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Business Administration

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Business Administration

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ADMS 1000
Chapter 6 Globalization
What is Globalization?
* Globalization- is a process involving the integration of world economies, facilitated by bodies such as NAFTA, EU, APEC, ASEAN etc. * It is a process of involving the integration of world markets, products like Gap or Nike * The free movement of good/services capital and labor is critical to globalization * Increased cross border transactions and economic independence Multinational/Corporation (Benefits/Threats)

International Trade
* The purchase sale or exchange of goods or services across countries * Mercantilism (1500-1800): encourages trade surpluses where exports of goods or services exceeds imports * Trade Protectionism: protects domestic economies through import restrictions. * Tariffs – tax placed on goods entering a country

* Quotas – limits the amount of imports
* Subsidies to domestic industries/firms to encourage exports * What is the problem with mercantilism and trade protectionism? * Trade retaliation
* Increased costs to consumers
* Limits competitiveness of domestic firms
* See handout on Tariffs
* Impact on exporting country:
* Lower production, job losses, economic decline…
* Impact on importing country:
* Less competition for domestic firms, rising sales, prices, employment, spending, government revenues… * Increased costs to consumers, less spending on other industries, economic decline, costs of imposing + collecting tariffs, possible costs of retaliation and trade wars… Trade Agreements and International Bodies

* GATT (1948) – 100 countries agreed to reduce tariff levels. * WTO (1995) – took over from GATT, to manage world trade agreements. * IMF – provides short term aid to developing countries. * World Bank – seeks to provide long-term loans for development. * Regional Economic Integration - Trading Blocs

* 1. Free Trade Area – removing subsidies & quotas for member...