C211 OA Questions and Answers 2023

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view that claims phenomenon of globalization was initially driven by the desire of Western economies to exploit their power through MNE's Ans- new view that claims globalization is a long-run histo... rical evolution since the dawn of humanity. Says it is nothing new and that it will always exist Ans- evolutionary view that claims globalization is swinging from one extreme to another from time to time Anspendulum investment in, controlling, and managing value-added activities in other countries Ans- foreign direct investment political view hostile to FDI. believes it is an instrument of imperialism and vehicle for exploitation of domestic resources by foreign capitalists and firms Ans- radical suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods and services Ansfree market views FDI as having pros and cons and only approving FDI when its benefits outweigh costs Anspragmatic nationalis what benefits exist to a country receiving FDI? Ans- capital inflow, technology spillovers, advanced management know-how, creates jobs what costs exist to a country receiving FDI? Ans- loss of sovereignty, adverse effects on competition, net outflow in the capital account The aggregation of importing and exporting that leads to the country-level trade surplus or deficit. Ansbalance of trade firms with a _____ degree of resource similarity are likely to have similar competitive actions Ans- high a high degree of resource similarity but low market commonality = _______ intensity of rivalry Anshighest little resource similarity but high market commonality = _____ intensity of rivalry Ans- lowest mercantilism, absolute advantage and comparative advantage belong to what theory of international trade Ans- classical theory of international trade that relies on more realistic product life cycles and first mover advantages Ans- modern under free trade, a nation gains by specializing in economic activities in which it has _____advantage Ans- absolute focuses on the idea that if a country does not have absolute advantage, they can still choose to specialize in the production of one good where it has ______ advantage Ans- comparative comparative advantage and absolute advantage stem from Ans- factor endowments theory that the wealth of the world is fixed and that a nation that imports more and exports less will be richer Ans- mercantilism stage of the product life cycle where production of a new product that commands a price premium will concentrate in the US Ans- new stage of the product life cycle where demand and ability to produce grow in other developed nations Ans- maturing stage of the product life cycle where the previously new product is commoditized and production will now move to low-cost developing nations Ans- standardized comparative advantage may change over time because patterns of ______ change over time Ans- trade theory that suggests that intervention by governments in certain industries can enhance their odds for international success Ans- strategic trade if a company seeks to limit foreign exchange rate exposure in the forward direction, what is the most effective way to do this? Ans- currency hedging exchange rate risk associating with the time delay between entering a contract and settling it Anstransaction risk forward transaction that protects traders and investors from exposure to fluctuations of the spot rate Ans- hedging a means of spreading out activities in different currency zones in order to offset the currency losses in certain regions through gains in other regions Ans- strategic heding amount of resources committed to entering a foreign market Ans- scale of entry how do institutions reduce uncertainty? Ans- by signaling which conduct is legit and which is not pillar of formal institution, coercive power of government Ans- regulatory pillar of informal institution, the mechanism through which norms influence individual and firm behavior Ans- normative pillar of informal institution, taken for granted values and beliefs that guide behavior Ans- cognitive institutions represented by laws, regulations and rules Ans- formal institutions represented by norms, culture and ethics Ans- informal [Show More]

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