International Business Finals Reviewer PDF 2024-2025

International Business Finals Reviewer National University Laguna 2nd year, Signs of Progress of Emerging Markets: 1st term, A.Y 2024-2025 Has financial infrastructure, which CO...

International Business Finals Reviewer National University Laguna 2nd year, Signs of Progress of Emerging Markets: 1st term, A.Y 2024-2025 Has financial infrastructure, which COURSE MATERIAL #5 includes banks, a stock exchange, EMERGING MARKETS and a unified currency. Definition: Tend to move away from activities Are markets of countries that are in that are focused on agricultural and the process of transformation. resource extraction toward From underdeveloped to industrial and manufacturing developing to developed. activities instead. Are markets of countries that are in Emerging Markets are NOT only small or transitional phase between poor. developing and developed status. Examples: An economy that experiences considerable economic growth and China is considered an emerging possesses some, but not all market. characteristics of a developed It has vast resources and a economy. population about 1.3 billion. A country progressing towards an Bangladesh, despite poor advanced economy which has governance and weak public rapid growth and industrialization. institutions, the country has From poor towards development to achieved an average annual growth rich country. rate of 5% since 1990. In December 2005, Goldman Sachs The Next Eleven also known as N-11 that named Bangladesh one of the identified by the Goldman Sachs and "Next Eleven – group of developed here's the country could become some of and developing countries that have the world's largest economies and can have very optimistic outlook for the potential of economic growth: investors. Bangladesh, Egypt, Indonesia, Iran, Emerging Markets are in process to Mexico, Nigeria, Pakistan, Philippines, make their economy: Turkey, South Korea, and Vietnam Strong  More open to international Government of emerging markets investors, and tend to implement policies that More competitive in Global favor industrialization and rapid markets. growth. Such policies lead to lower Large or small, most nations have unemployment, higher disposable something of value for international trade income per capita, higher in terms of natural resources, labour, investments, and better technology, location or culture. infrastructure. Characteristics of Emerging Markets: 4. INCOME PER CAPITAL (per 1. MARKET VOLATILITY person) Stems from political instability, Emerging markets usually achieve external price movements, and/or a low-middle income per capital supply-demand shocks due to relative to other countries, due to natural calamities. their dependence on agricultural It exposes investors to the risk of activities. fluctuations in exchange rates, as As the economy pursues well as market performance. industrialization and manufacturing 2. GROWTH AND INVESTMENT activities, income per capita POTENTIAL increases with GDP. Emerging markets are often attractive to foreign investors due EMERGING MARKETS PER to the high return of investment CONTINENT they can provide. ASIA: China, India, Pakistan, Malaysia, In the transition from being an Indonesia, Thailand, Vietnam, Philippines, agriculture-based economy to a Bangladesh, Sri lanka, Turkey, Israel, developed economy, countries Jordan, Syria, Lebanon, Iran, Iraq often require a large influx of capital from foreign sources due to AMERICAS: Mexico, Brazil, Argentina, a shortage of domestic capital. Venezuela, Ecuador, Peru, Chile 3. HIGH RATES OF ECONOMIC GROWTH EUROPE: Colombia, Russia, Poland, imposes import quotas on sugar, because Ukraine, Czech Republic, Slovakia, of a fear that such imports would drive Hungary, Romania, Bulgaria down the price of sugar and thus injure domestic sugar producers. AFRICA: Egypt, Libya, Morocco, Algeria, Tunisia, South Africa, Nigeria, Zimbabwe SPECTRUM OF TRADE POLICIES: (in an economy) Risks of Emerging Markets Free trade Political Instability - Is when there are no government or Domestic Infrastructure Problems very little restrictions in a country’s Legal Protection for Investors trading practices. Restriction on Foreign EXAMPLE: Accessibility The European Union is a notable example of free trade today. The member nations COURSE MATERIAL #6 form an essentially borderless single entity for the purposes of trade, and the adoption GOVERNMENT TRADE POLICIES of the euro by most of those nations Trade agreements, that are smooths the way further. negotiated to create trade and Protectionism investment regulations and to open markets. - Is when governments set trade A measure that influences how restrictions to help domestic much a nation imports and exports industries. in terms of goods and services. - Limit reliance on other countries. Is a system of laws and regulations EXAMPLE: that governs how one nation behaves toward another in the - tariffs context of international trade and - quotas business, whether through - subsidies. protectionism or free trade. EXAMPLE: WHY GOVERNMENT TRADE good or service at a lower opportunity cost POLICIES IMPORTANT? than its trading partners. POLITICAL REASONS: - Protecting jobs and industries, SOURCES OF COMPARATIVE national security, retaliation against ADVANTAGE foreign policies, and protecting 1. INTERNATIONAL their consumers. DIFFERENCE IN CLIMATE ECONOMIC REASONS: International differences in climate play a significant role in - Protecting new industries from international trade competition and building strategic trade policies. EXAMPLE: INTERNATIONAL TRADE: Tropical countries export products like coffee and sugar. In contrast, countries in - Is an exchange involving a good or more temperate areas export wheat or service conducted between at least corn. Trade is also driven by differences in two different countries. seasons and geography. - The exchange can be imports or exports. 2. DIFFERENCE IN FACTOR ENDOWNMENTS: WHY DOES INTERNATIONAL Imply that some countries are more TRADE OCCUR? resource-rich than others in land, Occur because one country enjoy’s a capital, and human capital. comparative advantage in the production A country enjoy’s a comparative of a certain good or service specifically if advantage in production of the the opportunity cost of producing that resources are abundantly available good or service is lower for that country within the country. than any other country. EXAMPLE: Canada exhibits a comparative advantage COMPARATIVE ADVANTAGE: an in the forestry industry. It is primarily economy's ability to produce a particular driven because the opportunity cost is lower for a country rich in the related controlling how trade is done with resource. foreign countries. 