International Business Module 5

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Questions and Answers

What is the estimated percentage of agricultural political contributions received by sugar farmers since 1990?

20 percent

17 percent (correct)

15 percent

10 percent

What is the purpose of tariffs on imported goods?

To promote free trade

To protect local consumers from low-quality imports

To increase government revenue

To stimulate local production and reduce competition (correct)

What type of duty is levied as a percentage of the invoice value of imported goods?

Specific duty

Compound duty

Variable levy

Ad valorem duty (correct)

What is a Voluntary Export Restraint (VER)?

An export quota imposed by the exporting country Signup and view all the answers

What type of nontariff barrier involves numerical limits on specific goods imported during a specific period?

Quantitative barrier Signup and view all the answers

What is an example of a nonquantitative nontariff barrier?

Customs and other administrative procedures Signup and view all the answers

What is the term for a combination of specific and ad valorem duties?

Compound duty Signup and view all the answers

What is the main difference between a tariff and a nontariff barrier?

Tariffs are a type of tax, while nontariff barriers are restrictions on trade Signup and view all the answers

What is the primary motivation behind the government's involvement in the management of a public good or necessity?

To manage a public good or necessity better than the private sector Signup and view all the answers

What is the primary goal of privatization?

To gain more efficiency in business operations and raise money Signup and view all the answers

Why might a government contract out services to the private sector?

To gain more efficiency in the provision of services Signup and view all the answers

What is a key characteristic of a stable government?

Predictable and consistent policies Signup and view all the answers

What is a primary role of government in protecting economic activities?

To protect citizens from unfair competition Signup and view all the answers

What is a key goal of government protection from terrorism?

To protect citizens and businesses from violence and harm Signup and view all the answers

What is a common tactic used by terrorists to generate funds?

Kidnapping for ransom Signup and view all the answers

What is a key difference between a stable and unstable government?

Ability to maintain power and predictability Signup and view all the answers

What is the primary goal of nationalizing business?

To transfer ownership of private assets to the government Signup and view all the answers

What was the main reason for suspending Venezuela's membership in Mercosur?

Human rights violations and lack of democratic order Signup and view all the answers

What is the role of country risk assessment in international business?

To evaluate the likelihood of government intervention in trade Signup and view all the answers

What is the primary motivation for government intervention in trade?

To protect domestic industries from foreign competition Signup and view all the answers

What is the result of a government's decision to nationalize business?

Private assets are converted to publicly owned assets Signup and view all the answers

Why do governments prioritize government protection and stability?

To attract foreign investment and promote economic growth Signup and view all the answers

What is the main objective of privatizing business?

To transfer ownership of public assets to private entities Signup and view all the answers

What is the relationship between political and humanitarian behaviors in international trade?

They are interconnected and influence each other Signup and view all the answers

What percentage of the world's cocoa comes from the Ivory Coast?

60% Signup and view all the answers

What is the estimated number of children working in hazardous conditions on the Ivory Coast?

500,000 Signup and view all the answers

What was Angela Schmitz's role in Guatemala?

Both A and B Signup and view all the answers

What is the significance of Angela Schmitz's experience in Guatemala?

It helped her get future internships and jobs Signup and view all the answers

What is the estimated number of children who are victims of human trafficking on the Ivory Coast?

The exact number is unknown Signup and view all the answers

What is the main topic of the minicase 'Chocolate: Is Your Treat the Result of Unfair Labor and the Exploitation of Child Labor?'?

The use of child slave labor on the Ivory Coast Signup and view all the answers

What is the likely origin of most chocolate treats enjoyed by consumers?

The Ivory Coast Signup and view all the answers

What is the cultural difference Angela Schmitz experienced in Guatemala?

Starting meetings 4 hours late Signup and view all the answers

What is the primary reason for retaliating in trade?

To respond to dumping by another country Signup and view all the answers

Which type of dumping involves selling products abroad for less than their cost of production?

Predatory dumping Signup and view all the answers

What is the purpose of countervailing duties?

To prevent export subsidies by other countries Signup and view all the answers

Which of the following is NOT a type of dumping?

First-degree dumping Signup and view all the answers

What do sugar tariffs in the U.S. primarily benefit?

A relatively small group of growers in 18 states Signup and view all the answers

What is the estimated annual cost of sugar tariffs to U.S. consumers and businesses?

$4 billion Signup and view all the answers

What percentage of the U.S. economy does sugar account for?

Less than 1% Signup and view all the answers

What is the purpose of subsidies in international trade?

To provide financial contributions to domestic producers Signup and view all the answers

Study Notes

Linking Political and Economic Dimensions in International Trade

Venezuela joined Mercosur in 2012, but was suspended in 2016 due to human rights violations and lack of democratic order.
Mercosur's decision demonstrates the link between political and humanitarian behaviors with economic benefits in international trade.

Governments and the Ownership of Business

Nationalization: the process of taking privately owned property and converting it to a publicly owned asset, motivated by the belief that government can manage a public good or necessity better than the private sector.
Privatization: the selling of government-owned property to the private sector, done to gain more efficiency in business operations, raise money, or change in political climate/philosophy.

Government Stability and Protection

Government stability: maintaining power and predictable policies, essential for business operations.
Protection from unfair competition: protecting the economic activities of citizens.
Protection from terrorism, cybercrime, and other threats: essential for business operations.

Government Intervention in Trade

Reasons for restricting trade: retaliation, dumping, predatory dumping, social dumping, and environmental dumping.
Subsidies: financial contributions provided directly or indirectly by a government, confer a benefit to businesses.
Countervailing duties: additional import taxes levied on imports that have benefited from export subsidies.
Tariff barriers: taxes on imported goods to raise their price and reduce competition for local producers.
Types of tariff barriers: tariffs, ad valorem duty, specific duty, compound duty, and variable levy.
Nontariff barriers: discrimination against imports other than import duties, including quantitative barriers, voluntary export restraints, and nonquantitative nontariff barriers.
Examples of nontariff barriers: customs and other administrative procedures, government and private standards.

Country Risk Assessment

Country risk assessment: evaluating the potential risks and opportunities associated with doing business in a particular country.

International Business Careers

Angela Schmitz's experience: working in Guatemala for Acción Humana, doing graphic design, website management, and teaching English language classes.
The value of international experience: employers may look for individuals who have had experience working abroad, as it demonstrates adaptability, cultural understanding, and other valuable skills.

Global Debate

Sugar subsidies: a debate around whether sugar subsidies are "sweet for producers but sour for food manufacturers and consumers".
U.S. sugar tariffs: in place since 1789, limiting sugar imports and protecting a relatively small group of growers in 18 states.

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Description

This quiz tests your understanding of political forces that affect global trade, including nationalization, privatization, government protection, and stability. Learn about the goals and impacts of these policies on international business.