BACR 3: International Business & Trade Chapters 1-6 PDF
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College of Business
Prof. Dave Kieth J. Lappay, LPT, MBA
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This document is a course outline for International Business & Trade for undergraduate students. It includes a course description, pre-assessment questions, objectives, and topics related to the subject matter.
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BACR 3: International Business & Trade PROF. DAVE KIETH J. LAPPAY, LPT, MBA Program Chair, College of Business Course Description The course will provide the students with business operations, business terminology, and examine methods for breaking into the global market. It wil...
BACR 3: International Business & Trade PROF. DAVE KIETH J. LAPPAY, LPT, MBA Program Chair, College of Business Course Description The course will provide the students with business operations, business terminology, and examine methods for breaking into the global market. It will emphasize the effects and dynamics of sociocultural, demographic, economic, technological, and political- legal elements in the context of international trade. The course provides a thorough analysis of the economics and politics of international trade and investment, clarifies the role and structure of the world monetary system, looks at the tactics and organizational structures of multinational corporations, and evaluates the unique functions of these corporations. Pre-Assessment: 1. What is the greatest contributory factor that maintain Philippine economic stability? 2. What factors contribute to the downfall of Philippine economy? 3. What could be done to improve the international trade deficit? 4. What could be done to encourage FDI without compromising the privilege of the locals? Topic 1: Introduction to International Business Definition of international business Stakeholders of International Business Forms of international business Objectives: ❖ discuss the concept of international business and trade, ❖ differentiate between micro and macro economics, ❖ elaborate the factors affecting international trade, ❖ know the relevance and importance of of international trade to economic development of the county. Topic 1: Introduction to International Business What Is International Business? International business relates to any situation where the production or distribution of goods or services crosses country borders. Globalization—the shift toward a more interdependent and integrated global economy—creates greater opportunities for international business. Such globalization can take place in terms of markets, where trade barriers are falling and buyer preferences are changing. It can also be seen in terms of production, where a company can source goods and services easily from other countries. What Is International Business? The term International Business refers to any business that operates across international borders. At its most basic, it includes the sale of goods and services between countries. A business imperative is an initiative or objective that the firm must accomplish to make meaningful progress toward achieving its strategic vision. It doesn’t only include international movement of goods and services but also the movement of capital, personnel, technology, and intellectual property like patents, trademarks, and copyrights What Is International Business? International business refers to the trade of goods and services, capital, knowledge and technology across borders on a global scale. International business transactions include contractual agreements that permit foreign firms to utilize services, products and processes from different countries. This research entails learning how culture, language, political systems, location, and socioeconomic aspects influence a company's business operations. Foreign trade is influenced by transportation, supply chains, and distribution networks. Needs for International Business - Causes the flow of ideas, services, and capital across the world - Offers consumers new choices - Permits the acquisition of a wider variety of products - Facilitates the mobility of labor, capital and technology - Provides challenging employment opportunities Who Is Interested in International Business? A stakeholder is an individual or organization whose interests may be affected as the result of what another individual or organization does. Beyond the company and governments, other stakeholder groups might include industry associations, trade groups, suppliers, and labor The Forms of International Business Key Highlights of the Philippines Economy from the report of Trade Imex published in 02-27-2023 Current Trends in the Philippine Economy from the report of Observatory Economic Complexity published in 05-20-2024 Top Commodity Exports from the Philippines from the report of Aboitiz Intra Capital published in 12-15-2022 Electrical Machinery and Equipment Computers and Computer Parts Copper Metal Fruits, Nuts, and Other Industrial Crops Gemstones and Precious Metals Components Used in Medical Equipment Motor Vehicles and Vehicle Components Mineral Ore, Slag, and Ash Animal and Vegetable Fat, Oil, and Wax Plastic Materials and Plastic Articles GENERALIZATION The articles from reliable companies such as Aboitiz, TradeImeX Info Solution Pvt Ltd, and Observatory of Economic Complexity (OEC) state that the Philippines is an emerging nation with rapid growth in its trade, infrastructure, and healthcare facilities. It is a bit obvious that the demands of its citizens would grow as they also want change like the rest of the world. So, now the higher officials must maintain the trade surplus of the country to prevent it from going into deficit. For more information about the top Imports in the Philippines, contact us and get all your questions answered. REFERENCES “Philippines (PHL) Exports, Imports, and Trade Partners.” The Observatory of Economic Complexity, https://oec.world/en/profile/country/phl. Accessed 13 August 2024. “Top 10 Import Products of The Philippines.” TradeImeX, 27 February 2023, https://www.tradeimex.in/blogs/top- 10-import-products-of-the-philippines. Accessed 13 August 2024. “The Top 10 Philippine Industrial Exports.” Aboitiz InfraCapital, https://aboitizinfracapital.com/the-top-10- philippine-industrial-exports/. Accessed 13 August 2024. RECITATION Why do you think a lot of people in the Philippines do not feel the economic improvement of the country? ASSESSMENT 1. Should the Philippines focus on technological advancements and components rather than utilizing agricultural produce to cope with increasing demand demand of international market? or retain its products (agricultural produce) for exportation? Justify your answer. THANK YOU! Topic 2: GLOBALIZATION AND ETHICS IN INTERNATIONAL BUSINESS The concept of globalization Ethics in international business What is culture? | International Business| From A Business Professor In the story called “The blind men and the elephant”, six blind men encounter an elephant for the first time. Each of them touches a different part of the animal and their variety of perspectives leads to different assumptions of what an elephant is. This story depicts how reality can be perceived in many ways and that there is almost always more than just one ultimate truth. Like this metaphor, culture is a concept which is not easy to define. So what exactly is culture? How it is formed? What elements are included in the culture? In this video, I am going to answer these questions for you. The Globalization Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the United States. History of Globalization Since ancient times, humans have sought distant places to settle, produce, and exchange goods enabled by improvements in technology and transportation. But not until the 19th century did global integration take off. Following centuries of European colonization and trade activity, that first “wave” of globalization was propelled by steamships, railroads, the telegraph, and other breakthroughs, and also by increasing economic cooperation among countries. The globalization trend eventually waned and crashed in the catastrophe of World War I, followed by postwar protectionism, the Great Depression, and World War II. After World War II in the mid-1940s, the United States led efforts to revive international trade and investment under negotiated ground rules, starting a second wave of globalization, which remains ongoing, though buffeted by periodic downturns and mounting political scrutiny. Globalization in the Contemporary World Globalization is a term used to describe how trade and technology have made the world into a more connected and interdependent place. Globalization also captures in its scope the economic and social changes that have come about as a result. It may be pictured as the threads of an immense spider web formed over millennia, with the number and reach of these threads increasing over time. People, money, material goods, ideas, and even disease and devastation have traveled these silken strands, and have done so in greater numbers and with greater speed than ever in the present age. Culture and Ethics What is Culture? In international business, Culture refers to an organization's beliefs, values, practices, and attitude, which influence company functions and strategic directions. Management and employee professional interactions within and outside the corporation are influenced by business culture. In other words, culture is an ever-changing set of common beliefs, values, and attitudes. Culture is an important factor in business and has an impact on the strategic direction of the company. business. It also influences management, decisions and all business functions from accounting to production Characteristics of Culture Culture in an integrated system of learned behavior patterns that are characteristics of the member of any given society. Culture is learned, shared, and transmitted from one generation to the next. Culture can be passed from parents to children, by social organizations, special interest groups, the government, schools, and churches. Culture is multidimensional, consisting of a number of common elements that are independent. Characteristics of culture in modern world are culture is learned, shared, symbolic, integrated, adaptive and dynamic Acculturation is the process by which an individual or groups adopts the practices and values of one culture while still retaining their own culture of origin. Typically used in reference to a minority culture adopting elements of a majority culture. However, it’s also a two-way process, since the majority culture also adopts elements of the minority cultures. Enculturation is the lifelong process of learning one's native culture, while acculturation involves adapting to a new culture when exposed to it. Enculturation begins at birth and is primarily subconscious. Processing assessment Give an example of acculturation in the current Philippine generation. Give an example of enculturation in the current Philippine generation. Ethics in Globalization The field of ethics is a branch of philosophy that seeks virtue. Ethics deals with morality about what is considered “right” and “wrong” behavior for people in various situations. While business ethics emerged as a field in the 1970s, international business ethics didn’t arise until the late 1990s. Initially, it looked back on the international developments of the late 1970s and 1980s is it ethical? 