30 Questions
What can happen to domestic companies when they try to cut costs?
They may fire workers or shift production abroad
According to economic principles, what determines the production of goods in a country?
Comparative advantage
Why might a government impose a tariff on imported goods?
To protect domestic industries
What is the purpose of the Import Substitution Industrialization strategy?
To foster growth in infant industries
What is a potential criticism of the Import Substitution Industrialization strategy?
It is expensive to subsidize infant industries
What can result from protecting infant industries?
Decreased unemployment and economic growth
What is the term used to describe the uncertainty of conducting business in a foreign country?
Sovereign risk
What is the primary function of an economic system?
To regulate the factors of production
What is the characteristic of a traditional economic system?
Relying on people with very little division of labor or specialization
What is the impact of lack of political stability on a business firm?
It directly impacts the operations of the firm
What are the factors that can affect the working of an international business firm?
Changes in tax rates, policies, and actions of government
What is the definition of an economic system?
A way of organizing and distributing available resources, services, and goods
What is a potential consequence of an industry developing without competition?
Lower quality goods and decreased economic growth
A country imposes a $15 tariff on each pair of shoes imported and a $300 tariff on each computer imported. What type of tariff is this?
Specific tariff
Why are defense industries often protected by developed countries?
Because they are vital to state interests
What is the purpose of an ad valorem tariff?
To protect domestic producers
What is an example of a situation where a country might impose a tariff as a retaliation technique?
If a trading partner has not followed fair trade practices
What is the effect of a 15% ad valorem tariff on a $10,000 vehicle?
The price of the vehicle increases by $1,500
What is a specific tariff?
A fixed fee levied on one unit of an imported good
What is the purpose of a license in international trade?
To restrict imports
What is a common reason for countries to protect certain industries?
To support industries that are deemed strategically important
What is the effect of an import quota?
It increases prices for consumers
What might happen if a country retaliates against another country's trade practices and the other country agrees to change its practices?
The retaliating country will stop its retaliation
What is a Voluntary Export Restraint (VER)?
A restriction on exports imposed by the exporting country
Which government agency issues permits for the importation of genetically modified plants and plant products?
Bureau of Plant Industry
What is the purpose of a satisfactory risk assessment under Administrative Order No. 8?
To prevent the importation or release of regulated articles into the environment
What replaced Administrative Order No. 8 in 2016?
Joint Department Circular (JDC)
What is the main reason why Administrative Order No. 8 was replaced?
It did not sufficiently cover the principles of risk assessment
What is the contact point for further information on minimum access volumes and current MAV license holders?
USDA Foreign Agricultural Service in Manila
What is the main difference between the Joint Department Circular (JDC) and Administrative Order No. 8?
The JDC provides more public consultation and consideration of socio-economic issues and environmental impacts
Study Notes
Import Regulations for Biotechnology-Derived Products
- The Department of Agriculture issued Administrative Order No. 8 (AO 8) on April 3, 2002, regulating the importation and release of genetically modified plants and plant products.
- The Bureau of Plant Industry issues permits for the importation of regulated articles and/or combined trait products for contained use, trials, or direct use as food or feed.
- No regulated article can be imported or released into the environment without a satisfactory risk assessment.
Joint Department Circular (JDC)
- The JDC was approved in March 2016, replacing Administrative Order No. 8 (AO 8).
- The JDC requires more public consultation and provides more consideration to socio-economic issues and environmental impacts in risk assessment procedures.
Tariffs and Trade Barriers
- Tariffs are levied on products to protect a country's population or industry.
- Infant industries can be protected by tariffs, which increase the prices of imported goods and create a domestic market for domestically produced goods.
- Types of tariffs include:
- Specific tariffs: a fixed fee levied on one unit of an imported good.
- Ad valorem tariffs: a percentage of the value of the good.
- Non-tariff barriers to trade include:
- Licenses: granted to businesses to import certain goods.
- Import quotas: restrictions on the amount of a particular good that can be imported.
- Voluntary export restraints (VER): "voluntary" restrictions created by the exporting country.
- National security barriers: protecting industries deemed strategically important.
Political Environment and Economic System in International Business
- Political factors such as changes in tax rates, policies, and government actions can affect the operations of an international business firm.
- Lack of political stability in a country directly impacts the operations of a business firm.
- Economic systems regulate the factors of production, including land, capital, labor, and physical resources.
- Types of economic systems include traditional, which relies on people and has little division of labor or specialization.
Protectionism and Trade Barriers
- Protectionist strategies can be used to protect infant industries or national security.
- Criticisms of protectionism include the cost of subsidizing the development of infant industries.
- Retaliation can be used by countries as a technique to protect their industries or interests.
Quiz on political environment and economic systems in international business, including political risk, government activities and policies affecting business operations in foreign markets.
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