3. DIFFERENCE IN THE INTERNATIONAL TECHNOLOGY: ORGANIZATION most commonly observed in 1. INTERNATIONAL TRADE superior production processes seen ORGANIZATION: (ITO) in different countries. founded in 1948, represented an EXAMPLE: agreement among 53 countries. Government policies are designed Japan in the 1970s – a country that is not to regulate, direct, and protect overly resource-rich yet enjoys a national activities. The exercise of comparative advantage in automobile these policies is the result of manufacturing. The Japanese are able to national sovereignty, which produce more output with a given input provides a government with the than any other country, and it comes down right to shape the environment of to superior Japanese technology. the country and its citizens. The domestic policy actions of INTERNATIONAL TRADE POLICY: most governments aim to increase the standard of living of citizens Refers to agreement made in the and to improve the quality of life, multilateral trade system under the and to achieve full employment. sponsorship of the general These policies affect international agreement on tariffs and trade trade and investment indirectly. (GATT) and World Trade Organization (WTO). Is the buying and selling goods 2. GENERAL AGREEMENT ON between various countries. TARIFFS AND TRADE (GATT) Vital to any country’s prosperity, started in 1947 as a set of rules to and more specifically the economic ensure nondiscrimination, development. transparent procedures, the Can be defined as the government's settlement of disputes, and the rules and regulations guiding and participation of the  lesser-developed countries in include regulation, allocation, international trade. distribution, and stabilization. Used tariff concessions to limit the Involved to a certain extent with level of tariffs that would be the major decisions not just being imposed on other GATT members. made by one body or group. Tariff concessions removes the tariff duty that would otherwise be payable under the Tariff for certain RATIONALE AND GOALS OF goods. These may be goods used TRADE AND INVESTMENT for social, humanitarian or industry POLICIES assistance purposes. Government policies are designed The Most Favored Nation clause to regulate, direct, and protect calls for member country to grant national activities. The exercise of every other member country, the these policies is the result of same treatment that it accords with national sovereignty, which any other country with respect to provides a government with the imports and exports. right to shape the environment of the country and its citizens. The domestic policy actions of 3. WORLD TRADE most governments aim to increase ORGANIZATION (WTO) the standard of living of citizens introduced in 1995 and administers and to improve the quality of life, international trade and investment and to achieve full employment. accords. These policies affect international In 2002, the Dola Round ended the trade and investment indirectly. first stage of implementation. The In more direct ways, a country may aim is to further hasten also pursue technology transfer implementation of liberalization to from abroad or the exclusion of help the impoverished and foreign industries to the benefit of developing nations. domestic infant firms. Government officials can also develop regulations on imports to THE GOVERNMENT ROLE IN protect citizens. INTERNATIONAL TRADE  Nations institute foreign policy partners from “dumping” goods into measures designed with domestic domestic markets at any price that is less concerns in mind but explicitly than fair. aimed to exercise influence abroad. A major foreign policy goal is national security. EFFECTS OF IMPORT RESTRICTIONS NOTE: Import control may mean that the Rationale: a basic reason or explanation most efficient sources of supply are for something not available, resulting in second-best products or higher costs for restricted supplies. RESTRICTIONS OF IMPORTS Import control may result in the Many countries including the downstream change in the United States have passed composition of imports. anti-dumping laws which help Due to inefficiency, import controls domestic industries by restricting may cause a lag in technological foreign products being sold below advancements. the cost of production, or at prices lower than those in the home market. RESTRICTIONS OF EXPORTS: Imports are also restricted by Nations control their exports for nontariff barriers, such as reasons of short supply, national buy-domestic campaigns. It is security and foreign policy difficult to remove these barriers. purposes, or the desire to retain Imports can also be reduced by capital. tightening market access and entry National security controls are of foreign products through placed on weapons and involved procedures and high-technology exports. inspections. Although restriction of exports is a NOTE: valuable international relations tool, it may give a country’s firms Anti-dumping laws: any domestic law the reputation of being unreliable designed to prevent a country's trading  suppliers and may divert orders to https://www.studysmarter.co.uk/explanatio firms of other nations. ns/microeconomics/market-efficiency/trad e-policy/#:~:text=A%20trade%20policy% 20is%20a,a%20spectrum%20of%20trade EXPORT PROMOTION %20policies. Export promotion is designed to https://study.com/academy/lesson/internati help firms enter and maintain their onal-trade-policy-strategic-trade-policies.h position in international markets tml#:~:text=Reasons%20for%20Governm and to match or counteract similar ent%20Trade%20Policy%20Interests,-The efforts by other nations. %20government%20trade&text=The%20p Various approaches toward export olitical%20reasons%20include%3B%20pr promotion include: otecting,and%20building%20strategic%20 - knowledge transfer. trade%20policies. - direct or indirect subsidization of https://corporatefinanceinstitute.com/resou export activities. rces/economics/international-trade/ - reducing governmental red tape for exporters. https://www.sciencedirect.com/topics/soci - export financing and mixed aid al-sciences/international-trade-policy credits To exporters. https://www.bartleby.com/essay/The-Role- - altered tax legislation for nationals Of-Government-And-Foreign-Trade-P3Y4 living abroad. MUXZLJ5W#:~:text=The%20Governmen NOTE: ts%20role%20in%20trade,trade%20(Hardi ng%2C%202016). Red tape: irregularities in the policy and procedure Mixed aid credits: Mixed credits are a kind of tied-aid credit or associated financing that combine funds partly from public sources and partly from private sources. References: