True/FalseQuestions(1scoreperquestion)Thenotionthatnationaleconomiesarerelativelyself-containedentitiesisontherise.Mercantilismadvocatedthatcountriesshouldencourageexportsandimports.Afirmbecomesamultinationalenterprisewhenitundertakesforeigndirectinvestment.ThetwomostcommonmethodsofrestrictinginwardFDIareownershiprestraintsandperformancerequirements.Themostglobalmarketscurrentlyaremarketsforindustrialgoodsandmaterialsthatserveauniversalneedtheworldover.Outsourcingisaprocessthatislimitedtomanufacturingenterprises.AccordingtoPorter,fourbroadattributesofanationshapetheenvironmentinwhichlocalfirmscompeteincludingsupplyconditions,factorendowments,regulation,andadvancedfactors.8.OneoftheUNcentralmandatesisthepromotionofhigherstandardsofliving,fullemployment,andconditionsofeconomicandsocialprogressanddevelopmentThetotalamountofcapitalinvestedinfactories,stores,officebuildingsandthelikeisreferredtoasthestockofFDI.Licensinginvolvestheestablishmentofanewoperationinaforeigncountry.MultipleChoiceQuestions(11-50,2scoreperquestion51-60,1scoreperquestion)Whichofthefollowingisnotcharacteristicofglobalization?ANationaleconomiesareturningintoindependenteconomicsystems.Materialcultureisstartingtolooksimilartheworldover.Perceiveddistanceisshrinkingduetoadvancesintransportationandtelecommunications.Barrierstocross-bordertradeandinvestmentaredeclining.Whichofthefollowingisnotanimpediment.thatmakesitdifficultfor.firms.to.achieve.the.optimal.dispersion.oftheirproductiveactivitiestolocationsaroundtheglobe?AReducedtransportationcosts.Governmentregulations.Issuesassociatedwitheconomicandpoliticalrisk.Barrierstoforeigndirectinvestment.Technologicalinnovationshavefacilitatedallofthefollowingexcept:globalizationofproduction.B.globalizationofmarkets.DC.creationofelectronicglobalmarketplaces.D.creationofabsolutely均勻的）consumermarkets.Whatisthetotalcumulativevalueofforeigninvestmentsbestreferredtoas?CAccumulationofforeignsharesPortfolioinvestmentsStockofforeigndirectinvestmentsStockmarketinvestmentsIfthecriticsofglobalizationarecorrect,allofthefollowingthingsmustbeshownexcept:Dtheshareofnationalincomereceivedbylabor,asopposedtothesharereceivedbytheownersofcapitalshouldhavedeclinedinadvancednations.eventhoughlabor'sshareoftheeconomicpiemayhavedeclined,livingstandardsneednotdeteriorateifthesizeofthetotalpiehasincreasedsufficientlyto抵消）thedeclineinlabor'sshare.thedeclineinlabor'sshareofnationalincomemustbeduetomovingproductiontolow-wagecountries,asopposedtoimprovingproductiontechnologyandproductivity.economicgrowthindevelopednationshasoffsetthefallinunskilledworkers'shareofnationalincome,raisingtheirlivingstandards.Thistheory,advancedbythe19th-centuryEnglisheconomistDavidRicardo,formstheintellectualbasisofthemodernargumentforunrestrictedfreetrade.CHeckscher-OhlinMercantilismComparativeadvantageAbsoluteadvantageThistheoryexplainstheobservedpatternsofinternationaltradebyemphasizingtheinterplaybetweentheproportionsinwhichthefactorsofproductionareavailableindifferentcountriesandtheproportionsinwhichtheyareneededforproducingparticulargoods.BMercantilismHeckscher-OhlinAbsoluteadvantageComparativeadvantageIdentifytheincorrectstatementpertainingtoRaymondVernon'sproductlife-cycletheory.CEarlyintheirlifecycle,mostnewproductsareproducedinandexportedfromthecountryinwhichtheyweredeveloped.Asanewproductbecomeswidelyacceptedinternationally,productionstartsinothercountries.Aproductintheearlystageoftheproductlife-cycleisimportedbythecountrywhereitwasinnovated.Aproductmayultimatelybeexportedbacktothecountryofitsoriginalinnovation.Thetheoryof,developedbyMichaelPorter,focusesontheimportanceofcountryfactors,inadditiontofactorendowments,suchasdomesticdemandanddomesticrivalryinexplaininganation'sdominanceintheproductionandexportofparticularproducts.DnewtradeabsoluteadvantagecomparativeadvantagenationalcompetitiveadvantageIdentifythetheorythatcanbeinterpretedasjustifyingsomelimitedgovernmentinterventiontosupportthedevelopmentofcertainexport-orientedindustries.ATheoryofnationalcompetitiveadvantageHeckscher-OhlintheoryTheoryofcomparativeadvantageTheoryofabsoluteadvantageMercantilismviewedtradeasa(n):Beconomicevil.zero-sumgame.nonessentialeconomicactivity.threattoagovernment'sindependence. CWhatisthebasicmessageofthetheoryofcomparativeadvantage?CountriesaresimilarintheirabilitytoproducegoodsefficientlyInternationaltradeisrarelybeneficialtoacountryPotentialworldproductionisgreaterwithunrestrictedfreetradethanitiswithrestrictedtradeTradeisazero-sumgameAccordingtotheproductlife-cycletheory,thelocusofglobalproductioninitiallyswitchesfromtheU.S.tootheradvancednationsandthenfromthosenationstodevelopingcountries.TheconsequenceofthistrendforthepatternofworldtradeisthatovertimetheU.S.:Bbecomesthesoleproduceroftheproduct.switchesfrombeinganexporteroftheproducttobeinganimporteroftheproduct.switchesfrombeinganimporteroftheproducttobeinganexporteroftheproduct.becomesthesoleconsumeroftheproduct. suggeststhatwhennationstrade,eachnationmaybeabletospecializeinproducinganarrowerrangeofproductsthanitwouldintheabsenceoftrade,andthroughtrade,eachnationcansimultaneouslyincreasethevarietyofgoodsavailabletoitsconsumersandlowerthecostsofthosegoods.CTheproductlife-cycletheoryPorter'sdiamondofcompetitiveadvantageNewtradetheoryThetheoryofcomparativeadvantageAccordingtothenewtradetheorists,becauseearlyentrantsareabletogain,theearlyentrantsintoanindustrymaygetalockontheworldmarketthatdiscouragessubsequententry.Dzero-sumadvantageshighlyskilledemployeesprocessexpertiseeconomiesofscaleAgreenfieldinvestment:isaformofFDIthatinvolvestheestablishmentofanewoperationinaforeigncountry.Ainvolvesa7percentstockinanacquiredforeignbusinessentity.involvesamergerwithaforeignbusiness.occurswhenafirmacquiresanothercompanyinaforeigncountry.Historically,mostFDIhasbeendirectedatthe nationsoftheworldasfirmsbasedinadvancedcountriesinvestedin:Cunderdeveloped;underdevelopedcountries.developed;underdevelopedcountries.developed;eachother'smarkets.underdeveloped;eachother'smarkets.IdentifytheincorrectstatementregardingthedirectionofFDI.AHistorically,mostFDIhasbeendirectedatthedevelopingnationsoftheworld.Duringthe1980sand1990s,theUnitedStateswasoftenthefavoritetargetforFDIinflows.ThedevelopednationsoftheEUhavereceivedsignificantFDIinflows.RecentinflowsintodevelopingnationshavebeentargetedattheemergingeconomiesofSouth,East,andSoutheastAsia.AccordingtoKnickerbocker:BthefirmsthatpioneeraproductintheirhomemarketsundertakeFDItoproduceaproductforconsumptioninaforeignmarket.whenafirmthatispartofanoligopolisticindustryexpandsintoaforeignmarket,otherfirmsintheindustrywillbecompelledtomakesimilarbininglocation-specificassetsorresourceendowmentsandthefirm'sownuniqueassetsoftenrequiresFDI.impedimentstothesaleofknow-howincreasetheprofitabilityofFDIrelativetolicensing.Whentwoormoreenterprisesencountereachotherindifferentregionalmarkets,nationalmarkets,orindustries,thereis:Cverticalintegration.horizontalintegration.multipointcompetition.monopolisticcompetition.Theproductlifecyclesuggeststhat:oftenthesamefirmsthatpioneeraproductintheirhomemarketsundertakeFDItoproduceaproductforconsumptioninforeignmarkets.Awhenafirmthatispartofanoligopolisticindustryexpandsintoaforeignmarket,otherfirmsintheindustrywillbecompelledtomakesimilarbininglocation-specificassetsorresourceendowmentsandthefirm'sownuniqueassetsoftenrequiresFDI.impedimentstothesaleofknow-howincreasetheprofitabilityofFDIrelativetolicensing.Thesuggeststhatafirmwillestablishproductionfacilitieswhereforeignassetsorresourceendowmentsthatareimportanttothefirmarelocated.DproductlifecyclestrategicbehaviortheorymultipointcompetitiontheoryeclecticparadigmAdvantagesthatarisefromusingresourceendowmentsorassetsthataretiedtoaparticularlocationandthatafirmfindsvaluabletocombinewithitsownuniqueassetsareknownas:Apetitiveadvantages.directionaladvantages.JohnDunning,achampionoftheeclecticparadigm,arguesthat:thefirmsthatpioneeraproductintheirhomemarketsundertakeFDItoproduceaproductforconsumptioninaforeignmarket.Cwhenafirmthatispartofanoligopolisticindustryexpandsintoaforeignmarket,otherfirmsintheindustrywillbecompelledtomakesimilarbininglocation-specificassetsorresourceendowmentsandthefirm'sownuniqueassetsoftenrequiresFDI.impedimentstothesaleofknow-howincreasetheprofitabilityofFDIrelativetolicensing.AccordingtotheviewofFDI,MNEsextractprofitsfromthehostcountryandtakethemtotheirhomecountry,givingnothingofvaluetothehostcountryinexchange.DimperialistconservativefreemarketradicalWhichofthefollowingisnotanimpedimentthatmakesitdifficultforfirmstoachievetheoptimaldispersionoftheirproductiveactivitiestolocationsaroundtheglobe?AReducedtransportationcosts.Governmentregulations.Issuesassociatedwitheconomicandpoliticalrisk.Barrierstoforeigndirectinvestment.MichaelPorterhasarguedthatandaretwobasicstrategiesforcreatingvalueandattainingacompetitiveadvantageinanindustry.Cdifferentiation;pricecompetitioneconomiesofscale;diversification.lowcost;differentiationefficiency;promotionThe wascreatedin1944by44nationsthatmetinBretonWoods,NewHampshiretopromoteeconomicdevelopment.AWorldBankInternationalTradeCenterWorldTradeOrganizationUnitedNations CIdentifytheincorrectstatementpertainingtotheWorldWideWeb.Itmakesitmucheasierforbuyersandsellerstofindeachother.Viewedglobally,itisemergingasanequalizer.Itrollsbackalloftheconstraintsoflocation,scale,andtimezones.Itallowsbusinessestoexpandtheirglobalpresenceatalowercostthaneverbefore. DTechnologicalinnovationshavefacilitatedallofthefollowingexcept:globalizationofproduction.globalizationofmarkets.creationofelectronicglobalmarketplaces.creationofabsolutelyhomogeneousconsumermarkets.Whatisthetotalcumulativevalueofforeigninvestmentsbestreferredtoas?CAccumulationofforeignsharesPortfolioinvestmentsStockofforeigndirectinvestmentsStockmarketinvestmentsIdentifytheincorrectstatementregardingtheformerCommunistnationsofEuropeandAsia.ATheeconomiesofmostoftheformerCommuniststatesareverystronganddeveloped.ManyoftheformerCommunistnationsofEuropeandAsiashareacommitmenttofreemarketeconomies.Asaresultofdisturbingsignsofgrowingunrestandtotalitariantendencies,therisksinvolvedindoingbusinessinthesecountriesisveryhigh.ForabouthalfacenturythesecountrieswereessentiallyclosedtoWesterninternationalbusiness.Whenacompany"exportsjobs"overseas,thecompanyis:Chelpingdomesticworkersbypushingupwagerates.increasingthedemandofqualifieddomesticworkers.takingadvantageoflowerwagesinforeignmarkets.deceivingthesupportersofglobalization.Propagatedinthe16thand17thcenturies, advocatedthatriesshouldsimultaneouslyencourageexportsanddiscourageimports.DA.ethnocentrismcapitalismcollectivismmercantilismIdentifytheincorrectstatementpertainingtoRaymondVernon'sproductlife-cycletheory.CEarlyintheirlifecycle,mostnewproductsareproducedinandexportedfromthecountryinwhichtheyweredeveloped.Asanewproductbecomeswidelyacceptedinternationally,productionstartsinothercountries.Aproductintheearlystageoftheproductlife-cycleisimportedbythecountrywhereitwasinnovated.Aproductmayultimatelybeexportedbacktothecountryofitsoriginalinnovation.Identifythetheorythatcanbeinterpretedasjustifyingsomelimitedgovernmentinterventiontosupportthedevelopmentofcertainexport-orientedindustries.ATheoryofnationalcompetitiveadvantageHeckscher-OhlintheoryTheoryofcomparativeadvantageTheoryofabsoluteadvantageChina,deliberatelykeepingitscurrencyvaluelowagainsttheU.S.dollarinordertosellmoregoodstotheUnitedStates,andthusamassatradesurplusandforeignexchangereserves,isviewedbycriticsasfollowinga:Bzero-sumgame.neo-mercantilistpolicy.positive-sumgame.freetradepolicy.AbasictenetofRicardo'stheoryisthat:Bconsumersinthosecountrieswithanabsoluteadvantageintheproductionofallgoodsmightderivenobenefitsfrominternationaltrade.consumersinallnationscanconsumemoreiftherearenorestrictionsontrade.restrictionsontradehelpconsumersincountriesthatlackanabsoluteadvantageintheproductionofaparticulargood.tradeisazero-sumgame.Accordingtothemodel,whenarichcountryentersintoafreetradeagreementwithapoorcountrythatrapidlyexperiencesdynamicgains,therichcountryislikelytonothavenetgains.DabsoluteadvantagemercantilistHeckscher-OhlinSamuelsonAccordingtothenewtradetheorists,becauseearlyentrantsareabletogain ,theearlyentrantsintoanindustrymaygetalockontheworldmarketthatdiscouragessubsequententry. Dzero-sumadvantageshighlyskilledemployeesprocessexpertiseeconomiesofscaleAgreenfieldinvestment:AisaformofFDIthatinvolvestheestablishmentofanewoperationinaforeigncountry.involvesa7percentstockinanacquiredforeignbusinessentity.involvesamergerwithaforeignbusiness.occurswhenafirmacquiresanothercompanyinaforeigncountry.IfGeneralElectric,aU.S.basedcorporation,purchaseda50percentinterestinacompanyinItaly,thatpurchasewouldbeanexampleofa(n):minorityacquisition. Coutrightstake.majorityacquisition.greenfieldinvestment.FDIhasbeenrisingforallofthefollowingreasonsexcept:Btheglobalizationoftheworldeconomy.thegeneralincreaseintradebarriersoverthepast30years.firmsaretryingtocircumventtradebarriers.thereisashifttowarddemocraticpoliticalinstitutionsandfreemarketeconomies.Historically,mostFDIhasbeendirectedatthe nationsoftheworldasfirmsbasedinadvancedcountriesinvestedin:Cunderdeveloped;underdevelopedcountries.developed;underdevelopedco