1. Listen to your instincts 2. Get the facts 3. Evaluate alternative actions a) Utilitarian approach - Most good and least hard b) Right-based approach - Action that respects the rights of everyone c) Fairness/ justice approach - Action that treats people fairly d) Common good approach - Action that contributes to the most quality of life Processing assessment When do we say that globalization is ethical? When do we say that globalization is NOT ethical? GENERALIZATION The subject of ethics is important in almost any context—be it medicine, science, law, or business. You learned a framework for ethical decision making as well as some opinions on what ethics is not. Many would argue that international business ethics can have a strong foundation in national culture. Some argue that ethics shouldn’t follow culturally accepted norms. However, business managers should have a good understanding of which norms their ethical standards are based on and why and how they believe they should apply in other national contexts. THANK YOU! Topic 3: Theories in International Trade International Trade Theory Political and Legal Factors that impact international trade Foreign Direct Investment Objectives: ❖ discuss the concept of foreign direct investments, ❖ differentiate classical country-based theories and modern firm-based theories, ❖ know the relevance of international business theories to contemporary form of globalization. What is Foreign Direct Investment (FDI)? The term foreign direct investment (FDI) refers to an ownership stake in a foreign company or project made by an investor, company, or government from another country. FDI is generally used to describe a business decision to acquire a substantial stake in a foreign business or to buy it outright to expand operations to a new region (Hayes, 2024). MERCANTILISM Developed in the sixteenth century, mercantilism was one of the earliest efforts to develop an economic theory. This theory stated that a country’s wealth was determined by the amount of its gold and silver holdings. In its simplest sense, mercantilists believed that a country should increase its holdings of gold and silver by promoting exports and discouraging imports. ABSOLUTE ADVANTAGE Absolute Advantage In 1776, Adam Smith questioned the leading mercantile theory of the time in The Wealth of Nations. Smith offered a new trade theory called absolute advantage, which focused on the ability of a country to produce a good more efficiently than another nation. Smith reasoned that trade between countries shouldn’t be regulated or restricted by government policy or intervention. He stated that trade should flow naturally according to market forces. COMPARATIVE ADVANTAGE Comparative advantage occurs when a country cannot produce a product more efficiently than the other country; however, it can produce that product better and more efficiently than it does other goods. The difference between these two theories is subtle. Comparative advantage focuses on the relative productivity differences, whereas absolute advantage looks at the absolute productivity. HECKSCHER-OHLIN THEORY The theories of Smith and Ricardo didn’t help countries determine which products would give a country an advantage. Both theories assumed that free and open markets would lead countries and producers to determine which goods they could produce more efficiently. In the early 1900s, two Swedish economists, Eli Heckscher and Bertil Ohlin, focused their attention on how a country could gain comparative advantage by producing products that utilized factors that were in abundance in the country. PERFORMANCE TASK 1 1. Divide the class into four (4) groups. 2. Each group is assigned to study an assigned topic. 3. Group members are assigned to defend the assigned topic. 4. All group members will be graded based on the performance of the whole group. Topic: Current Events Philippine Offshore Gaming Operators or POGOs are online gambling firms that operate in the Philippines but cater to customers outside the country. To operate legally, they must be licensed by the Philippine Amusement and Gaming Corporation (PAGCOR). POGO: An advantage to Philippine economy or a risk? Philippines offshore gaming operators were a core feature of the vibrant Philippines gaming market for some years. They divided opinion, however, before, in July 2024, they were outlawed altogether. On 22 July 2024, Philippines President Ferdinand Marcos Jr. introduced a ban on all Philippine offshore gaming operators (POGOs) by the end of the year. The announcement was made during Marcos’ State of the Nation Address (SONA). Source: Gambling Insider | Published August 20, 2024 RUBRICS 5 POINTS 3 POINTS 1 POINT GROUP The group are well The group are The group manifest COOPERATION AND behaved and behaved at some noise and ORGANIZATION organized. point