Answer: The world economy has shifted dramatically over the past 30 years. We have been moving away from a world in which national economies were relatively self- contained entities, isolated from each other by barriers to cross- border trade and investments; by distance, time zones, and language; and by national differences in government regulation, culture, and business systems. As late as the 1960s, four stylized facts described the demographics of the global economy. The first was U.S. dominance in the world economy and world trade. The second was U.S. dominance in the world foreign direct investment picture. Related to this, the third fact was the dominance large, multinational U.S. firms in the international business scene. The fourth was that roughly half of the globe- the centrally planned economies of the Communist world- were off- limits to Western international businesses. All of these demographic facts have changed. Although the U.S. remains the world’s dominant economic power, its share of world output and world exports have declined significantly since the 1960s. This trend doesn’t reflect trouble in the U.S. economy, but rather reflects the growing industrialization of developing countries such as- China, India, Indonesia, and South Korea. This trend is also reflected in the world foreign direct investment picture. The foreign direct investment generated by rich industrial countries. Shifts in the world economy can also be seen through the shifting power of multinational enterprises. Since the 1960s, there have been two notable trends in the demographics of the multinational enterprises. The first has been the rise of non-U.S. multinationals, particularly Japanese multinationals. The second has been the emergence of a growing number of small and
References: http://www.academia.edu/3462125/The_single_global_currency_-_common_cents_for_the_world_2008_Edition_ http://econsguide.blogspot.com/2009/02/between-fixed-floating-exchange-rate.html http://www.bates.edu/prebuilt/stockman.pdf http://www.thomaspalley.com/docs/articles/international_markets/Dollarization%20Debate.pdf http://irps.ucsd.edu/assets/001/500495.pdf http://www.martsolf.com/CSUH/4670/solutions/MGMT4670Hmwk1u1.html https://www.google.com.bd/search?q=the+shifts+in+the+world+economy+over+the+past+30+years&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-beta&channel=fflb&gws_rd=cr&ei=l4e5U8bsJ8qGkQXjnID4Ag#channel=fflb&q=describe+the+shifts+in+the+world+economy&rls=org.mozilla:en-US:official https://www.google.com.bd/?gws_rd=cr,ssl&ei=Djq6U_-iLpGVuASbloCIBA 3. You are the international manager of a US business that has just developed a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe; your options are (a) to export from the Bangladesh, (b) to license a European firm to manufacture and market the computer in Europe, and (c) to set up a wholly owned subsidiary in Europe. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO.