AEM230__Lecture1___Fall_2007 - AEM/ECON 230: International...

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AEM/ECON 230: International Trade and Finance Professor David Lee Dept. of Applied Economics and Managment 441 Warren Hall
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2 of Professor David Lee AEM 230 / ECON 230 “Globalization” An economic view the reduction and elimination of traditional barriers which separate international buyers and sellers: 1. Trade policy barriers: tariffs, quotas, etc. 2. Decreasing transportation costs 3. Decreasing transactions costs 4. Market-determined exchange rates
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3 of Professor David Lee AEM 230 / ECON 230 But globalization is more than just freer trade: ¾ Firms serve expanding global markets…but experience increased competitiveness and pressure to reduce costs. ¾ Telecommunications revolution makes it easier to identify, communicate with and produce efficiently for larger global markets…but makes it easier for low-cost competitors to gain entry into tradition domestic and foreign markets ¾ Increasing international specialization means great scope for cost reductions…but also displacement of employees and changes in traditional employment patterns
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4 of Professor David Lee AEM 230 / ECON 230 ¾ International mergers and acquisitions mean potential for cost reduction and enhanced product quality…but also aggressive competition for many firms used to “captive” domestic markets; also potential market power in influencing prices and availability ¾ Cultural convergence and “homogenization mean increasing scale economies in marketing and production in serving a larger global market…but also raise questions of national cultural identity ¾ Advances in communications, democratization, and “marketization enhance individual consumer sovereignty, leading to greater choice, lower costs, and greater consumer power…but what is the role of the state?
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5 of Professor David Lee AEM 230 / ECON 230 Summary : Globalization has great scope to increase economic welfare of individuals, households and nations, but also raises the potential for exacerbating economic and social problems associated with income distribution, poverty, the environment, factor migration (immigration, capital market instability), and cultural identity.
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6 of Professor David Lee AEM 230 / ECON 230 BASIC DEFINITIONS
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This note was uploaded on 03/04/2008 for the course ECON 2300 taught by Professor Lee during the Fall '07 term at Cornell University (Engineering School).

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AEM230__Lecture1___Fall_2007 - AEM/ECON 230: International...

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