disorganization The group presented The group presented The group provided OBJECTIVITY OF and objective and statements with some subjectivity from the THE STATEMENTS based from facts objectivity and topic assigned statements with subjectivity with without references. citations. some citations. Topic 4: (cont…) Theories in International Trade International Trade Theory Political and Legal Factors that impact international trade Foreign Direct Investment COUNTRY SIMILARITY THEORY Swedish economist Steffan Linder developed the country similarity theory in 1961, as he tried to explain the concept of intra industry trade. Linder’s theory proposed that consumers in countries that are in the same or similar stage of development would have similar preferences. In this firm-based theory, Linder suggested that companies first produce for domestic consumption. LEONTIEF PARADOX PRODUCT LIFE CYCLE THEORY Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory in the 1960s. The theory, originating in the field of marketing, stated that a product life cycle has three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. The theory assumed that production of the new product will occur completely in the home country of its innovation. In the 1960s this was a useful theory to explain the manufacturing success of the United States. US manufacturing was the globally dominant producer in many industries after World War II. GLOBAL STRATEGIC RIVALRY Global strategic rivalry theory emerged in the 1980s and was based on the work of economists Paul Krugman and Kelvin Lancaster. Their theory focused on MNCs and their efforts to gain a competitive advantage against other global firms in their industry. Firms will encounter global competition in their industries and in order to prosper, they must develop competitive advantages. The critical ways that firms can obtain a sustainable competitive advantage are called the barriers to entry for that industry. The barriers to entry refer to the obstacles a new firm may face when trying to enter into an industry or new market. GLOBAL STRATEGIC RIVALRY Barriers to Entry: Research and Development Ownership of Intellectual property rights Economies of Scale Business processes Favorable access to raw materials PORTER’S The theory in continuing evolution of international trade theories, Michael Porter of Harvard Business School. The theory states that nation’s competitiveness in an industry depends on the capacity of the industry to innovate and update. His theory focused on explaining why some nations are more competitive in certain industries than others. Political & Legal Factors Affecting International Trade Democracy is the most common form of government around the world today. Democratic governments derive their power from the people of the country, either by direct referendum (called a direct democracy) or by means of elected representatives of the people (a representative democracy). Democracy has a number of variations, both in theory and practice, some of which provide better representation and more freedoms for their citizens than others THANK YOU! Topic 5: World Economies · Classifying World Economies · Understanding the Developed World · Developing World Emerging Markets How’s the Philippine economy today? Philippines BEST-PERFORMING Economy in Southeast Asia | Quarter 1 2024 In the first quarter of 2024, the actual economic performance among the major economies in the region remain strong, with the Philippines leading the ASEAN economy expanding by 5.7%. Followed closely by Vietnam in advance estimate expanding by 5 point 66%. Indonesia, the largest economy in the region, maintains its growth trajectory of 5 point 11%. Malaysia’s economy rebounded in the first quarter, expanding by 4.2%. Singapore’s economy remains Shakey with minimal growth of 2.7%. While Thailand economy is expected to expand this quarter between 2.5 to 2.7%. The Philippines 5.7% first quarter growth also surpass its neighboring East Asian country, with China expanding by only 5.3%, South Korea by 3.4% and Japan contracted by 0.5%. The near-term economic outlook for the Southeast Asia Nations in 2024 remains positive, supported by the continued expansion of domestic demand in a number of large Southeast Asian economies. Foreign direct investment inflows are also expected to remain strong, as multinationals continue to diversify their manufacturing supply chains towards Southeast Asian industrialized nations. Developing and emerging economies in Asia and the Pacific are forecast to expand by 4.9% on average this year as the region continues its resilient growth amid robust domestic demand, improving semiconductor exports, and recovering tourism. Stronger growth in Asia—fueled by both domestic demand and exports—is offsetting a slowdown in the People’s Republic of China caused by weakness in the property market and subdued consumption. On the report Issued by International Monetary Fund, the Philippines is expected to outpace its neighboring Asean nations growing by 6.2%, followed by Vietnam expected to grow by 5.8%, Indonesia growing by 5%, Malaysia at 4.4%, Thailand at 2.1% and Singapore growing by 2.1%. According to Asian development bank Outlook for 2024, the Philippines and Vietnam will be the growth leader expanding by 6% this year. Followed by Indonesia with 5%, Malaysia by 4.5%, Thailand growing by 2.6% and Singapore with minimal growth of 2.4%. The same trend was also seen for 2025, which