International Economics Quiz

Globalization and International Management: Cross Cultural Management

• Globalization is the integration of social, political, economic, cultural, and technological aspects amongst countries globally.
• The goal is the vision of a single global market entity.
• International management is the application of management principles and techniques throughout a multinational environment, while adapting management standards to different cultural and political landscapes.
• Multinational corporations (MNCs) operate in multiple countries with international sales and diverse management & ownership.
• Globalization, linked with emerging market MNCs, has fostered prosperity in previously underdeveloped regions.
• Firms need to develop international management expertise.
• Examples of MNCs: Nissan, Fanta (Coca-Cola), M&S, Tea Latte (coffee shop), Jollibee, Google, Nestlé, Canva, IBM.
• An interconnected world relies on global communication platforms - e.g., YouTube, Facebook, Snapchat, Twitter.
• Management means completing activities with and through other people.

Introduction

• The global interconnected world and rise of digital technologies require adaptation in management practices.
• A key element in managing international businesses is understanding diverse cultures.

Introduction: Internationalization

• Globalization and internationalization are interconnected concepts that define how businesses operate across national borders.
• Internationalization is the process of expanding business operations internationally.
• Offshoring and outsourcing amplify the effects of global linkages.
• The rise of emerging market MNCs is significant in the current international landscape, bringing increased trade and investment around the world.

Introduction: MNCs

• Multinational corporations (MNCs) have operations across international borders and have varied ownership and employees.
• The rise of emerging market MNCs contributes to the global economic landscape.

Globalization and Internationalization

• Globalization involves the integration of social, political, economic, and technological facets across countries
• Internationalization is the movement of businesses across national borders into a new market
• Offshoring and outsourcing of work increase global connections

Globalization

• Proponents believe globalization benefits all involved parties.
• Critics argue that offshoring does not create jobs for those in the local economies.
• Some individuals concerned with globalization argue that poorer countries lower standards and norms for the sake of investment by global firms.
• Proponents also argue that global companies use modern technologies that are environmentally friendly

Global and Regional Integration

• WTO oversees rules and regulations for global trade and investment.
• NAFTA (North American Free Trade Agreement) reduced barriers between the US, Canada, and Mexico.
• USMCA will replace NAFTA.
• Other bilateral agreements, including CAFTA-DR, reduce trade barriers that exist between countries.
• The EU has unified markets. (Brexit is relevant).
• Japan experiences economic problems but China continues its steady growth.
• CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) is a trade agreement covering parts of Asia.
• Central and Eastern Europe and Russia require continual economic transformation to become robust economies.

Global and Regional Integration - RP

• ASEAN Trade in Goods Agreement (ATIGA)
• Philippines-Japan Economic Partnership Agreement
• Philippines-European Free Trade Association Free Trade Agreement
• Regional Comprehensive Economic Partnership

Changing Global Demographics

• Global working-age population declined.
• Global life expectancy increased.
• Global fertility rate decreased.
• Developed economies will be affected more by these demographic shifts.
• Health care spending increases, leading to a decline in consumer demand.

RP Working-age Population

• Working-age population refers to people aged 15–64
• PSA data shows the proportion of the working-age population is growing in the Philippines (63.9% in 2022).

The Shifting Balance of Economic Power in the Global Economy

• BRIC economies are predicted to grow by 2025.
• By 2050, the GDP of the E7 is expected to exceed that of the G7.
• The N-11 (newly industrializing countries) may significantly contribute to emerging global markets.
• MIST (Mexico, Indonesia, South Korea, and Turkey) nations are attractive emerging markets.
• African countries have potential for economic growth.

The Shifting Balance of Economic Power in the Global Economy: Trade and Investment

• Global trade and investment increase, surpassing many national growth rates.
• Foreign direct investment (FDI) involves investment in property, plant, and equipment in other countries.
• Increased prosperity in other countries stimulates investment by richer nations.

Global Economic Systems

• Market economy
• Command economy
• Mixed economy

Evaluating Economies

• Established economies (e.g., North America, EU, Japan)
• Emerging economies
• Developing economies

Established Economies

• North America, EU, and Japan are among the most important economies in the world.
• EU members seek to eliminate barriers between each other.
• Japan remains a major economic power.

Emerging/Developing Economies - Central/Eastern Europe

• Russia's economic development continues amidst falling poverty and an expanding middle class.
• Privatizations and Western firms entering joint ventures have spurred Poland's growth.
• Central and Eastern Europe and Russia face difficulties in transitioning to market economies.

Emerging/Developing Economies - China

• China's GDP growth is slowing but remains a major risk for investors.
• Trade relations between China and countries like the US and EU remain strained.

Emerging/Developing Economies - Other Asian Markets

• ASEAN countries fuel growth and development.
• South Korea's conglomerates (e.g., Samsung, Hyundai, LG) are significant in Asia.
• Hong Kong is a major headquarters location for MNCs in Asia.
• Singapore is a leader and financial center of Southeast Asia.
• Taiwan's economy grows steadily.

Emerging/Developing Economies - India

• India's large population and a growing economy with considerable economic struggles,
• India's attraction to multinationals stemmed from its advanced IT skills, educated workers, and English language proficiency.
• India has one of the fastest-growing GDPs in the world.

Developing Economies on the Verge - South America

• Economies in South America face difficult economic issues with major economic issues including foreign debt and inflation.
• Inter-country trade continues to grow due to free market policies.

Developing Economies - Middle East and Central Asia

• Israel, Arab countries, Iran, Turkey, and Central Asian countries are a special group of emerging countries.
• The economies of these countries frequently benefit by natural resources such as oil.

