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Outsourcing and Subcontracting Overview
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Outsourcing and Subcontracting Overview

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Questions and Answers

What is a key reason for the increasing trend of outsourcing in the international trade?

  • Higher domestic production costs
  • Reduced international competition
  • Simplified contracting processes
  • Improved technology for search (correct)

    • Which of the following is not a feature of a modern outsourcing strategy?

  • Convincing suppliers to customize products
  • Inducing relationship-specific investments
  • Searching for partners with specialized expertise
  • Creating a standardized contract for all partners (correct)

    • How does the size of a country impact outsourcing?

  • Larger countries always have thicker markets.
  • It limits the technology available for outsourcing.
  • It affects the thickness of its markets for input suppliers. (correct)
  • It does not influence outsourcing activities.

    • What is subcontracting primarily associated with?

    <p>Complex projects such as construction and IT</p> Signup and view all the answers

    What is the main challenge of outsourcing regarding contracts?

    <p>Contracts often remain incomplete and vague.</p> Signup and view all the answers

    What does the technology for specializing components influence in outsourcing?

    <p>The willingness of partners to invest in prototypes</p> Signup and view all the answers

    What type of investment is often required from partners in outsourcing?

    <p>Relationship-specific investments</p> Signup and view all the answers

    What factor does not directly influence the cost of outsourcing?

    <p>The marketing strategies of domestic firms</p> Signup and view all the answers

    What primarily drives European integration?

    <p>The policies of the European Union</p> Signup and view all the answers

    What characterizes a Preferential Trading Area (PTA)?

    <p>Agreement on reduced tariffs on selected goods</p> Signup and view all the answers

    Which of the following is NOT a stage of economic integration?

    <p>Monetary alliance</p> Signup and view all the answers

    What is the primary aim of economic integration among countries?

    <p>To enhance the welfare of participating countries</p> Signup and view all the answers

    What does Max Weber define as a characteristic of a state?

    <p>Monopoly of legitimate use of force</p> Signup and view all the answers

    How does a Free Trade Area (FTA) differ from a PTA?

    <p>FTAs eliminate barriers on all goods, unlike PTAs.</p> Signup and view all the answers

    Which of the following is NOT one of the major driving forces of the global economy mentioned?

    <p>Cultural exchange</p> Signup and view all the answers

    What does the term 'economic union' imply in the context of economic integration?

    <p>Harmonization of economic regulations and policies</p> Signup and view all the answers

    Which of the following is a consequence of economic integration?

    <p>Greater coordination of economic policies</p> Signup and view all the answers

    What differentiates economic globalization from internationalization?

    <p>Economic globalization is a broader process impacting many nations.</p> Signup and view all the answers

    According to Hedley Bull, what is a defining feature of a state?

    <p>It possesses a monopoly on military power.</p> Signup and view all the answers

    What was a significant development in the early 21st century for the European Union?

    <p>Expansion into Central and Eastern Europe</p> Signup and view all the answers

    Which of these elements is part of the contemporary global governance discussed?

    <p>International treaties</p> Signup and view all the answers

    Which statement accurately describes the relationship between globalization and nation-states in the early 21st century?

    <p>Nation-states still play an essential role within globalization.</p> Signup and view all the answers

    Which term refers to the economic phenomenon where markets and businesses integrate on a global scale?

    <p>Globalization</p> Signup and view all the answers

    What is one of the learning objectives of the unit on the structures of globalization?

    <p>Trace the origin of economic globalization</p> Signup and view all the answers

    What does the Economic and Monetary Union (EMU) primarily aim to provide?

    <p>Stability and stronger economic growth</p> Signup and view all the answers

    Which of the following is NOT a feature of complete economic integration?

    <p>Control over individual monetary policies</p> Signup and view all the answers

    In the context of complete economic integration, what does a single currency imply?

    <p>Shared currency for all member states</p> Signup and view all the answers

    What characterizes political integration within the EU?

    <p>Integration of economic and political systems</p> Signup and view all the answers

    What is a key aspect of neo-functionalism in the context of EU integration?

    <p>Role of interest groups and supranational institutions</p> Signup and view all the answers

    What is the primary concept illustrated by the term 'Golden Straitjacket' as defined by Thomas Friedman?

    <p>A forced choice between free market compliance and economic isolation</p> Signup and view all the answers

    What does the term 'complete harmonization of fiscal policy' include?

    <p>Shared regulations of tax and benefit rates</p> Signup and view all the answers

    What is the ultimate goal of policy integration within the EU?

    <p>To create equal conditions for integrated economic functions</p> Signup and view all the answers

    What major effect does being in the 'Golden Straitjacket' have on a country’s political structure?

    <p>It narrows political policy choices.</p> Signup and view all the answers

    Which aspect does the complete economic integration NOT include?