still growth will be headed by the Philippines and Vietnam by 6.2%. Join this channel to get access to perks: https://www.youtube.com/channel/UCuCwi7OhBOCvHDKHUS3m_1Q/join What makes a country wealthy? One way to help a country grow its wealth is to boost levels of labour, capital or both, but that doesn’t continue growth indefinitely. Technological advancements can make it easier to produce goods, increasing what is known as total factor productivity (TFP), a key part of economic growth. Wealth is created by reducing inputs into production, or having greater output. Specialization of labor does both. Voluntary free trade also does it. There are legal, political, and economic system changes that promote this. Gross Domestic Product (GDP) Gross domestic product (GDP) is the value of all the goods and services produced by a country in a single year. Usually quoted in US dollars, the number is an official accounting of the country’s output of goods and services. For example, if a country has a large black, or underground, market for transactions, it will not be included in the official GDP. Emerging-market countries, such as India and Russia, historically have had large black-market transactions for varying reasons, which often meant their GDP was underestimated. What do you think is the composition of GDP in the Philippines? The Philippine economy is transitioning from one based on agriculture to one based more on services and manufacturing. It has experienced significant economic growth and transformation in recent years. The country's primary exports include semiconductors and electronic products, transport equipment, garments, chemical products, copper, nickel, abaca, coconut oil, and fruits. Its major trading partners include Japan, China, the United States, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. Percent share to the gross domestic product (GDP) of the Philippines in 2023, by sector Purchasing Power Parity (PPP) Purchasing power parity (PPP) is, in essence, an economic theory that adjusts the exchange rate between countries to ensure that a good is purchased for the same price in the same currency. For example, a basic cup of coffee should cost the same in London as in New York. Human Development Index HDI It measures people’s satisfaction in three key areas—long and healthy life in terms of life expectancy; access to quality education equally; and a decent, livable standard of living in the form of income. Since 1990, the United Nations Development Program (UNDP) has produced an annual report listing the HDI for countries. FORMATIVE QUESTIONS In what particular economic aspects is the Philippines lacking? Pick one economic factor from the mentioned discussion, how does the country improve that factor? Understanding developed countries in several factors. Understanding developed countries in several factors. Newly Industrialized Countries 2024 The word industrialized refers to a region that has developed industries. This includes tech enterprises, manufacturing, and other industries that bolster the economic activity of the region.Another term related to industrialization is Newly Industrialized Country, or NIC. This is a term that was created by economists and political scientists to describe countries with economic development that falls between the classifications of First World and developing. Countries that are classified as NICs have rapid export-driven economic growth and a migration of workers from rural areas to urbanized regions. There are a handful of nations that are currently categorized as NICs. These nations are Brazil, China, India, Indonesia, Malaysia, Mexico, Philippines, South Africa, Thailand, and Turkey. Most economists and political scientists believe that these are NICs. However, there are a few other nations that are up for debate, including Argentina, Russia, Chile, Sri Lanka, and Egypt. Major Developing Economies and Regions The Middle East presents an interesting challenge and opportunity for global businesses. Thanks in large part to the oil-dependent economies, some of these countries are quite wealthy. in shows the per capita gross domestic product (GDP) adjusted for purchasing power parity (PPP) for select countries. Interestingly enough Qatar, Kuwait, United Arab Emirates (UAE), and Bahrain all rank in the top twenty- five. Only Saudi Arabia ranks much lower, due mainly to its larger population; however, it still has a per capita GDP (PPP) twice as high as the global average. While the income level suggests a strong opportunity for global businesses, the inequality of access to goods and services, along with an inadequate and uncompetitive local economy, present both concerns and opportunities. Many of these countries are making efforts to shift from being an oil-dependent economy to a more service-based economy. Dubai, one of the seven emirates in the UAE, has sought to be the premier financial center for the Middle East. The financial crisis of 2008 has temporarily hampered, but not destroyed, these ambitions. Developed Countries In general, the developed world encompasses Canada, the United States, Western Europe, Japan, South Korea, Australia, and New Zealand. While these economies have moved from a manufacturing focus to a service orientation, they still have a solid manufacturing base. However, just because an economy is developed doesn’t mean that it’s among the largest economies. And, conversely, some of the world’s largest economies—while