Developing Economies - Africa

• Despite natural resources, African countries often experience poverty and underdevelopment.
• Political issues often present risks to investors.
• Sub-Saharan Africa has faced significant economic struggles.
• African economies are rapidly growing and developing.

Political Environment

• Political systems influence how people manage and conduct business.
• Ideology and cultural values shape governments.
• Political systems can be evaluated along two dimensions: ideology and extent of individualism or collectivism.
• Adopters of individualism support the freedom to pursue individual goals without restriction.
• Collectivism values the needs of society more than individual desires.

Ideologies

• Individualism prioritizes individual freedom and economic freedom, prioritizing individual pursuits.
• Collectivism emphasizes societal goals above individual needs, valuing collective well-being.
• Socialism is a moderate form of collectivism, emphasizing government control over institutions and de-emphasizing profit as the main driver of businesses.
• Social democracy focuses on achieving socialist goals via non-violent revolutions, and social reform processes.

Political Systems

• Democracy involves citizens controlling government via direct or representative elections.
• Totalitarianism sees one party controlling all political and social aspects, prioritizing power and suppression.
• Communism is a form of totalitarianism.
• Some totalitarian parties operate on religious principles.

Legal and Regulatory Environment

• Islamic, Socialist, Common law, Civil law are frameworks for global laws and regulations.
• Philippines legal system is a blend of civil laws, common laws, Muslim laws, and indigenous traditions.
• Its primary sources of law include statutes and jurisprudence.

Basic Principles of International Law

• International law is less consistent than domestic law.
• The principle of sovereignty allows governments to operate according to their view of how best to rule.
• Jurisdictional principles apply internationally to establish appropriate jurisdiction across countries (nationality principle, territoriality principle, protective principle)
• Doctrine of comity is a principle that governs mutual respect between nations.
• Act of state doctrine provides guidance on interactions between sovereign states.

Legal and Regulatory Issues: Examples

• International financial services regulation, Foreign Corrupt Practices Act, Bureaucratization, Privatization, and Trade Regulation.

Technology in the Next Decade

• Internet of Things (IoT)
• Blockchain Technology
• Artificial Intelligence (AI) and Machine Learning
• Robotics

Technological Environment and Global Shifts in Production

• Technology advancements improve product quality & expedite research and development.
• Biotechnology seeks to improve healthcare and food security in developing countries.
• MNCs improve e-business operations (B2C).
• Developing economies are quickly adopting modern technology.
• Technology adoption has the potential to eliminate some industrial jobs in the future.

Technological Environment and Global Shifts in Production: Advancements

• Technological advancements reduce costs for businesses, enhance productivity, and reduce prices in most cases.

Environmental Protection and Development

• National differences, frequently based on wealth and developmental status, influence environmental conservation decisions.
• Many developing countries prioritize improving human well-being over environmental concerns.
• The Paris Agreement on climate change promotes global cooperation.
• Many companies ignore conservation efforts as part of their business approach.

Globalization and Ethical Obligations of MNCs

• The question of how much responsibility MNCs should embrace in changing ethical practices is important.
• Business codes of ethics are needed across nations.
• Job relocation frequently results from globalization trends.
• Relocated individuals remain part of corporate responsibility in an interconnected world.

Reconciling Ethical Differences across Cultures

• MNCs often adhere to ethical codes while also adapting to local norms.
• Integrative Social Contracts Theory (ISCT) explains why international ethical codes exist, and can address areas of discrepancy between local norms and international codes.

CSR and Sustainability

• Corporate Social Responsibility (CSR) involves taking actions in addition to just adhering to social and business norms.
• CSR is often closely related to ethical considerations and sustainability practices.
• Four dimensions of CSR: Economic, Legal, Ethical, Philanthropic.
• Sustainability emphasizes long-term well-being for the natural world.
• Sustainable development strikes a balance between current needs and future generations' needs.

Sustainability and Ethical Decision-Making

• Sustainability is related to minimizing negative social impacts on stakeholders, and should account for stakeholder feedback.
• Ethical awareness is necessary for sound decision-making.
• Stakeholder reaction drives business decisions surrounding sustainability.
• Sustainability, social responsibility, and ethics have a distinct relationship but are not identical.

Corporations and the "Green" Movement

• Companies now prioritize leadership in environmentally conscious activities.
• Sustainability is frequently a major selling point in the marketplace.

Corporate Governance

• Corporate governance structures how corporations make decisions and monitor performance internationally.
• Corporations often prioritize actions by boards of directors and top leadership.
• Regulations and standards regarding business conduct vary across countries.

Ethics and Corporate Governance: Ethical Issues

• Ethical considerations are paramount in employment practices (hiring, firing, compensation, conditions).
• Employees' interaction with the organization (conflicts, confidentiality, internet use, absences) should be fair and equitable.
• Treat economic agents (customers, competitors, suppliers) justly.
• Practices vary from nation to nation.

Corruption

• Corruption is common in many countries.
• Government corruption is pervasive in the international business arena.

International Assistance

• Countries and corporations collaborate increasingly to provide assistance through global partnerships.

Sustainable Development Goals

• The UN's Sustainable Development Goals (SDGs) encompass targets for global development in areas like poverty, health, and education.

References

• Various academic texts and publications are listed for further research

Test your knowledge on key concepts of international economics, trade agreements, and the characteristics of various economies. This quiz covers topics such as the GDP predictions for the E7, the role of the World Trade Organization, and insights into emerging markets.