Economic globalization
The increasing integration and interdependence of national economies around the world
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| Term | Definition |
|---|---|
| Economic globalization | The increasing integration and interdependence of national economies around the world |
| Economies of scale | Savings from buying parts and materials, manufacturing, or marketing in large quantities |
| Benefits of international trading | Focusing on relative strengths Expanding markets Pursuing economies of scale Acquiring materials, goods, and services Keeping up with customers Keeping up with competitors |
| Balance of trade | Total value of the products a nation exports minus the total value of the products it imports, over some period of time. |
| Trade deficit | An unfavorable trade balance is created when a country imports more than it exports |
| Balance of payments | The sum of all payments a country receives from other countries minus the sum of all payments it makes to the other countries, over some specified period of time |
| Exchange rate | The rate at which the money of one country is traded for the money of another |
| Free trade | International trade unencumbered by restrictive measures. Supporters of generally acknowledge that it produces winners and losers but that the winners gain more than the losers lose, so the net effect is positive. |
| Protectionism | Government policies aimed at shielding a country’s industries from foreign competition |
| Tariffs | Taxes levied on imports |
| Import quotas | Limits placed on the quantity of imports a nation will allow for a specific product |
| Embargo | A total ban on trade with a particular nation (a sanction) or of a particular product |
| Export subsidies | A form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the global market |
| Dumping | Charging less than the actual cost or less than the home-country price for goods sold in other countries |
| World trade organization (W T O) | Permanent forum for negotiating, implementing, and monitoring international trade procedures, and for mediating trade disputes among the 160 plus member countries |
| International monetary fund (I M F) | Formed to monitor global financial developments, provide technical advice and training, provide short-term loans to countries that are unable to meet their financial obligations, and work to alleviate poverty in developing economies |
| World Bank | Founded to finance reconstruction after World War II and is now involved in hundreds of projects around the world aimed at addressing poverty, health, education, and other concerns in developing countries. Is a United Nations agency owned by its 187 member nations |
| Trading blocs | Organizations of nations that remove trade barriers among their member countries and establish uniform barriers to trade with nonmember nations |
| North american free trade agreement (N A F T A) | Formed by the united states, canada, and mexico to pave the way for the free flow of goods, services, and capital within the bloc through the phased elimination of tariffs and quotas |
| European union (E U) | Constitutes more than two dozen countries and a half billion people. Now accounts for the world’s largest economy. E U nations have eliminated hundreds of local regulations, variations in product standards, and protectionist measures that once limited trade among member countries. |
| Asia-pacific economic cooperation (A P E C) | An organization of 21 countries working to liberalize trade in the pacific rim. Has a long-term goal of liberalizing and simplifying trade and investment among member countries and helping the region as a whole achieve sustainable economic growth |
| Culture | A shared system of symbols, beliefs, attitudes, values, expectations, and norms for behavior |
| Stereotyping | Assigning a wide range of generalized attributes, which are often superficial or even false, to an individual based on his or her membership to a particular culture or social group |
| Ethnocentrism | Judging all other groups according to the standards, behaviors, and customs of one’s own group |
| Cultural pluralism | The practice of accepting multiple cultures on their own terms |
| Tax haven | A country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business |
| Importing | Purchasing goods or services from another country and bringing them into one’s own country |
| Exporting | Selling and shipping goods or services to another country |
| Licensing | Agreement to produce and market another company’s product in exchange for a royalty or fee |
| Foreign direct investment (F D I) | Investment of money by foreign companies in domestic business enterprises |
| Multinational corporations (M N cs) | Companies with operations in more than one country |
| Multidomestic strategy | A decentralized approach to international expansion in which a company creates highly independent operating units in each new country |
| Global strategy | A highly centralized approach to international expansion, with headquarters in the home country making all major decisions |
| Transnational strategy | A hybrid approach that attempts to reap the benefits of international scale while being responsive to local market dynamics |
| Multidomestic | Decentralized control, with individual divisions or subsidiaries in various countries free to pursue strategies that align with local markets |
| Global | Centralized control and single approach, applied as uniformly as possible around the world |
| Machine translation | Any form of automated translation |