growing rapidly—don’t have competitive industries or transparent legal and regulatory environments. The infrastructure in these countries, while improving, isn’t yet consistent or substantial enough to handle the full base of business and consumer demand. Countries like Brazil, Russia, India, and China—also known as BRIC—are hot emerging markets but are not yet considered developed by most widely accepted definitions. Post Chapter Assessment In the city where you reside, discuss the emerging markets and its sustainability in relation to economic development. Topic 6: Global and Regional Economic Cooperation and Integration International Economic Cooperation among Nations Regional Economic Integration The united nations and the impact on trade and investment When did International Trade start? The Mesopotamians, Egyptians, and Phoenicians established trade networks as early as 3000 BCE, fostering exchange of commodities such as spices, textiles, metals, and agricultural products. The Code of Hammurabi, dating back to 1754 BCE, provides early documentation of trade regulations and practices. The establishment of United Nations Four months after the San Francisco Conference ended, the United Nations officially began, on 24 October 1945, when it came into existence after its Charter had been ratified by China, France, the Soviet Union, the United Kingdom, the United States and by a majority of other signatories. International Economic Cooperation among Nations In the post–World War II environment, countries came to realize that a major component of achieving any level of global peace was global cooperation: politically, economically, and socially. General Agreement on Tariffs and Trade (GATT) The basic underlying principle of GATT was that trade should be free and equal. In other words, countries should open their markets equally to member nations, and there should be neither discrimination nor preferential treatment. One of GATT’s key provisions was the most-favored-nation clause (MFN). It required that once a benefit, usually a tariff reduction, was agreed on between two or more countries, it was automatically extended to all other member countries. World Trade Organization (WTO) Formed officially on January 1, 1995, the concept of the WTO had been in development for several years. When the WTO replaced GATT, it absorbed all of GATT’s standing agreements. In contrast to GATT, which was a series of agreements, the WTO was designed to be an actual institution charged with the mission of promoting free and fair trade. WTO “is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.” World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS). Regional Economic Integration Regional Economic Integration Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. There are four main types of regional economic integration. Free trade area NAFTA (Canada, USA, Mexico) Customs union GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) Common market COMESA (21 member states in Africa from Tunisia to Eswatini) Economic union EU (27 member countries) Free trade area. This is the most basic Customs union. This type provides for form of economic cooperation. Member economic cooperation as in a free-trade countries remove all barriers to trade zone. Barriers to trade are removed between between themselves but are free to member countries. The primary difference from the free trade area is that members independently determine trade policies agree to treat trade with non member with nonmember nations. countries in a similar manner. Common market. This type allows for the Economic union. This type is created when creation of economically integrated markets countries enter into an economic agreement between member countries. Trade barriers to remove barriers to trade and adopt are removed, as are any restrictions on the common economic policies. movement of labor and capital between member countries Pros of creating regional Cons of creating regional agreements include the following agreements include the following ❖ Trade creation ❖ Trade diversion ❖ Employment opportunities ❖ Employment shifts and reductions ❖ Consensus and cooperation ❖ Loss of national sovereignty Major Areas of Regional Economic Integration and Cooperation ❖ The North American Free Trade Agreement (NAFTA) came into being during a period when free trade and trading blocs were popular and positively perceived. ❖ The Common Market of the South, Mercado Común del Sur or MERCOSUR, was originally established in 1988 as a regional trade agreement between Brazil and Argentina and then was expanded in 1991 to include Uruguay and Paraguay. ❖ The Caribbean Community and Common Market (CARICOM), or simply the Caribbean Community, was formed in 1973 by countries in the Caribbean with the intent of creating a single market with the free flow of goods, services, labor, and investment. Major Areas of Regional Economic Integration and Cooperation ❖ The Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) is a free trade agreement signed into existence in 2005. Originally, the agreement (then called the Central America Free Trade Agreement, or CAFTA) encompassed discussions between the US and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. ❖ The European Union (EU) is the most integrated form of economic cooperation. As you learned in the opening case study, the EU originally began in 1950 to end the frequent wars between neighboring countries in the