orientation.

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GDP Per Capita

The total value of goods and services produced within a country divided by its population. It gives a snapshot of a nation's economic activity and wealth.

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Purchasing Power Parity (PPP)

Adjusts GDP per capita to reflect the cost of living differences across countries, making comparisons more accurate.

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Human Development Index (HDI)

Measures a country's development based on life expectancy, education levels, and income. Scores range from 0 to 1, with higher values indicating better development.

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Economic Growth Rates

Reflect how quickly a country's economy is expanding.

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Market Economy

An economic system where resources are allocated based on supply and demand, encouraging innovation, efficiency, and economic freedom.

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Command Economy

A centrally controlled economic system where the government makes all decisions about production and distribution, often leading to inefficiencies.

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Mixed Economy

A combination of market-driven principles and some government intervention.

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Strong Property Rights

Legal protections that guarantee individuals and businesses the right to own and control their property, encouraging investment and economic activity.

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Innovation and Entrepreneurship

The creation of new products, services, or processes, driving economic growth and increased productivity.

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Entrepreneurial Dynamism

A thriving environment that encourages entrepreneurship, leading to the creation of successful firms and economic value.

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Hernando de Soto's Theory

Argues that lack of legal property ownership in developing countries hampers economic potential.

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Coastal Advantage

Coastal nations tend to have better access to trade routes, promoting economic growth.

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Temperate Climates

Favorable weather conditions that support higher population densities and economic development.

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Shadow Economy

Unrecorded economic activity that avoids taxation, like cash transactions and barter.

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Ethics

Moral principles that guide behavior, shaping what is considered right or wrong.

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Social Responsibility

A company's obligation to contribute positively to society, considering its impact on stakeholders.

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Stakeholders

Groups or individuals who have an interest in a company, such as shareholders, employees, customers, suppliers, and the community.

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Shared Value

A business strategy that aims to create both economic and social value by addressing social problems while increasing profits.

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Balance of Payments

A record of all economic transactions between a country and the rest of the world, including imports, exports, and investments.

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Levels of Moral Development

Three stages of moral reasoning: Preconventional (punishment/reward), Conventional (conformity to norms), Postconventional (internal principles).

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Teleological Reasoning

Moral decision-making based on the consequences of an action, where good outcomes are considered ethical.

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Deontological Reasoning

Moral decision-making based on the inherent rightness or wrongness of an action, regardless of its outcomes.

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Relativism

The belief that ethical behavior is determined by the culture or society, leading to variations in norms.

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Normativism

The belief that universal ethical standards apply across all cultures, regardless of local customs.

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Corruption

The misuse of power for personal gain, often involving bribery or dishonest practices.

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Bribery

Offering something of value to influence someone's decision, often illegal.

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Sustainability

Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs, often linked to environmental protection.

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Corporate Codes of Ethics

Guidelines for ethical behavior within a company, outlining expected standards for employees and partners.

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CSR (Corporate Social Responsibility)

A company's voluntary commitment to operating ethically and sustainably, encompassing environmental, social, and governance issues.

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Political Economy

The interconnectedness of a country's political, economic, and legal systems. These systems shape the environment for international business and determine the level of economic well-being.

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Collectivism

A political philosophy that prioritizes collective goals and social harmony over individual freedoms. It emphasizes the importance of the group over the individual.

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Individualism

A political philosophy that champions individual freedom and self-reliance in economic and political pursuits. It emphasizes personal autonomy and the right to pursue self-interests.

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Democracy

A system of government where power resides with the people, either directly or through elected representatives. Citizens have the right to participate in political decisions.

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Totalitarianism

A system of government where a single person or party exerts total control over all aspects of human life. It suppresses dissent and individual freedoms.

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Common Law

A legal system based on tradition, precedent, and custom. It relies on court decisions and interpretations of previous cases.

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Civil Law

A legal system based on detailed written codes and statutes. It relies heavily on codified laws and legal principles.

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Theocratic Law

A legal system based on religious teachings and interpretations. Religious principles guide legal decisions and societal norms.

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Political Risk

The risk of political changes impacting business operations, such as expropriation, government intervention, or instability.

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Expropriation

The seizure of foreign assets by a government, often without compensation.

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Property Rights

The legal rights over the use and resources and income derived from a specific piece of property.

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Intellectual Property Rights

The legal rights granted to inventors and creators to protect their inventions, designs, and creative works.

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Product Safety and Liability

The legal regulations and standards that ensure the safety of products for consumers and protect manufacturers from liability.

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Trade Theory

A set of ideas that explains why countries trade with each other and what the effects of trade are. It helps answer questions about what goods to import and export, how much to trade, and who to trade with.

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Factor Mobility

The movement of production factors, like labor and capital, between countries. This can be driven by seeking higher wages, better opportunities, or higher returns on investments.

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Mercantilism

An economic theory that emphasizes a country's wealth being measured by its gold reserves. It encourages a trade surplus (exporting more than importing) through government intervention, like restricting imports and subsidizing exports.

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Neomercantilism

A modern version of mercantilism where countries prioritize trade surpluses to achieve social or political goals, like reducing unemployment. It still involves government intervention.

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Free Trade

The absence of government intervention in trade. It encourages open borders for goods and services to flow freely between countries, advocating for unrestricted trade.

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Absolute Advantage

A country should specialize in and export products it can produce more efficiently than other countries. This leads to mutual gain through trade.

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Comparative Advantage

Even if a country is more efficient at producing everything, it should specialize in the goods it produces most efficiently relative to others. Everyone gains by focusing on their comparative advantage.

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Country Size Theory

Large countries tend to rely less on trade due to their diverse resources and larger domestic markets. Smaller countries, on the other hand, depend more on trade to access resources they may not have.

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Factor Proportions Theory (Heckscher-Ohlin)

Countries export products that use their abundant resources. So, countries with ample labor will export labor-intensive goods, while those with abundant capital will export capital-intensive products.

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Country-Similarity Theory

Countries with similar per capita incomes and preferences are more likely to trade with each other. This is because they are more likely to demand similar goods and services.

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Product Life Cycle (PLC) Theory

A product goes through stages: introduction, growth, maturity, and decline. As a product matures, production may shift from developed countries to lower-cost countries.

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Diamond of National Competitive Advantage

A framework by Michael Porter that identifies four key factors that contribute to a nation's competitive advantage: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.

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Substitution (Trade and Factor Mobility)

Companies may relocate production instead of trading goods. This can happen when factor costs become higher, regulations are stricter, or foreign markets offer more advantages.

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Complementarity (Trade and Factor Mobility)

Trade and factor mobility can support and reinforce each other. For example, companies invest in foreign manufacturing plants to make goods for export.

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