Review Sheet Exam 1 Fall 2011 REVISED(1)

Review Sheet Exam 1 Fall 2011 REVISED(1) - Review Topics...

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Review Topics – Exam 1 IB 350 NOTE: Topics and Readings from Ch. 4 that are postponed to Exam 2 are highlighted in red. This review sheet focuses on the specific material from the lectures, textbook, and the readings most relevant to review for the exam. Where there might be confusion, specific pages in the text are included – although often this material is also covered in lectures. The exam will include some material covered only in the textbook and also in the readings (particularly if listed on the review sheet questions), but overall the lecture material will be emphasized in the exam . (But that does not mean that you can ignore the readings and text!) Globalization and Trends in the Global Economy: Chapter 1 What is globalization? o Trend to be a more integrated global economy o Distinct national markets merging into global markets What are the specific drivers of globalization? (pp. 11 – 17) o Declining trade and investment barriers o Technological change – communication, microprocessors, the Internet, containerization What are the GATT, the WTO, and the IMF? o General Agreement on Tariffs and Trades: international treaty that committed signatories to lowering barriers to the trade o World Trade Organization: Organization responsible for policing the world trade system and making sure nation-states adhere to the rules laid down by the treaty. Lowering barriers to trade and investment o International Monetary Fund: maintain order in the international monetary system; lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other countries What has been the impact of the GATT on trade barriers, particularly tariff rates? o Decreased to an average of between 2.3-3.9% What are the specific technologies spurring globalization and what has been their impact? o Microprocessors: growth of high-power, low-cost computing increasing the amount of information that can be processed o Telecommunications: lowers cost of coordinating and controlling global organizations o the Internet: equalizer; rolls back constraints of location, scale and time zones; makes it easier for buyers and sellers to find each other o Containerization: lowering cost of shipping goods over long distances o Globalization of Production and globalization of markets What are the most important trends in the global economy covered in class? - specifically with regard to output/GDP, trade, and FDI. o Increasing trade and FDI: FDI is more volatile to changes in the economy Why increase in FDI? Advances in production; currency hedge; government intervention; market advantages US share of trade output has decreased, more trade output from developing nations More FDI in developing nations; decreased FDI in developed nations Rising non-US multinationals o Reduced trade barriers o Shift from developed to developing o Greater wealth and economic convergence vs. greater poverty and economic divergence
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Review Sheet Exam 1 Fall 2011 REVISED(1) - Review Topics...

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