    <p>Independent national trade rules</p> Signup and view all the answers

    Neoliberalism is described as prioritizing which of the following?

    <p>Market exchange as an ethic and guiding principle</p> Signup and view all the answers

    How do investment houses and corporate executives influence countries under globalization?

    <p>By punishing states that do not adopt neoliberal policies</p> Signup and view all the answers

    Economic sovereignty refers to which of the following?

    <p>The ability of national governments to make independent decisions</p> Signup and view all the answers

    What does neoliberalism emphasize as a means to maximize social good?

    <p>Expanding the reach and frequency of market transactions</p> Signup and view all the answers

    In the context of globalization, what is a key challenge to national sovereignty?

    <p>Greater international market integration</p> Signup and view all the answers

    Which of the following statements reflects a core idea of the 'Golden Straitjacket' in relation to states?

    <p>States are comparably valued like stocks in an investment portfolio.</p> Signup and view all the answers

    Study Notes

    Outsourcing and Subcontracting

    • Outsourcing involves seeking partners for relationship-specific investments governed by incomplete contracts.
    • The extent of international outsourcing depends on the domestic and foreign market for suppliers, search and customization costs, and contractual environments.
    • Subcontracting is crucial in complex projects, like construction and information technology.
    • Outsourcing establishes bilateral relationships, with partners making specific investments to meet the firm's needs.
    • Contracts may not ensure partners perform tasks with the same care as the firm itself.

    Determinants of Outsourcing Location

    • The size of a country influences the "thickness" of its markets.
    • Search technology impacts the cost and likelihood of finding suitable partners.
    • Specialization technology determines a partner's willingness to invest in prototypes.

    The Global Economy

    • Globalization in the 21st century hasn't displaced the state.
    • Max Weber defines the state as a compulsory political organization with a centralized government that holds a monopoly on the legitimate use of force within a territory.
    • Hedley Bull emphasizes the independence of states with their own governments and sovereignty over a designated area and population.

    The "Golden Straitjacket"

    • Globalization forces states to conform to free market principles or risk being left behind.
    • This concept, termed the "Golden Straitjacket" by Thomas Friedman, emphasizes states being pushed towards policies favoring investment houses and corporations.
    • Countries are likened to individual stocks, with their governments being rewarded for their adaptability to international business demands.

    Globalization and Economic Sovereignty

    • States have relinquished some economic sovereignty due to the influence of neoliberalism.
    • In the "Golden Straitjacket", economic growth prevails over political considerations.
    • Neoliberalism elevates capitalism as a mode of production, influencing ethics, political imperatives, and cultural logic.
    • It promotes market exchange as an ethic, emphasizes contractual relations, and seeks to expand the market's dominance.
    • Economic sovereignty refers to national governments' ability to make independent decisions.
    • Globalization, through market integration, challenges national sovereignty.

    European Integration

    • European integration encompasses industrial, political, legal, economic, social, and cultural integration of European states.
    • The European Union (EU) comprises 28 European countries and governs common economic, social, and security policies.

    Economic Integration

    • Economic integration aims to increase the welfare of participating countries.
    • It involves reducing trade barriers and coordinating monetary and fiscal policies.
    • The goal is to reduce costs for consumers and producers and boost trade among member countries.

    Stages of Economic Integration

    • Preferential trading area (PTA): Agreement on tariff reduction on selected goods imported from member countries.
    • Free trade area (FTA): Elimination of trade barriers on all goods from other members.
    • Customs union: Member states agree to a common external tariff on imports from outside the union.
    • Common market: Free movement of goods, capital, labor, and services among member states, requiring a high degree of policy coordination.
    • Economic union: Full integration of economies, requiring a common currency, fiscal policy, and economic regulations.
    • Economic and monetary union (EMU): Single economic market, common trade policy, single currency, and common monetary policy.
    • Complete economic integration: Complete loss of monetary and fiscal policy independence, with a single economic market, common trade policy, single currency, common monetary and fiscal policies, and harmonized economic trade rules.

    Political Integration

    • The process of integrating components within political systems, integrating political systems with economic, social, and other human systems, and integrating social, economic, and political systems.
    • Aims to create a common policy framework for equal conditions in the integrated parts of the economy.
    • Based on welfare-increasing effects of integrated policy making, leading to more effective policy making.

    Neo-Functionalism

    • Focuses on the supranational institutions of the EU.
    • The driving forces of integration are:
      • Interest group activity at the European and national levels.
      • Political party activity.
      • The role of governments and supranational institutions.

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    Description

    This quiz explores the concepts of outsourcing and subcontracting, focusing on their role in complex projects and international markets. It discusses determinants influencing the outsourcing location and the relationship dynamics between firms and partners. Test your knowledge on these essential topics in the global economy.

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