Europe. ❖ Central European Free Trade Agreement (CEFTA) is a trade agreement between non-EU countries in Central and Southeastern Europe, which currently includes Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro, Serbia, and the United Nations Interim Administration Mission on behalf of Kosovo (UNMIK)—all of whom joined in 2006. Major Areas of Regional Economic Integration and Cooperation ❖ The Association of Southeast Asian Nations (ASEAN) was created in 1967 by five founding-member countries: Malaysia, Thailand, Indonesia, Singapore, and the Philippines. Since inception, Myanmar (Burma), Vietnam, Cambodia, Laos, and Brunei have joined the association. ❖ The Asia–Pacific Economic Cooperation (APEC) was founded in 1989 by twelve countries as an informal forum. It now has twenty-one member economies on both sides of the Pacific Ocean. APEC is the only regional trading group that uses the term member economies, rather than countries, in deference to China. ❖ The Cooperation Council for the Arab States of the Gulf, also known as the Gulf Cooperation Council (GCC), was created in 1981. The six member states are Bahrain, Kuwait, Saudi Arabia, Oman, Qatar, and the United Arab Emirates (UAE). The United Nations and the Impact on Trade Military conflict can be extremely disruptive to economic activity and impede long-term economic performance. As a result, most global businesses find that operating in stable environments leads to the best business operations for a range of reasons: ❖ Staffing ❖ Operations ❖ Regulations ❖ Currency convertibility and free-flowing capital The United Nations and the Impact on Trade A secretary-general leads the UN and serves for a five-year term. Structurally, the UN consists of six main bodies: 1. General Assembly 2. Security Council 3. Economic and Social Council (ECOSOC) 4. Secretariat 5. International Court of Justice 6. UN Trusteeship Council 10 Principles of the UN Global Impact Human Rights Environment Principle 1: Businesses should support and respect the protection of Principle 7: Businesses should support a precautionary internationally proclaimed human rights; and approach to environmental challenges; Principle 2: make sure that they are not complicit in human rights abuses. Principle 8: undertake initiatives to promote greater environmental responsibility; and Labour Principle 9: encourage the development and diffusion of environmentally friendly technologies. Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Anti-Corruption Principle 5: the effective abolition of child labour; and Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. Principle 6: the elimination of discrimination in respect of employment and occupation. Post Chapter Assessment Compare-and-Contrast: In 1945, the Philippines was among the 51 original Member States and one of only four Asian nations that signed the UN Charter. The Philippines actively took part in the negotiations for the Sendai Framework for Natural Disaster Risk Reduction in 2015, and succeeded in having migrants included in the Framework, particularly in recognizing their contributions in building disaster resilient communities. Recently, the Philippines contributed and participated in the Global Compact for Migration and the Global Compact on Refugees. In November 2018, the UN Country Team (UNCT) signed the Partnership Framework for Sustainable Development (PFSD) 2019-2023 with the Government. The 2023-2028 Philippine Development Plan (PDP) serves as the implementation mechanism of the SDGs. In the context of the Philippines as a middle-income country, the UN supports to ensure that no one is left behind in the implementation of the 2030 Agenda for Sustainable Development. Post Chapter Assessment Compare-and-Contrast: As a citizen of the Philippines, how are you going to compare the impact of joining the United Nation in 1945 in various sectors such as agriculture, human capital, technological advancement, and even freedom to amend our constitution without the interference of the UN? COMPARE CONTRAST AGRICULTURE (Similarities of agricultural sector in the (Contrasting of agricultural sector in the Philippines before and after joining the Philippines before and after joining the UN) UN) HUMAN CAPITAL THANK YOU! Topic 7: International Monetary System Description of the International Monetary System? Role of the IMF and the World Bank Understanding How International Monetary Policy, the IMF, and the World Bank Impact Business Practices Objectives At the end of the chapter, the learner will be able to: Discuss the role and purpose of the international monetary system. Describe the IMF’s and World Bank’s current role and major challenges and opportunities. Explain how the current monetary environment, the IMF, and the World Bank impact business. What is International Monetary System? International monetary system refers to a system that forms rules and standards for facilitating international trade among the nations and helps in relocating the capital and investment from one nation to another. The international monetary system, aids countries by loaning them money so they can overcome poverty, and debts. Some countries struggle with inflation which means that there is too much product and no demand for it. Topic 8: Foreign Exchange and the Global Capital Markets Meaning of Currency and Foreign Exchange Understanding International Capital Markets Venture Capital and the Global Capital Markets Week 9: MIDTERM EXAMINATION WEEK